Why Pricing Your Work Feels So Hard

Welcome to Make Good Things Happen, a podcast for makers in business presented to you by Angela
D’Alton and Renee Baker.
Welcome to Make Good Things Happen, Season 3, Episode 5. Thank you for indulging us in a brief
break. We were both a little under the weather and we just couldn’t do it.
and so we had had a break how are you feeling now renee feeling a lot better today how about you
there’s nothing like that first day when you feel normal after you’ve been sick for a couple of
weeks with the flu like that first day you think oh my god i’m invincible yeah this episode we’re
going to start with making news from my perspective not entirely confidently and i’ll tell you why
because it’s about money renee used to have quite a talent for mathematics particularly in her
school years and has always been interested i would say in economics and as such is regularly
updated on what’s happening having said all of that i just want to make sure you know we are not
accountants and we do not give financial advice so we’re going to start there i just want to make
sure everyone’s very clear about our background and our credentials before we get cracking on this
topic because Renee, it’s about the surcharge. So we saw in the news recently that the RBA have
banned a surcharge. And you know what? That’s all I know. And it is something that’s come up in the
news. So you might have seen various outlets talking about it. But yes, the RBA, the Reserve Bank
of Australia, did release a statement regarding… surcharges that are being passed on to consumers
through paying using your credit card so for example when you go to a cafe and you might pay what
is it at the moment $10.70 for a small coffee and then you have an extra 50 cents thrown onto that
if you decide to pay with card and that’s something that we’ve sort of seen slowly increase I think
we talked about it on the podcast possibly in season one but it is certainly something that we’ve
seen a trend in over time and I think that’s actually something that the RBA point out in their
announcement that while there has only been, I think it was around 16% of merchants doing that
surcharge, it’s increased or it’s doubled since 2022. And so it’s growing.
It’s showing an upward trend, I suppose they would say. The news that came out was that, and this
is relevant to anyone who might have recently implemented a surcharge on their, for example,
Square system at a market or anywhere that they take payments, is that that surcharges will no
longer be allowed to be passed on to consumers when they’re paying debit, prepaid or credit
payments using FPOS MasterCard or Visa cards. I think it’s interesting because one of the other
things that I suppose is tied up in this story is that obviously at the moment I’m bouncing around
but Angela and I did kind of struggle a little bit to know what to talk about at the moment because
we feel like there’s a lot of news stories that aren’t. overly positive in the world and I feel
like we’ve kind of lived in that space for so long now and we try to focus on things that are about
making good things happen and so it’s hard for us to sort of keep showing up and saying yeah look
it’s it is tough out there for makers we don’t want to rename the podcast to pushing shit uphill
maybe we should maybe we’ll get more There has been probably no surprise to anyone.
Inflation that has been rising and costs have been going up and we are seeing that now even more so
with the petrol situation that we have globally but in Australia particularly.
And I think one of the things that’s interesting about that, maybe not interesting is not the right
word, but we’re seeing a more rapid. increase of people passing on those extra costs,
businesses passing on those extra costs. So suddenly everything’s costing 30% more because petrol
costs 30% more, for example. I guess just the side note is that it’s interesting in the context of
that because this is another one of those examples where costs are actually going to most likely
rise as a result of this change. It kind of sounds like good news to say, oh, surcharges are
banned, but that… surcharge needs to be passed on still somehow. And this is,
I guess, where we are going to just link you to the article because we’re not going to explain it
in detail where we could get it wrong. But there is a cap that’s also being implemented on how much
the banks can charge the business for that payment fee. Every transaction, you’ll have like a
percentage charge from your bank and usually a processing fee. We see that in PayPal.
Stripe and those sorts of businesses as well. Banks do the same thing and so I believe that there
is a cap on that but there is still going to be some level of fee that we’ll no longer be able to
add on the end of the transaction when shopping but of course that’s going to have to be passed on
at some level. It’s just interesting to know whether these sorts of stories that feel like they’re
in the best interest of consumers are actually going to help or who they’re going to challenge and
it’s probably most likely the small business owners that are managing this. Almost definitely it’ll
be the small business owners that will be the ones that will have to find a way to absorb that cost
into their already challenging prices because it’s such a price sensitive market right now everyone
is cautious about every single dollar so removing the ability to transparently pass on that
surcharge to your customer and absorb it yes okay the banks are going to be limited in what they do
but it’s still there that will immediately mean that it will increase prices is that bad maths well
I don’t think so I mean I’m not probably as across the maths of this either because while yes you
did say I was into maths when I was at school I liked the maths that was more to do with the
algebra and geometry and I guess what I would call the more creative maths I certainly was not
interested in compound interest and percentages and fractions and those sorts of things the
conversation have done a pretty decent job at breaking it down they also have a section in there
for small businesses and how this might impact you what does it actually say there The RBA says
most small businesses will be better off from October as 85% of small merchants don’t add a
surcharge now. For smaller businesses that have had surcharges like a local pharmacy or independent
grocer, the good news is their overall card fees will now be lower. They won’t vanish entirely.
That leaves them with limited choices, absorb a hit to margins or lift prices. Now, there you go.
That’s a pretty good segue into what we wanted to talk about for the meat of this episode in our
next segment. So I’m happy to roll. straight into that if you are i am happy to do so renee this is
the making good things happen segment as was so well introduced and blended into from our previous
topic to provide a little bit of advice about pricing as a result and surcharges being one of many
things that you have to consider when you’re setting your prices amongst all of the other things
that it costs you to run your business and ultimately what you’d like to earn it’s come up a bit
for both of us recently in some of the training or the mentoring that we’ve been doing one of those
things renee you mentioned to me was earnings and capabilities You said something very eloquent
before I hit the record button. Can you say it again? Yes, of course. We’d also like to talk about
the expenses side of running a business. But I think, yes, to start with, because it’s not always
something that people feel like is money related or price related, but it is such an important
piece of this puzzle or this pie that we often refer to when we’re training. You’ll never hear us
talk about pricing calculation. And the reason for that is because there are so many moving parts
and every single business has a unique set of circumstances. Absolutely,
yes, there are textbook things that you should think of and we will talk about those. But it is
really, really hard to say A plus B equals C when it comes to pricing maker-based products because
there’s, like I said, so many moving parts. There’s moving parts, but I think there’s also elements
of value that aren’t. easily measurable elements that don’t have a measurement that go into it that
you can easily include in a formula like that i think for sure and one of the biggest one or things
being is that as someone who might be making their product from start to finish or at least
partially making it we have to factor in how many of those things let’s just say a product can be
made in a period of time. And I always like to look at a 12 month period when doing pricing makes
sense to me to work in a calendar year. I not only look at expenses across that year, which we’ll
talk about, but how much can I physically make in a 12 month period? And that might be from…
a financial point of view so it might be how much money do i have to invest in product over the
next 12 months how much time do i have available to me to make this product do i rely on external
resources like manufacturing that runs on a specific schedule or other people that I need to make
sure that they’re available or am I relying solely on myself to make it from start to finish which
again of course has a whole other set of risks associated because like we’ve just said you know
sometimes you might be wiped out with the virus for two weeks and you can’t be there in your studio
or are you working in a medium like for example ceramics that has time associated to the process
where you have to let things dry and you have to allow for glazing time. firing time and all these
extra bits and pieces that mean that you can’t just sit down breakages breakages there’s just a lot
of things that you have to factor in you might have started this sort of thought process by
thinking yeah I’d really love to sell a hundred thousand dollars worth of product in a year because
that means I have enough money to pay for my business expenses and pay myself and invest back into
the business but when you actually think about it you don’t have the capacity to make enough
product at your current pricing in order to make that much money It’s one of those ones can be a
bit of an eye opener. It can feel like a bit of a penny dropping moment. When I teach this, I often
see people’s faces falling. Yeah. And I think that’s one of the hardest things about having this
information and not being able to provide this easy formula in amongst all of the things that have
to be considered. It is a hard truth because you’re entering business and it’s unfortunately a very
realistic thing. for someone who has created things from their personal experience their
vulnerability their dreams their creative life it’s such a hard thing to teach because of that but
having this information will actually make you make better decisions and whilst it might sound like
a big deal if you start with your capacity as renee has mentioned it means that you’re being kind
to future you and making sure you’re taking into consideration the reality of your current
situation and your current capabilities and whether or not you’re going to be able to do this thing
plus if you think you can’t it actually just sparks a moment of creativity do i then need to change
my products maybe i make five things a year and i charge a really high price and then that dictates
your marketing campaign so It isn’t all bad news having to do this exercise but it is the reality
of it and it does inform the decisions you make so you’re not just entering into a situation that
you end up burning out from but also broke. That’s right. You kind of touched on this before when
you talked about the varying costs and expenses and things that we sometimes can’t put prices on
and that is so true with artists and something that we very much. undervalue sometimes I’m not
speaking for everyone but I have seen it in a lot of people we undervalue this within ourselves
because it’s hard to feel worthy when you are want of a better word indulging in a creative pursuit
but I think it’s really important to feel confident within yourself and within your skills and know
that it is valuable and you do have something to offer and it’s okay for that to therefore cost
something because it comes at a cost to you and I think that’s what we see. a lot particularly with
makers that we work with who might be neurodivergent for example or managing invisible illnesses or
even visible disabilities is it’s okay to say that i have a limitation and my capacity is only at
this much therefore my time that i do have to spend on this product that you want that is desired
by you is going to come at a cost because i value that time that i have that good quality time
where i feel strong and capable and able to do these things it’s a really hard mindset to get into
and I you know I’m not saying that it’s easy but I just want to give you that if you’re listening
to this that encouragement that it is okay to value that time and like Angela says that might mean
that you are only able to create a limited collection of work each year and therefore in order to
sustain the practice that you want to have for yourself that means they’re going to have to cost a
certain amount of money and that’s up to you to decide I mean isn’t that what art and creativity is
as well like there is that sort of scarcity element to it because it’s not mass produced and it’s
not coming from a factory and so therefore it’s prized and valued in that sense it comes back to
the value perception that you’re putting forward as well in your marketing this comes back to the
thing that you mentioned at the top of the episode this is the pie these are all of the different
things that affect pricing marketing strategy how you spend your time it’s important to create
these frameworks to operate within because as creative people when you’ve got these frameworks to
operate within you know what you’re doing you can just solve the problems you can just do the
things you can solve that problem every day my problem today is that i’ve commissioning myself a
piece that i’m going to sell in three months time whatever it takes to give yourself permission to
do the work be creative but also value your time and price your items properly absolutely and i
think it’s not the burden of makers to wear this excessive consumer culture that we have i think
again we’ve talked about it on the podcast before in fact i think it was in the very first episode
what does eight dollars feel like that idea of people redecorating their entire house every season
sort of almost like stripping it bare and having all new art and all new vases and all new throw
cushion just doing that all the time it’s not our job as makers to keep up with that having your
work priced appropriately not only is it i feel like almost a form of activism within that it’s
about pushing back on the eight dollar vase and saying no yeah vases are something that are
beautiful and special but you can either find one at an op shop because there are many there or you
could save up for one and have one special gorgeous beautiful vase from a maker that you then pass
on down the generations of your family it’s tricky not saying that that’s the problem that’s going
to be solved overnight either no but i think you’re right it is an act of anti-capitalism and i
guess that also brings me back to something that i thought of before when you were talking about
the pricing and there not being a formula. And further to that,
the competitors that you have do affect that formula. And that formula that you do end up coming up
with may not apply to a small item as much as it does to a large item. Like it’s sometimes size and
materials affects the profit margin that you’re going to have per product. You know,
one product might have five things that you need to put in it. The other one might only have three.
so therefore it gets a different margin there’s so many elements that you have to consider and one
of them being what your consumers will pay and it is important to therefore be educational in our
marketing because if we don’t let people know that these things are made by hand by people who care
who love what they do then there is not that perception of value because it’s not just about the
item people are buying your story and your craft this is just conversations just sparking more
thoughts in me and because it’s a tricky one to sort of get right because you don’t want to feel
like you’re creating a market as in a market of sellers that feels exclusionary or is no longer
accessible for certain people and I think it’s a really tricky conversation to have especially when
we do mention brands like Kmart for example. I don’t want to sort of say oh we should never shop
there because that’s not realistic either. What I’m personally trying to help you consider is that
sometimes we should be asking ourselves these questions before making these purchases like is this
something that i actually need is there another way i can get it am i buying it because i feel like
i want something new can i fulfill that need elsewhere but also to go back to that idea of not
wanting to exclude people there are ways that makers who sell product can consider a wider range
and a wider demographic of an audience to allow for that inclusivity in the product as well.
And so you touched on it with like some things might cost more because they’re big or small. That’s
true. But some things might cost more or less because you are allowing for certain products to be
accessible to an audience. So, for example, you might say I have an original artwork.
That’s my sort of like prized big piece. And I know that it’s not going to be sold for any less
than this amount. But I want to make sure. that this can be accessible to more people.
So I’m going to offer poster prints and postcards that are sort of a $10 price point so that people
can still have access to the work but in a more accessible way. That’s just one very obvious
example but there are lots of different ways that you can look at that. My one hope for you if
you’re listening to this to take away from it is to just think that it’s okay to value and put
value on what it is that you offer and it’s okay to ask for that of your audience because you don’t
owe anyone a cheap price point there’s the added factor of whether or not you know you’re going to
wholesale or or retail or do consignment through galleries or shops Those things are massive
factors in your pricing strategy. And recently I’ve come across people who have said,
oh, I can’t afford, for example, a 30% or 40% hit of consignment fees. immediately tells me that
that person is not pricing their pieces for a longer term sustainability of their business they
don’t have more than 50 profit margin basically in their recommended retail price then they are
probably underselling and they’re probably just running a very expensive hobby that’s one of those
actual pieces of data that i think you can take into consideration when you if you wanted some
quantifiable advice and i’m not even a mathematician that is definitely something i would take into
consideration because if your retail price essentially 50 of that is what your wholesale price is
going to be in general that is how wholesale works in australia at the very least if you can’t
afford to do that that means you’re cutting yourself off from potential marketing opportunities and
sales opportunities and wholesale opportunities if you don’t want to do any of those things should
probably still indicate raise your prices i think that’s an important thing to think about because
you may want to take advantage of those opportunities in the future as you grow and they can help
with growth and they can be one of those streams of income that become a little bit more reliable
but again it comes back to that capacity wholesale is One of the biggest questions,
I think, when it comes to that capacity thing you were talking about earlier, you found that out
yourself firsthand. Yeah, because I think even if you can afford to it from a margin perspective,
like, for example, when you factored in all of your business costs across the products that you
have for sale and including paying yourself and you still have a profit margin that allows you to
wholesale, you might then find I need to sell 50 earrings at my retail price point in order to
cover my expenses and pay myself and do all of those things but then suddenly 20 of those earrings
are being taken out and sold wholesale. So you’re actually getting less. It also comes back to how
much you can actually make as well to support wholesale because it’s all well and good to say, oh,
how amazing would it be to have a wholesale order for 50 earrings? But then you’ve got to make
those 50 earrings and still make your other orders as well and manage your retail shop and
potentially other wholesale orders. There’s lots of moving parts to consider with that because yes,
that’s exactly what happened to me. I sent out wholesale catalogs to a whole bunch of people and
then had a whole bunch of people reply saying yes please and place orders and then I was
essentially stuck making hundreds of earrings by hand and it wasn’t a good situation because I felt
like I was letting people down and At the end of the day, it was still less money than I would have
ever made if I had have sold those products directly. A lot to consider when you’re doing those
things. And of course, if you do want more advice on pricing and you feel like you might want to
join Make Good Things Happen, even if it’s just for a month to watch the pricing videos, there is a
variety of resources on there as well. One of them being a very in-depth pricing strategy
discussion. And we go into the things that you need to take. into consideration probably in a more
structured way than we have during this particular conversation there is like a little bit of a
formula in there but it’s because we will never provide you with a blanket formula it’s more like
here are the things that you need to consider to get to this price yeah exactly we suggest it helps
if you’ve got some data to use after the first year in business or selling things at markets or
whatever it is that you’re currently doing start thinking about this because Starting, as you mean,
to continue with pricing is important in my opinion. Agreed.
This week I have been reading a lot. I think I’ve been reading from the minute I wake up to the
minute I go to bed. It’s got to the point where, oh, I’m unstacking the dishwasher. That’s good. I
can read my book. if it’s sitting on the countertop and glance at it while I’m putting away the
knives and forks. But it’s been actually really good because I’ve maybe been on my phone a little
bit less. The book I’m reading, I’ve actually read, I’m on to the fifth one. It’s a series called
Magnolia Parks and I think it’s a young adult. I’m not sure, but it’s very much just easy reading.
So the first one’s called Magnolia Parks. It’s a series of five books. The second one’s called
Daisy Hates. alternate so then the third’s another magnolia parks daisy hates again the last one’s
magnolia parks it’s a writing structure for book one there’s two main characters where each chapter
sort of alternates between them so it’s written in the first person of that character in that
chapter and then it alternates still remains in first person but it’s a different character and so
it does that for the first book between two main characters it’s like gossip girl which is was a
book series that i read when i was a teenager that was then made into a tv show it’s set in london
so it’s different to gossip girl and it’s just about socialites who are very very very wealthy
billionaires basically that just hang out in couture and fancy clothes and go out to dinner and
lunch and so it’s like playing barbies exactly right that’s a really good metaphor um but it’s just
about you know a crazy entanglement of love stories between the friendship group and they all went
to boarding school and now they’re 21 22 23 sort of thing and it’s just chaos but the second book
is then Daisy hates and it’s based off Daisy one of the characters and then her brother and her
love interest and so it cycles between those three characters but what’s really interesting about
the structure of the book and it’s actually self-published by the author Jessa Hastings so book
one and book two overlap so if you were to read them sort of in sync you could actually follow a
linear storyline it’s from the perspective of all the different characters covering that same
period of time across two books and then the same thing happens for book three and book four and
now i’m just started book five so i’m not exactly sure what happens because then that’s I’m just
back to the first two characters but it’s just so interesting particularly when I went from book
three to book four you already know what’s happened sort of but then you get to just hear other
people’s perspectives of those events and so it’s so interesting then going oh and like you kind of
had suspicions about what they thought and then you’re like oh that is what they thought and
because by then you know the characters and you know what they might be doing so yeah it’s just
like taken me by surprise kind of how into it I’ve got I’m not going to call it trash because it’s
not it is good but it’s very like playful reading in that it doesn’t sort of take a lot of brain
power i think literary snobbery is an un-worthwhile pursuit i don’t think it’s fair to ever dictate
what people enjoy reading it’s like the most personal thing and also they’re reading like exactly
especially when it’s such a solo activity like it’s all going on in your head what the hell has it
got to do with anybody else whether or not it’s worthy of their approval i think it’s great it
sounds really interesting and actually reminds me of you know like crossover episodes on tv they’re
always the fun ones and yeah i’ve recently been re-watching angel which is the spin-off series
from buffy the vampire slayer there’s obviously a lot of crossover episodes between buffy and angel
it’s fun well I think especially because it’s all about relationships really like that’s the
subject matter love and lust and you see how much thinking people do and then how little they say
to one another and how much we think about how we feel about other people and what we think about
what they’ve said and done but then when it comes to the actual conversation what we can kind of
not say and do that then has this ripple effect in the relationship into the future and of course
like keep in mind these are young characters but it doesn’t really matter i don’t think because
it’s still forming the basis of who they are you know as adults and into the future sounds cool it
sounds fun thank you so much for joining us this episode of Make Good Things Happen,
the podcast for makers in business. Of course, if you want to find out more about Make Good Things
Happen or if you would like to get in touch to tell us what you think or what you’d like us to talk
about in future, head to makegoodthingshappen.com.au and I want to thank everyone who’s sending
me emails and really appreciate it. It’s very interesting hearing from people. Thanks again.
Bye. Bye. Thanks for listening to Make Good Things Happen. If you enjoyed this episode,
why not write a review or share it with a friend? For show notes and more, head to mgth.com.au.
This has been a D’Alton Baker production.

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