How to run a sale in your Etsy shop without cutting into your profits
Hey there and welcome to another episode of the Simplify Your Sales podcast! And today, with the holidays soon to be approaching (believe it or not), we’re diving headfirst in talking about sales promotions. Specifically, one of THE most frequently presented objections to running a sales promotion. It’s one I hear A LOT and I want to tackle it head on so that if you have this excuse at the tip of your tongue, you leave this episode today with a new perspective and some ideas on how you can make a sales promotion work in YOUR unique shop.
So the objection we’ll be tackling today?
“HOW CAN YOU RUN A SALE PROMOTION IN YOUR SHOP IF I CAN’T ACTUALLY AFFORD TO DISCOUNT YOUR ITEMS?
And while there are plenty of little “band-aid” fixes out there, none of them are actually addressing the root of the problem– which is your pricing.
Let’s dive on in!
Pricing foundation
So in order to tackle this roadblock, we have to go ALLLLLLLL the way back to the beginning and talk about the pricing of your products.
If you have not priced your products in a way that allows you to run a sale in your shop, they are priced too low. Point blank, end of story.
Now I’m not a CPA or pricing expert, but I have friends that are absolutely BRILLIANT at it and my very, very favorite pricing formula actually comes from Janet over at Paper + Spark. She’s a certified CPA and also an Etsy seller and she’s just dang good with pricing.
HER FORMULA IS: (SUPPLIES X 4) + LABOR + OVERHEAD RATE = RETAIL PRICE
Run that formula against your OWN items in your shop and see what you come up with. I’m willing to bet that you’re pricing yourself too low.
“But I can’t raise my prices!”
Now I can already see into the future and notice some of the pushback I’ll get on this because I’ve been doing this for a while and the same types of comments pop up over and over again:
“I can’t raise my prices to what my items are worth because nobody will buy them. Everybody else is priced so cheaply in the market and I need to compete!”
And while it should go without saying that you should NEVER try and compete in the marketplace for pricing just for the sake of “fitting in,” it can definitely be disconcerting to see handmade scarves selling for $15 when you’ve calculated out your pricing to be at $40.
Trust me, I GET IT.
In fact, it’s the #1 reason I recommend that Etsy shop owners learn how to effectively market their own shops without relying on Etsy SEO– so that the competition (and their pricing) become completely irrelevant, as you’ll be driving people directly into YOUR shop with an understanding of YOUR brand– and they won’t be comparing you to “Faceless shop A” that pops up in the search results for $30 cheaper.
But if you honestly feel like the price you’d have to charge to pay yourself fairly and still make a profit is flat-out TOO HIGH, you *may* need to evaluate what you’re selling and if it’s a viable business model.
It’s a problem that pops up A LOT with time-intensive products like knitted or crochet goods– where the amount of work you pour into them doesn’t align with what you’re able to realistically charge.
And that’s not to say you have to give up that form of crafting entirely– it just means that crocheting baby blankets may not be as viable a business option as crochet caps, which can be completed quicker and sold at a decent profit.
Anyways, I’ll do a full episode about that in the future for sure, but know that if you honestly feel like you CAN’T raise your prices, you may have a problem with your business model.
But with that being said, I want to throw a little food for thought your way: When I was running LittleHighbury, there was shop after shop after shop selling baby headbands for less than $3/each. Some for $1.50. Like, ridiculously cheap. Maybe making $.50 per headband in profit. MAYBE.
I made similar headband styles and sold mine for $10/each.
And I averaged between 25-30 sales/day, often for bundles of 3 that I was selling for $28.
So is it possible to charge *more* than what is considered the “average price” and still makes sales? Yes, absolutely.
Anyways, just consider that some food for thought 🙂
Alright, so moving along, let’s say you’re on board with paying yourself what you’re worth (congratulations, by the way– you’re totally worth it!) and it’s time to bump up the prices of your items.
HOW THE HECK DO YOU GET STARTED?!
I know there’s a lot of ethical dilemma on raising prices and charging more for something that your previous customers, obviously, paid less on. And if you’re a shop that sells supplies or something similar and has repeat customers quite frequently, the fear that your customers will see you as an unethical sell out and not return is a VERY real fear for a lot of people. And I totally get it.
So today’s episode is going to walk you through how to ETHICALLY raise your prices in a way that feels good for you AND feels good for your customers. Because yes, believe it or not, raising prices doesn’t have to be a negative thing.
It starts with hosting a “price-raising promotion.”
And it’s the PERFECT way to raise your prices AND get a boost of sales to boot.
Consider it the “not-sales” sales promotion you never knew you needed 😉
Your Price Raising Promotion
Now, one of my Etsy coaching friends– Michelle– over at M + K Collective— who is a freakin pricing GENIUS, uses a similar tactic and calls it a “Price Raising Party” which I love so much.
But before I had even heard of that awesome name for it, I’d been using this strategy for a while because it’s the perfect solution for when you’ve obviously priced your products too low and need to raise the prices. In fact, when I *first* introduced baby hats to my Etsy shop back in 2016, this was a strategy I used when I realized I wasn’t making *quite* the profit on them that I wanted to. It was easy, effective, and worked like a charm.
But you’re probably wondering what the heck I’m talking about. Fair enough.
Essentially for a price raising promotion, you’re going to host a sale promotion…but nothing in your shop is actually going to go on sale.
Wait….what?!?! Crazy, right?!
Instead, you’re going to position it as a “last chance” sort of sale where it’s the final opportunity for your customers and audience to purchase your items at your current pricing model because you’ll be raising the prices after the promotion is over.
Now, while it may take a little bit of extra work to run a price-raising promotion instead of just raising the prices in the dark of the night, the benefits far outweigh the effort:
You are building goodwill with past customers by letting them know ahead of time that the prices are going up and that you want to ensure they get what they want at the price they’re used to before that happens.
You’re going to get a spike in sales at your normal, undiscounted pricing, because FOMO is a very real thing and people that are on the fence are going to have a solid reason to take action. I mean, how’s that for NOT cutting into profits?!
Structure for a price raising promotion
At the very basics, a price raising promotion is run the same as a traditional sales promotion– you’re going to promote it in two separate phases: The pre-promotion hype-building phase, and the live-promotion sales phase.
PHASE #1: THE PRE-PROMOTION PHASE
During this phase, you’re going to focus alllllll of your content — meaning the emails you send, the social media posts you post, your shop announcements and updates– EVERYTHING– on raising awareness for your upcoming “price-raising sale.”
You can start laying the groundwork foundation for this about 2 weeks prior to the actual sales promotion, but you’ll want to REALLY hit it hard the week leading up to the promo. Your goal is to make sure that NOBODY can email you and say “But I didn’t know you were raising your prices!”– we want to make sure EVERYBODY has a chance to shop the current pricing model before it goes up.
And believe it or not, you’ve GOT to mention it more than once to make that happen 😉 I know, I know that you’re worried that you’re going to “annoy your audience” and get unfollows or unsubscribes but here’s the deal: If they’re going to unfollow you because you’re trying to share a good deal with them that will save them money, they weren’t ever going to buy from you in the first place.
And while vanity metrics FEEL good to look at, at the end of the day they don’t do a dang thing for your bottom line except stress you out about saying the wrong thing and annoying them. I mean, tell me I’m wrong 😉
So hit up this pre-promotion phase HARD so that everyone and their dog knows about your upcoming sale.
AND THEN PHASE #2: THE LIVE-PROMOTION PHASE
Now, just because you’ve talked about your sale #nonstop BEFORE it went live doesn’t mean you can just “peace out” when it’s go-time.
While the #1 problem is definitely people being timid about mentioning their sale and potentially annoying customers, a close runner up? The shop owner that posts about their sale, doesn’t get the immediate rush of customers they were hoping for, and then hides under the covers for the next couple of days instead of shouting loudly and proudly about the promotion.
Don’t be the person that abandons ship + sale mid-promotion! And yes, my dad-joke loving husband and father would totally approve of that pun.
So often we think that if we don’t have this MASSIVE success on Day 1, the sale is a lost cause and we should just wave the white flag of surrender (but not too high, because, you know, we don’t want to draw too much attention to ourselves).
But after YEARS of running promotions for physical AND digital products, that “strategy” honestly couldn’t be further from the truth.
YOUR BUSIEST SALE DAY WILL USUALLY NOT BE DAY 1, OR 2 OR 3– BUT THE LAST DAY.
The reason? Human beings are procrastinators. We get busy. We have YouTube tabs with cat videos open. There’s a new Buzzfeed quiz to take. There’s “just one more scroll” on Pinterest.
Basically, if it’s there is any sort of commitment involved (like purchasing a product), we will almost always wait until the last possible minute to make a decision. And that absolutely includes shopping online.
Think about how many shoppers are in the stores on December 23 and 24– they’ve known for a whopping 365 days that Christmas was coming, and yet here they are, just a day or two before Christmas, running around like a madman trying to find that perfect gift for their significant other….even though they’ve known that they needed a gift for a FULL YEAR.
And that’s EXACTLY why you need to see your sales promotion through to the end– ESPECIALLY on a price-raising promotion. People will absolutely wait until the last day– sometimes the last hour– to snag that deal because they’re on the fence. And then the FOMO kicks in and they take action and BUY THE DANG THING. Yes, it’s frustrating, but it’s human nature and we just have to roll with it.
So make sure you are showing up EVERY SINGLE DAY of the actual sales promotion reminding people to shop. If you abandon ship and skip the last part of your promotion, I GUARANTEE you are leaving buckets of money on the table– money that SHOULD be in your pockets!
See it through to the end and I promise you’ll be glad you did!
And there you have it– the trick to raising your prices, making a fat wad of cash, and feeling good doing it- the price-raising promotion. Thanks for listening to this episode. If you liked what you heard, make sure you subscribe to the Simplify Your Sales podcast over on iTunes where I share a new episode every single week. And if you’ve found ANY sort of value in this episode, I would head over heels LOVE YOU (in a non-creepy way, pinky promise) if you left a review so that this free resource can get in front of as many eyes as possible.
Thanks for tuning in and I’ll see you next week, same time, same place, teaching you how to build a business that supports your lifestyle…and not the other way around!