(side note: I got a lot of great feedback for my last post, publicly and privately. In the few instances where someone thought my advice was not applicable to themselves, I noticed that they ignored the everything takes time theme.)
Part 2: Inventory and Pricing
In my last post, I mentioned a show that was 3-days long, where I grossed $9000 in sales. I have done this show for the last three years. I grossed $5200 in 2013 (which thrilled me at the time), then $7700 in 2014, and $9000 in 2015. The show was essentially the same for these three years, so why the steady increase in sales for me? Because the beginning of 2013 is when I started using an inventory tracking system. I suppose a business school professor would call it basic market analysis. It’s not that complicated, the tools required for this system are a spiral notebook and a pen.
Years ago I would make a written list of my inventory before each show. This was not in a proactive planning way, it was just so I knew how much work I had. This was the beginning of my system, but as the years went by it grew more robust, and my attitude switched around completely. Now, I am not just recording how much work I made, past-tense. Instead, I decide far in advance how much work I need for a particular show, plan my production schedule to meet those needs, then write down the inventory list before each show to make sure I’ve met my target. And here’s what I started doing in 2013 that turned this into a complete system: At the end of every show, before I start packing down, I make a list of the leftover pots.
Here are my spiral notebook pages from the $9000 show. These are the pots I packed:
And these are the pots I brought home afterwards:
If you were scratching your head at my above statement “I decide far in advance how much work I need for a particular show” here is the explanation. The “before” and “after” lists that I am accumulating over time are telling me the answers. Sales patterns become clear. Bring more of this, less of that, stay steady with this, eliminate that altogether. I use all of the lists together to see general trends. And when planning for a specific show, I will study the lists for that show from the previous year for guidance.
Here’s a specific example: In 2013, I packed only 12 mugs (which seems so clueless to me now) for the show that I’m using as an example here. Based on sales, I increased the mug inventory every year. In 2015, I packed 27 mugs, and brought home 3. At $35 per mug, that’s an additional $420 in sales, just in mugs alone.
Everything takes time, because when you start doing this, you can only make broad guesses. That’s ok. Once I started really paying attention to this, I did maybe 20 shows before I started to feel some clarity. And I am not done with this process. It is an ongoing slow march of improvement.
Now on to the subject of pricing. I know this is a subject that new sellers find confusing and distressing. It’s not supposed to be easy, and there is no “formula.” Just like inventory planning, proper pricing can be figured out over time.
When I am offering a new design for sale for the first time, it will start out with a low “prototype” price. If sales are poor, the item will be eliminated (hey I thought an individual pie dish was a great idea, nobody else agreed). If it sells well, then it will go through a feeling-out process to arrive at the right price. I will keep inching up the price, sometimes even raising the price in the middle of the show. In my experience, sales will screech to a halt when I’ve overshot the right price. Even by a few dollars, it’s funny how sales will stop cold. When I notice that happening, I will back the price down to the last price that sold well, and call that the “sweet spot.” This process takes several shows, sometimes up to a year.
If a new design makes it this far, then it progresses onto another level of analysis. Does the “sweet spot” price match the amount of material, labor, and kiln space that this item consumes? Sometimes the answer is “no,” and therefore the item is dropped, even if it’s a good seller. An example of this is my now discontinued Personal Teapot. It’s “sweet spot” was $48, but that was not enough to make its complicated production worthwhile (the pot consisted of three parts that had to fit together, and one of them was prone to breaking).
Once a new item has made it through all of this vetting, and officially added to my inventory, that doesn’t mean its price is carved in stone. I am always open to tweaking the prices. In fact, the system that I use for inventory planning is also how I make ongoing decisions about pricing. When I notice trends in sales, my first reaction is to “pack more” or “pack less.” But sometimes “charge more” or “charge less” is the better choice. For example, my dinner plates were always selling out. But plates are hard to stack into a kiln, and I did not want to dedicate more kiln space for these. Therefore, producing more was not a attractive option, and prices went up instead.
Are you getting the sense of how long this takes? Just like with inventory planning, it’s ok that you can only make broad guesses at first. WIth time and experience, the answers become clear.
My final point about pricing … everyone has the right to choose their own prices. Respect that boundary, and defend your own. Don’t let anyone tell you that your prices affect other potters. This is complete baloney. Why? Because pottery customers are not shallow people. They shop based on quality and appeal, not by price. When I am figuring out the “sweet spot” prices for my work, I am not figuring out “the going price of mugs in general” but rather I am determining “the appeal value of my mug.” If I’ve done it correctly, I’ve learned that it doesn’t matter if a nearby potter is charging half as much for the same item. Conversely, if my mugs are cheaper than a nearby potter’s mugs, I know that I am not affecting that person’s sales, as long as they have figured out the correct appeal value of their mugs. (And if they have misjudged their appeal value, that’s not my fault.) So don’t spend a minute worrying about anyone else’s prices. It’s much more productive to worry about making the most appealing pots you can.
I combined inventory and pricing into one blog post because these two subjects are two halves of the same thing, otherwise known as a line of work. You’ve probably noticed by now that I don’t make random pottery designs, pack a random inventory, slap on random prices, and shrug my shoulders at the results. I don’t really make individual pots at all. I make a line of pots, which includes about 40 different designs and their “sweet spot” prices. The designs and the prices are developed over a long time. It’s rare for me to make changes to my line, and these decisions are made with a great deal of analysis and proof. All of this time, effort, and commitment means that I show up for every festival with a booth full of proven good sellers, all priced correctly.