The perfect price is: The price at which your item sells fast enough to turn your inventory at the rate that you have targeted.

When figuring the perfect price for your item, you have to consider a number of things. First you have to determine how fast you should turn your inventory. As I mentioned earlier, if you turn your hand crafted item inventory 3 or 4 times a year, this would be good.

The important thing to remember is that the perfect price for your item has everything to do with how fast the item sells. The goal of your business is to sell your product. Where you choose to sell your product will make a difference in the perfect price for your product.

The perfect price for your product will not be the same for every place that you want to sell it. In one location, your product will sell just as fast for a higher price than in a different place. Therefore the perfect price for both locations would be different. If you are turning your inventory at your target rate (3 to 4 times), at one location and you are selling it for the same price at a different location but it is turning faster; you may want to keep the same price at both locations. But if your product sells at your target rate at one location and a much slower rate at the second location, you might want to lower your price at the second location. This would depend on your mark-up.

If the places that you are selling your product are substantially different in the type of customer that you can expect, your items will sell at different rates in those places. If you sell your items to retail stores, you may jeopardize your relationship with the store if you sell your product for a lower price elsewhere. In this case it would not be wise to lower the price of your item in a place where your retail dealer’s customers might shop.

Some shops will ask you to give them an exclusive on your product within their area. You will have to decide if this is worth it to you or not. I would recommend against this because you have no guarantee that the one shop will sell any of your product. Even if the shop does not ask for an exclusive, they will be very upset if you sell your product for less at a place where their customers might shop.

The only way that you can tell if you have found the perfect price for your product, is to monitor how fast your product sells. Price is a dominate factor in how fast your product will sell, but you also have to remember that the perfect price will not be the same in every place that you sell your product. So, the place that you sell your product has a direct affect on the perfect price.

(The perfect price: determine how fast you want to turn your inventory and set the price to where it will sell at that rate.)

I am often asked the question, “How do I price my items?” Of course, there is no simple answer to this question. Some, including myself, have rule of thumb formulas for pricing, but these formulas are just starting points and will not necessarily be the right price for every item.

Coming up with the perfect price for your products is something that has to be worked out over a period of time. You have to get some sales experience with your product before you will be able to determine the perfect price.

I do have a formula for the perfect price, but first we have to discuss inventory turnover. To large companies, how fast they “turn” their merchandise is a closely monitored statistic. It is calculated on an annual basis and companies set certain goals for inventory turnover. Some may want to see their merchandise sell fast enough to reorder the same merchandise 10, 20, or more times a year. With hand crafted merchandise this would be a bit excessive but some retailer do turn a lot of merchandise.

The rate at which a retailers’ merchandise turns, is important because, items that sit on a shelf costs the retailer money. With your hand crafted products, you face the same situation. Product that you have, that has not been sold yet, cost you money. You may say, “But they are paid for, they are not costing me anything.”

Let’s say that you have two products that you made with virtually the same materials. One of the two items has a little better design so it sells like hotcakes, while the other one does not sell at all. You can see how the one that is selling is producing income for you to buy more materials to work with. The one that is not selling is tying up your money in materials that could be put into the better design that does sell. The one that is not selling is costing you money in potential sales lost.

The rate at which you turn your inventory is not always easy to calculate without careful inventory tracking but if you keep 100 items in inventory, and you sell 25 items a month, you would be turning your inventory once every 4 months or 3 times a year. To turn your inventory 3 or 4 times a year would be good for hand crafted items.

So what does this have to do with pricing your product? I told you that I have a formula for the “perfect price”. Price is the element that has the greatest immediate effect on your sales. Once you have determined that it is important that your inventory turns on a regular basis, you have to do something to make that happen. The price of your item can be set so that your inventory will turn at your targeted rate.

The “perfect price” for your product is the price at which your product sells fast enough to turn your inventory at the rate that you have targeted.

I am often asked the question, “Can you tell me what sells?”

This is really a great question. It shows that the person asking the question is thinking about the right thing before they get started. In fact this is the most important question that you need to ask, and answer before you start to sell anything.

Unfortunately, there is no easy answer to the question, what sell? In the fourteen plus years of being in the jewelry and craft business, we have learned the hard way, how important this question really is. This may also be the hardest question for a creative person to ask.

By nature, a creative person wants to let their creativity guide them, and not the market trends. Generally, they do not like their creativity to be bound in any way. It takes a certain level of maturity for the creative person to use their design talent within the boundaries of “what sells”.

I am not saying that you can not be successful by doing your own thing, but if you want to be on the fast track to success, you must give the market what it wants.

As I said earlier, there is no easy answer to the question, “What sells?” If you want to sell a product that is fashion oriented, you have to keep up with the current trends. Many trends are started by national figures, such as actors, musicians or people in the news. The national magazines and chain stores will reflect these trends, so they are good places to look to for your research on what sells.

It is an ever changing landscape where some trends may last for months and others may last for years. Popular colors, for instance, have traditionally changed with the seasons, but many fashion colors will stay popular for a year or more.

Ultimately, the best advice that I can give to someone that asks me, what sells, is to say, keep your eyes open. Watch the magazines, movies, and TV, to identify trends. The better you are at identifying trends and incorporating them into your work, the more successful you will be.

You can make a lot of money by selling your hand crafted products. You can start small and sell your items part time. As your inventory and customer base grows, you can actually make your living from the products that you create and sell. It can be very rewarding financially and emotionally. When people compliment you by buying your creations, you receive an emotional and creative boost.

The beauty of starting a business by selling your own hand crafted items is that you do not have to start with a huge inventory, rented office space, rented workshop space, and employees. You do not have to take out a loan or secure venture capital to get your business started. You don’t have to start by hiring a lawyer and accountant. You don’t have to incorporate or form an LLC.

If you are going to start selling your own products, you need to focus on the products and how you are going to sell them. All of the things mentioned above will not sell your products. In fact they could be a distraction and major drain on your available capital.

You can start your business with whatever extra money you have to spend and just a state sales tax number in most states. If you are selling in a place that does not require that you collect sales tax, you may not even need the tax number to get started.

Concentrate on your products. Make them the best that you can make them and always keep in mind the cost of the supplies that you put into each item. If you plan to sell your items, you have to be able to offer them for a price that people will be willing to pay for them. Sometimes you can put too many expensive materials into one item and you will not be able to sell it for as much of a mark-up as you would have if your materials would have been a little less expensive. You have control over the amount of expense that you put into each item and you need to be thinking about the potential selling price when you make your items.

When you are selling your own hand crafted items, it is best to start your business slow. You could borrow a bunch of money and hire employees and make allot of products, but if your market research was flawed, you could loose all of that money and waste allot of time. If you start small, you will learn lessons that will not be so costly. You will be able to build on your strengths and avoid making the same mistakes again.

Always start by doing research. The research that you do to see what products similar to yours are selling and which ones are not, will be the most valuable information that you will ever receive.

As you get experience making and selling your products your business can grow and then you can set up your business structure in the way that you feel will be best for you. But these are things that you do not need to worry about until you actually have a viable business. The way you create a viable business is not with lawyers and accountants. The way to create a viable business is with a product that sells.

Don’t get me wrong, I am not saying that you don’t need lawyers and accountants. I am just trying to make the point that, if you want to be successful, you must put your efforts into your product and sales, first. Without that, you do not have a business no matter how you set yourself up legally. As you grow you will get to a point where you will need the services of a lawyer and accountant, but first things first.

The way that you choose to promote your product will affect the perceived value. Promoting your product does not have to cost an arm and a leg. You can do things that are fairly inexpensive that will increase the value and sales of your items.

Making hanging cards that tell about you as the designer is an inexpensive way to promote your product at the point of sale and even after. With hand crafted products, buyers want to know about the designer and creator of the product. It makes the piece more valuable to them.

Business cards are an inexpensive way to promote your business. If you can afford to have them professionally done, your potential buyer will get the impression that your product is a quality product, thus raising the perceived value of your product.

If you are responsible for the display for your jewelry, this is a form of promotion that will effect the buyer’s perception of your product. You may want to buy some commercially made displays. You can make your own display items, but be sure that the overall look of your display is clean and professional. A shabby or cluttered display will reflect poorly on your product.

If you are selling your products yourself at fairs or shows, the items mentioned above are the promotional tools that you have that will affect your sales. You should pay close attention to them and spend some money on making your display look attractive, clean, and professional.

You may want to have a post card or tri-fold brochures printed with information about your product, yourself, and contact information. You can also put your items in a gift box labeled with your company name. These things will help your customers remember you and make it easier for them to recommend you to others.

The money that you spend on these types of promotional items is usually very well spent. It will make you look professional and will make it easier for people to contact you for more products in the future.

The absolute best and most cost effective way to promote your business is to start a mailing list. People that like your products will want to know where you will be exhibiting next or when you have some new creations. You can communicate directly to them through the mail or even better, through e-mail. If you let your customers know when you are going to be exhibiting in their area, you will have business when other do not. This is the most powerful secret I know to effective promotion.