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Setting Prices and Arranging Delivery

By: Rachel Newcombe - Updated: 16 Oct 2012 | comments*Discuss
 
Setting Prices And Arranging Delivery

Setting the prices of your craft products or service is an essential part of your business plan. Another key element, if you’re offering mail order or online ordering, is to get an efficient delivery system in place. So here are some tips and advice on cracking both these aspects.

Setting Prices

Setting the right prices for the craft products or services that you’re selling is crucial if your business is to make money and survive. In the first instance it can be hard to know where to draw the line – if you price too highly, you may not get enough business, but if you price too low, you won’t make much money.

When you’re working out what to set your prices at, there are a number of practical factors to take into consideration. These include:

  • The wholesale cost of any materials used to produce the product.
  • The wholesale cost of the product itself.
  • The time and skill involved in making a handcrafted product.
  • Any wages you’re paying to employees or yourself.

In addition, there are other factors to consider too, such as:

  • How your product or service competes with other similar products on the market.
  • What position your product has in the market.
  • The lifecycle of the product – is it very new and unique, or likely to go out of fashion soon.
  • What price your profile of customers are likely to pay.

Looking at what your competitors are selling similar products or services for is worthwhile, but you should also think about how much, or how little, your customers will want to pay. It’s a tricky situation when you’re starting out and you’ll have to expect some degree of experimentation.

If you get your pricing wrong and no-one buys your products, or under-price and lose money, don’t panic. You can make up for it by having special offers – for example, a limited time at a certain price. This works for both selling excess stock and selling well-priced items, as you can market it as an introductory price and then put it up after a while.

Arranging Delivery

If you’re going to be operating a mail order or online business, then you need to sort out a reliable delivery service as soon as possible. Customers will want to receive their products quickly and efficiently, and it inevitably reflects back on your business if this doesn’t happen

Sending parcels and packets by Royal Mail is one option and you could always offer recorded delivery for extra safety. Some people, however, may not want to pay the extra for recorded delivery, but still want the safety of a signed for delivery.

Other commonly used options are courier companies. The way they operate and the prices they charge will vary considerably, so it’s a good idea to try out the service if you can or get recommendations from other small businesses about the service they use.

Whatever you choose to go with, you then have to work out how you’ll charge customers for their deliveries. Do you charge one large fee for all purchases? Should it go on a sliding scale, with smaller values of parcels charged less for postage? Or could you offer any free postage options for orders over a certain value?

All of these issues should be on your list as you work through your delivery charges, plus you need to take the cost of actual packing and packaging materials into consideration. At least with the latter, you should be able to get good deals for buying in bulk from wholesalers. If you’re unsure of what would work best, you could trial certain options and ask your customers what they prefer before settling on a final choice.

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