Defining Your Worth March 11 2015 10 Comments
I've seen variations of this blog post circulating for a number of years now but after receiving some less than favourable feedback this morning, I felt compelled to add my own voice to the mix.
As anyone reading this blog post will already know, Sugar & Vice is a small, two-person operation. We work very hard and spend a lot of money to cultivate a professional image, one that sometimes belies the humble reality, but at the heart of this business is just two hard-working souls who aren't immune to taking harsh criticism on board. We're grown-ups, we learn from our mistakes on a daily basis and have developed a thicker skin over the years but sometimes something happens that makes me want to speak up and in this case I want to address our pricing structure, and that of most of the artisans that I know too.
I am the first to acknowledge that in recent years, our pricing structure has evolved and many of our pieces are more expensive than they used to be. There are a couple of reasons for this. Firstly, with each year that passes we have one more year of valuable experience and practised skill under our belt. As with any job, when you gain experience and get better at what you do, you're in a position to ask for a raise. Same thing. Our pieces aren't staying the same and getting more expensive, our pieces are getting better and as a result are worth more.
Secondly, and most importantly, as we've grown, so have our expenses. When we first started out we weren't even earning enough to have to pay tax. Ah, those were the true salad days! Now, we pay almost 30% of what we earn in taxes and national insurance, we have to buy larger quantities of materials, we have to buy better materials and we have to provide a certain level of service, all of which boasts an increased price tag to us, some of which we have to pass on to our customers in order to simply be able to live.
To make it easy to digest, here's a breakdown of how we come to decide on the price of any piece;
1. Taking into account the 8 years of experience and skill that allowed us to design the piece - Our designs aren't something just anyone can do. In my head that sounds arrogant, but it's simple fact. When I invite a plumber into my home it's because I can't fix my broken sink myself, so I'd expect to pay them accordingly. Like any job that requires a level of skill, that's valuable and has to be accounted for.
2. The time involved - We laser cut in-house so that means that instead of out-sourcing and paying for the job, we have to take the time to set up the cut files and actually cut them. For designs that incorporate many different pieces and a variety of colours, this can take quite some time, but it allows us to offer custom options on pretty much everything we do and we get to over-see the quality of the techniques used, which can often change the over-all look of a finished piece for the better. (Attention to detail is incredibly important to us!) We also have to assemble the chains, put the designs together very carefully, allow the glue/chemicals time to dry/bond, hot-foil print the box it goes in, organise the packaging, etc. The whole thing can be a very lengthy process and as the old saying goes "time is money".
3. The cost of materials - How much did the acrylic or wood cost? Some finishes have to be imported which incur vast customs fees. How much did the chain and the components cost? Some are more expensive than others, some are difficult to source, gold can be pricier than silver sometimes, etc. How much were the glue or chemicals required and how much were the apparatus needed to keep us safe while handling them? How much is the laser cutter itself? The list can seem endless at times.
4. Other hidden costs - As a business, we have to pay tax by law. That means that assuming we earn 50% profit on each piece we sell (after re-ordering materials, website hosting, photoshoots, PayPal fees, payment processor fees, newsletter software fees, website gallery fees, Etsy/Folksy/Rakuten fees, monthly payments on the laser cutter itself, etc.) we lose nearly 30% of our profits to tax and national insurance. 30% of 50% is a huge and often disheartening dent on a small businesses income.
Acrylic - £2.50
Metal components - £2.50
Box with in-house printing (necessary to protect the necklace in transit) - £1.20
Padded envelope, receipt (required by law), address label - £0.30
Labour time - incalculable
Time to package and post - incalculable
PayPal/payment processor fees - £1.19-£1.50
Postage - £0.93 - £3.20 (depending on the size of the parcel)
The most favourable calculation would leave us with £14.63. Almost 30% off that would be taxed, leaving us with £10.27. Between two people! The worst-case-scenario calculation makes me want to run away from my own brain.
Then consider all the weekly hours spent replying to emails, promotion and correspondence via social media, sending invoices, stock-takes, various paperwork, properly disposing of used acrylic and waste, post office runs, buying stickers, sweets and business cards to brighten up packages etc, none of which we get paid for.
So there we are. It's not a pretty breakdown, but it's an honest one and I thrive on being as transparent as possible, both in my personal and working life. We're not a big business so we can't operate like one, but this means we can be personable and reachable and available.
On a very personal level, obviously bad feedback hurts, but as a level-headed grown-up I fully acknowledge the need to understand that what you do will NEVER appeal to everyone. Unless you're Beyonce. Accepting that nugget of useful information is liberating, but taking it for granted can lead to bad business ethics and so this is our balance. We're not a couple of untouchable Scrooge McDuck figures that laugh into our champagne whilst sitting on our thrones of an evening, we're just two approachable people who work very long hours trying their best to create things that will make people smile, which makes us smile. And that's the only way we know how to run a business.
Never be afraid to define your worth on your own terms and remember that if someone can't see your value, or the value in what you do, then don't let it hang like an albatross around your neck, there are plenty of people who do see your value, even if they're not as vocal.
Loads of love,
-Sarah & Matt.