by Stacy Altiery of InkSpot Workshop
To Groupon, Zulily, Scoutmob? (just to name a few) is the question of the day and what it all boils down to is….are you pricing your products and participating in marketing programs in a manner that is profitable for your small business?
I’ve recently been asking myself this question as I ponder fully entering the wholesale market. Up until now I’ve always felt like why wholesale? It’s the same amount of labor for less profit, right? Then I had dinner with a friend/mentor who runs a very successful online boutique and buys wholesale from both large and small companies. She flat out told me in order to wholesale I needed to raise my current prices. Light Bulb moment! Aha, that’s how to do it? As a result I have been gradually raising my prices and honestly, I’m not sure why I didn’t do it sooner. My prices at InkSpot Workshop have hovered around the same mark for the past 3 years. Many items (hand lined envelopes) are time consuming and it was time to increase the cost. I also used to offer free return address labels with a few of my personalized stationery sets, but most customers never even realized they were getting them for free and neglected to give me the info needed to print the labels. This meant more work for me to constantly keep up with getting this information from them, meaning a delay in producing their order.
Then there’s the daily barrage of “great deals” from the aforementioned sites. There are many social coupon websites out there that promise customers 50% or more off their purchase. Seems like a great way for a small business to market as you only pay if someone is interested and buys your coupon. As a customer, who doesn’t love a sale? Seems like a win, win for everyone, right? As the shop owner or restaurant that issues the coupon, you share the percentage of the coupon price with the coupon site (typically 50%).
At first I was on the Groupon bandwagon (still have a few I need to use before they expire) then I discovered ScoutMob, where you don’t have to pay for the deal upfront, just when you use it. I felt lucky on the days where I got a deal at a restaurant or salon that I already frequented, which lead me to ask the question… are these good marketing strategies or just eroding current profit margins? I guess if the deal brings you in more “new” customers compared to “existing” customers, then the answer is yes, this is a good strategy.
Recently, I was contacted by a well known social media coupon company about doing this type of discount in exchange for free marketing and I decided against it. It was a tough decision because we all want the publicity and I’ve even seen some of my fellow online artists/sellers participating. Their selling point was the fact a good 15% of the people who buy the coupons don’t even use them, basically money for nothing, right? Here is where I stand, I am not going to do it!
I want to share a testimonial from another small business, this seller details her Groupon experience and it confirmed my suspicions about it not being good for small business. I thought about my personalized party invitation sets and did the numbers and thought for free marketing would I want to do this? Then I wondered whether or not any of the Groupon buyers would ever be back. How would I handle the additional workload in addition to my current volume. Then what would I do after all the Groupons were full and I was back to my normal volume. Here is Posie’s Bakery and Cafe’s story and how she lost thousands of dollars. I also found this post called The Good and Bad of Groupon and Small Businesses interesting.
Which brings me back to the question… am I pricing my products in a proper manner to be profitable? I’ve gone through times of frustration in not knowing how to price my items, we’ve all been there but I feel that my pricing accurately reflects where I am in my business. I see other designers selling their items for what I can only imagine did not even cover the cost of materials, let alone their time and I feel sad. Sad that they devalue their own work and treat their business more like a hobby. costs. So how much is something really worth and how do you accurately price your items? Here are a few fantastic posts from Etsy on this topic…
To sum it all up…. please don’t devalue your own hard work! I’d love to hear your thoughts on pricing and especially if you have had success with social coupon sites.
Owner, Imagination behind InkSpot Workshop
and The Inkspot Workshop Blog
Dog Lover? Checkout my charitable shop Fire Hydrant Press
I’m always having an ADD party on Facebook
plus you can follow me on Twitter