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The recent emphasis on authenticity in branding goes hand in hand with transparency – about business practices, provenance, and now pricing. Profit margins used to be sacred and not spoken of but companies are now using it as a marketing tool. Let’s look at some companies who use transparency about their goals and pricing to gain customer trust.

 

Warby Parker explains how they can price their eyeglasses so low with easy-to-read graphics.

Warby Parker sells complete eyeglasses for $95 through online sales. They talk extensively about how they achieve their pricing (mostly due to cutting out the middleman – local eyeglass boutiques who have a 2.5-3x markup). They also give a pair of glasses away via non-profits in countries to aid directly and via entrepreneurship. Truthfully, there are ways to get even less expensive eyeglasses, but talking about their bottom line combined with great photography and social media/word of mouth marketing has made this company a success story.

 

Everlane breaks down average costs to create a simple cut-and-sew garment.

Everlane, an online retailer of high-quality apparel basics, released an infographic that they say reflects the true costs of creating a T-shirt to sell. It helps to position their product as being sold at not only a good price but a fair price, compared to similar products sold for much more by fashion designers. The graphic itself is also a great, easily digestible bite of information that spread across the Internet like wildfire – never a bad thing for a business. (To see many, many more fascinating infographics, check out visual.ly.*)

How does transparency affect you? Shouldn’t being a handmade maker be reason enough for someone to buy from you?

These days, no. A consumer in 2012 is not only price-conscious, she is armed with many tools to help her find the best deal or sale on something she wants. She can do on-the-spot price comparisons on her phone and is bombarded with daily deals in her email.

A handmade artisan cannot and should not compete on price with a major manufacturer. However, the more education about what’s behind your pricing shows trust in the buyer and also can provide them multiple reasons to support your business. Here are some possible reasons you can present to your prospective customers:

  • High-quality materials
  • High-quality workmanship
  • Use of recycled/reclaimed materials
  • Providing jobs to others
  • A unique and customizable product
  • Supporting non-profit causes
  • Great customer service

With these points, you are not justifying your prices for people who wonder why it is so high, you are instead making transparent your carefully considered product choices for those who care deeply about what they buy and who they buy it from. The difference is subtle, but important. Be upfront, don’t apologize!

As a bonus, keeping your customer up to date on your work practices is a great way to build an ongoing relationship, which is key to the health of your business. There are many ways to be transparent to your customers, via social media, volunteering for efforts that are important to you, and yes, even a great infographic. Find the method that works for you, and communicate your vision to the world.

*The danger of infographics is oversimplification. There is a very good rebuttal discussion at Well Spent about Everlane’s graphic, the designer clothing industry, local production and fair wages that is a must-read.

  • Erica

    This seems ironic in a post about transparency — I just clicked on the Everlane Link because I trust links and recommendations from this blog. While Everlane might be transparent about its pricing and the origin of its merchandise, you have to create an entire profile just to move beyond the home page — and once you do, you cannot see anything until you have at least one friend also create a profile. You don’t get any real access unless you have FIVE. There is no way I am going to harass my friends and family so I can simply LOOK at their line of clothing. I felt duped for even creating the profile in the first place.

    • http://ohmyhandmade.com/members/ohmyhandmade/ Jessika Hepburn

      Erica that is really interesting-it seems totally counterintuitive to make people work so hard to even take a look at their goods. Thank you for sharing your thoughts on Everlane!

  • http://www.aurorashoeco.blogspot.com Alyssa @ Aurora Shoe

    This is such a fascinating topic! We are a small handmade leather shoe company in upstate NY. We make all of our shoes in house using American materials and are building a combination of direct and wholesale business. I read through the Well Spent article (and the comment thread) and agree that there is a huge difference between the pricing of a product that is made by the seller and one where the production has been farmed out.

    I think that handmade companies like ours have nothing to lose (and a lot to gain) by being more transparent. When people really understand how our shoes are priced, they begin to really understand the difference between our shoes and a similarly priced pair of imports. Our profits go to our employees, theirs get divided in more ways than I care to list here.

    Thank you for bringing up this important topic and for encouraging us to be more open with our customers.

  • http://renatom.net rena

    hi erica,

    everlane is pretty new and still in their customer acquisition phase. they are positioning themselves more like a web startup than a usual retail venture. while i don’t love their practice, others are doing it too (like Gilt, Fab, etc). the infographic is something they share freely however – interesting information but also a way of getting people to come check out their site. personally i don’t love “exclusive” sites either, sorry about that.

    rena

  • http://peasloveandhappiness.blogspot.com Sierra

    As someone who is trying to start a business, this was a great resource for me to read. Thank you for sharing!

  • http://www.createasfolk.com Laura Simms

    Thanks for spelling this out: “A handmade artisan cannot and should not compete on price with a major manufacturer.” It could be easy to think that transparency means showing why your price is the lowest, but it seems more about educating consumers about the process. I like to think that the more people know about the process of handmade goods, the more they’ll value them.

    • http://ohmyhandmade.com/members/ohmyhandmade/ Jessika Hepburn

      I so fully agree Laura! The more we understand the process/skill that goes into creating the things we consume, from food (farm to table) to handmade, the more we consider our purchases. I want to know and be known by the businesses I support, and have some idea of the people/process behind the product, once I do I am happy to invest!

  • http://oneelevenone.blogspot.com Tori

    I guess that’s why blogs work so well.

  • http://www.cattailswoodwork.com Brenda

    This is a great topic…Being a woodworker my pieces are hugely time consuming to make by hand. I could never compete with imports, the back yard hobbyist but instead try to promote the fact that I use wood from sustainable earth friendly sources, am skilled in what I do, thus bringing a better product to the table. The buyer is keen on the fact that they are buying a handmade, one of a kind piece that is a functional ‘piece of art’ something that will be handed down to future generations because of the quality. They love the connection with the maker and will pay for it. They are paying more for handmade but they realize they are also GETTING SO much more as well.

  • http://www.sarahssilks.com Sarah Silks

    Great article! Thank you.

    I went and read the Well Spent article as well and really enjoyed it.

    Transparency is a big issue for our company.
    We design our products in US. They are mostly made in China.
    Silk is an ancient product of China so that makes sense to us.
    We know who is making our silk and sewing it. We pay them above the minimum wage.
    Our things cost more than your average product.
    Its hard to know how to succinctly and non-defensively explain this.
    here is a infographic I made recently (I did not know there was a name for them!) I’d love feedback on it. http://sarahssilks.com/blog/sarah/02-14-2012/map-how-our-playsilks-are-made

  • http://renatom.net rena

    great comments everyone! Sarah, i think you are doing a good job of non-defensively talking about why your products originate in China. also your infographic is the most charming one i have ever seen and perfectly fits in with your website design too :)