A friend once sent me a picture of a Coach keychain that was $98. Meanwhile, I was afraid to tell her that the resin keychain I had handmade was $17.
Think about that for a second. She was looking at a $98 keychain from a recognizable brand, and I was worried that $17 was too much for something I had handmade with my own two hands. My materials. My time. My work. Yet somehow I was questioning whether I was allowed to ask $17 for it.
That conversation stuck with me, and eventually I started explaining pricing with what I called the bread aisle analogy. But really, it isn't just the bread aisle.
It's canned vegetables. Condiments. Macaroni and cheese. Coffee. Paper towels. Clothing. Cars. Almost everywhere we spend money, there are cheaper options, recognizable name brands and premium options existing right beside each other.
Look in my own grocery cart and you'll find both. I'll buy Great Value bread. Some canned vegetables I'll buy store brand, while others I want name brand. There are products where the brand matters to me and plenty where it doesn't. Even where I buy my meat matters to me.
Then there are paper towels.
My best friend and I share a house. She picks the toilet paper. I pick the paper towels. Even if only one of us is doing the shopping, we know the other's preference and we know it's non-negotiable.
I pay for warehouse club memberships where I could grab a giant pack of store-brand paper towels, probably get more for my money and call it a day. I'm still buying Viva. I may spend more and get less, and I'm perfectly okay with that because that's one of the places where I've decided the difference is worth paying for.
That's how we actually spend money. We don't necessarily choose the cheapest option in every category or the most expensive option in every category. We save where the difference doesn't matter to us and spend more where it does.
Sometimes that decision isn't even about a measurable difference in the product. People will tell you they can't tell the difference between a particular name brand and the store brand while still reaching for the name brand. If there's genuinely no difference to you, why aren't you saving yourself the money?
Because purchasing decisions aren't based on price alone.
Sometimes it's familiarity. Sometimes it's quality, taste, convenience or trust. Sometimes it's simply what you've always bought. And sometimes a brand represents something to the person buying it—or something they want it to represent to everyone else.
Certain brands are associated with success, wealth, class or status. There are people who won't buy the generic version because they're worried buying it makes it look like they can't afford the name brand. Sometimes people will even spend more than they comfortably should trying to maintain an image they've created.
On the other hand, buying the generic version doesn't necessarily mean someone can't afford the name brand. Maybe they simply don't care enough about that particular product to spend the extra money. They'd rather save those dollars there and spend them somewhere else.
Our budgets adapt to what matters to us, and a small business doesn't need to adapt to what you're willing to spend.
More Expensive Doesn't Automatically Mean Overpriced
Would I spend $98 on a Coach keychain? No. Would someone else? Absolutely.
Coach has built a recognizable brand, and brand recognition itself carries value. That's why companies spend enormous amounts of time and money building their brands and protecting them with trademarks. Sometimes part of what you're paying for really is the name.
That doesn't make something overpriced simply because I wouldn't buy it. It means it isn't worth that amount to me. There's a difference.
My budget and my priorities determine whether I'm their customer. They don't determine what the business should charge.
Branding can also affect how we perceive quality. “Genuine leather” sounds premium if you don't know much about leather, but full-grain leather is generally considered a higher grade. The words used to describe something, the name attached to it and the way it's presented can all affect what we think it's worth.
That's true for major brands, and it's true for the person selling something under a 10x10 canopy on Saturday morning.
You're Seeing the Product, Not Everything Behind It
I had a young man, probably in his early teens, walk past my booth at a show once and comment that they could make the same 3D prints at school. His teacher gave them away for $1 or $2, and I had mine priced at $8.99.
When he came back by, I asked his parents if I could talk business with him.
We talked about commercial licensing because I wasn't the designer of the files I was printing, which meant I still had to pay for the right to sell them. We talked about business insurance and the liability involved when you're selling small items that could potentially become choking hazards. We talked about electricity to run the printers, materials and all of the expenses that exist beyond the finished object he saw sitting on my table.
I also explained that his teacher and I might not have the same costs. A school may have grants that purchased its printers or supplies. Materials may have been donated. The equipment might already be paid for. There are expenses an educational program may never need to recover through the sale of that $1 or $2 print.
My business does.
That doesn't mean his teacher was wrong for charging $1 or $2. It doesn't mean I was wrong for charging $8.99. The products might have looked similar, but the circumstances behind their prices were completely different.
That's something customers don't always get to see.
The Failed Ones Cost Money Too
Research and development isn't something reserved for giant corporations with laboratories and entire departments devoted to it. Small businesses do R&D every day; we just don't always call it that.
Finding suppliers takes research. Ordering samples costs money. Testing materials costs money. Prototypes cost money. The material you ruined figuring out a process cost money. The supplier you ordered from once and never used again because the quality wasn't good enough still got paid. Every failed print, bad resin pour, unusable sample and attempt that didn't work represents money the business actually spent getting to the version that finally did.
Those failures won't be sitting on the table for a customer to buy, but the money spent on them still left the business's bank account.
Some of that loss has to be baked into the successful products so the business can recoup the money it spent getting from an idea to a finished product that's finally ready to put into a customer's hands.
Sourcing changes the numbers too.
I've asked people before: Do you think a giant retailer buys an 89-cent can of store-brand vegetables for almost 89 cents, marks it up a couple of pennies and calls it good?
Of course not.
Large retailers have purchasing power that small businesses simply don't have. They can negotiate enormous quantities and unit costs that a business ordering 20, 50 or 100 pieces couldn't reasonably expect to receive.
The same thing happens between small businesses. One may have enough capital, sales volume and storage space to meet a manufacturer's minimum order quantity and purchase directly. Another may need to buy smaller quantities through a wholesaler or even Amazon because they can't meet that MOQ yet—or because the convenience makes sense for their business.
Two businesses can sell very similar products while having completely different costs before either one pays themselves a penny.
That's why comparing markup percentages without knowing the numbers underneath them doesn't tell you very much.
Competition Is Good. A Race to the Bottom Isn't.
Competition keeps businesses honest, and I have no problem setting up beside someone selling something similar to what I sell.
What I don't believe in is looking at their price and deciding mine automatically needs to be lower.
You see that race online all the time. Someone searches Etsy, finds a comparable item for $20 and decides they'll sell theirs for $19. Somebody else sees $19 and goes to $18. Then $17.
Everybody is trying to win by being the cheapest.
But continuously falling prices can affect how customers perceive the product itself. If shoppers repeatedly see the price getting lower and lower, eventually the perceived value of that product can fall with it.
You can devalue the very thing you're trying to sell while fighting to be the cheapest person selling it.
I used to regularly set up near someone else who sold wristlets. Hers were cheaper than mine, and that didn't bother me because I knew there were differences between our products.
The glitter inside hers was textured. Mine was smooth. There was a reason I used glitter in the first place. It sealed the porous fabric backing so it wouldn't wick moisture and sweat as easily, helping prevent smells and discoloration. I wanted that glitter smooth because the wristlet would sit against someone's skin and I didn't want the texture causing irritation.
A customer walking by might initially see two wristlets.
Once you explain the decisions behind yours, they're no longer comparing two products based solely on price. Now they understand some of what went into making yours the way it is.
Sometimes Cheaper Doesn't Fix the Problem
When I first started selling wristlets, I thought my pricing was too high. So I lowered them to a single bill: $5.
They still sat.
Eventually, I started pricing them based on what was actually involved: what was on the leather, the technique used to make them and whether they had specialty shaped hardware. I also changed how I displayed them.
They started selling better.
Making them cheaper hadn't fixed the problem. Presentation helped communicate their value. They looked more valuable because I was finally displaying them like they were valuable.
I've experienced the opposite too.
I once brought two 24-inch sunflower wreaths to an event that I still needed to finish. Someone bought both of them before I even finished making them.
Crafting at an event can actually be a fantastic sales tool when the product allows for it. Customers get to see the process instead of only seeing the result. They see the steps, the time and the work involved.
Something that might have looked like “just a wreath” five minutes earlier suddenly makes a little more sense at its price because they watched part of what it took to create it.
Your Time Wasn't Free
Handmade sellers constantly get in their heads about pricing. We calculate what something should cost and then immediately start worrying that it's too much.
But YOU MADE IT.
Your two hands made it. Your talent made it. Your time went into it. Your research, sourcing, trial and error and all those failed attempts came before it. You learned how to make the product sitting in front of the customer, and learning how to make it probably cost you both time and money.
The money can eventually be made back.
The time cannot.
Enjoying what you do doesn't make your time free. Being talented enough to do something quickly doesn't mean that skill has less value. Sometimes you're fast because you've spent years learning how to be fast.
Why Do We Negotiate With the Small Business?
There's another strange thing that happens with small businesses, and too often it comes from the people closest to them.
Friends and family ask for discounts.
Most of those same people aren't walking into Walmart, picking up a $20 item and asking if they'll take $15. They aren't going into Target and asking what their special price is because they know somebody who works there.
They see the price and understand that the corporation has decided what the item costs.
So why does that price suddenly become negotiable because you know the person who owns the small business?
Knowing the person behind the product shouldn't make their work worth less. If anything, friends and family may know better than anyone how much went into getting that business where it is. They heard about the failed attempts. They know about the late nights. They watched the business grow.
If the price doesn't fit your budget, that's okay.
But “I can't spend that” and “you should charge me less” are not the same statement.
Not Everyone's Money Is Meant for Me
I had to learn this one after a lot of heartbreak:
Not everyone's money is meant for me, but the right person's money will come to me.
If somebody tells me they can get something cheaper somewhere else, my response is pretty simple: No worries. Buy the one that best suits your budget.
That's not meant to be rude or dismissive.
There really is a market for everyone.
I've had customers tell me after making a purchase that they looked at all of them before choosing mine. I've heard, “Your colors were the best.” I've heard, “Yours looked better.”
Sometimes customers notice things they may not even communicate at the moment they're deciding what to buy.
Maybe it was the colors. Maybe it was the finish. Maybe it was the materials, the presentation or some tiny decision I made during the process that they couldn't possibly know about.
They simply knew which one they wanted.
And sometimes it wasn't the cheapest one.
Go back to the grocery store. Somebody is buying the store-brand bread while somebody else buys the name brand. Somebody saves money on canned vegetables and refuses to compromise on ketchup. Somebody buys the cheapest paper towels on the shelf while I'm walking past the giant warehouse pack because we're getting Viva.
Neither one is necessarily doing it wrong.
We're deciding where the difference matters enough to us to pay for it.
Our budgets adapt to what matters to us.
There is a market for the cheaper option. There is a market for the expensive option. There is a market for the recognizable name, the handmade product, the mass-produced product and everything in between.
There's a market for everyone. That includes you.
Know Your Worth. Then Add Tax.
Your price doesn't have to make sense for every person who sees it. It needs to make sense for the business that has to pay its expenses, recover its costs, compensate you for your time and still be there tomorrow.
Know what went into your product. Know what it costs to make. Know what it cost to get good enough to make it. Know what it costs to run the business selling it. Understand the market you're selling it in and communicate why your product deserves its place there.
Then stop apologizing for the number on the price tag.
Know your worth. Then add tax.