Christmas & Discounting Handmade Items

Christmas PresentMy local SCORE office emailed a link to recent Wall Street Journal article which discussed small business owners offering deep discounts to be competitive this Christmas.

Three of the businesses were selling handmade items and the third was a spa selling their own line of lotions and things.

All four of them, in my humble opinion got caught up in the craziness of deep discounting and forgot who their customers really are.

All of the companies offer specialty items that would be easily classified as high end. They obviously cater year-round to folks who like the finer things in life and are willing to pay handsomely for those fine things. Yet, all three of them find themselves lamenting over the decision to cut prices in order to “compete” this Christmas. Prices for their items run from about $20 to thousands of dollars. While discounts may lead to a few new customers, did they really think 20% off of a thousand dollar jigsaw puzzle is going to save their Christmas or selling a few custom suits for 50% is going to garner a new, long-term customer?

Think about why people buy high-end items and who they are. Are they buying based on price or based upon the brand, it’s use as a status symbol or high quality? Before I go any further, yes, I know many people shop based on price alone. Retail giant WalMart has built their entire company around that premise. Question is, are WalMart customers the ones buying hand-embroidered linens, luxury spa treatments or a hand-tailored suit?

Let’s put the price point up a bit shall we? I used to live near Hatteras Yachts in North Carolina. The boats they sold at that time started at $1,000,000. Yes, that’s one million dollars. They offer a high quality product to a discriminating clientele. People would come to the showroom via their private planes. They don’t have “sales”.

A million too rich for your blood? How about $500k then? Ever heard of a sale on Lamborghini’s? How about Ferrari? They don’t have “sales” either.

I know, your artisan necklace, handmade jigsaw puzzle or other handcrafted items don’t sell for hundreds of thousands of dollars. But, you’re not competing with WalMart either – at least I hope you’re not.

Consider the whole “Shop Handmade” movement. It’s never been about getting something cheap, it’s always been about getting something special and unique. While I realize it might be a little late for this year, consider other ways to attract new customers.

Take a quick look at one of the most famous jewelry companies in the world – Tiffany & Co.. Betcha won’t see any flashing, neon red “Sale” signs there! Sure, they’re having a number of special events during the Christmas season which offer free shipping or free engraving but you won’t see a single thing that could negatively impact the brand message of high quality and exclusivity that they have become known for.

Instead of “loss leaders”, why not have “entry level” items? Instead of giving 20% discounts, why not offer a less expensive item made with the same high quality? Maybe offer a travel/trial size of your best selling lotion? How about an embroidered pin only offered each year at Christmas? Make something using a different fabric that will have a limited quantity. Or maybe offer lunch to everyone who buy’s a suit during December. The idea is to offer something tempting for Christmas without devaluating your own products.

And, for Pete’s sakes, if you are going to offer stocking stuffers, offer something people might actually want to find in their stocking. T-shirts, tote bags and coffee mugs with your company logo are not going to excite anyone on Christmas morning when you sell some of the coolest puzzles on the planet. Even a single hand-cut puzzle piece keychain would be more interesting than a $20 cotton t-shirt.

A few suggestions for further reading...

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