Should I price lower than my competitors?

You've finished the collection. You laid it all out on the table and stood there thinking, yes, that's good, that's really good. Now you're putting the prices on, and your hand is hovering, because there's a number in your head and you're about to write down a smaller one.

It will sell at the smaller number. That's the problem.

So, should you price lower than your competitors? No. And I want to walk you through why properly, because I've done it myself, twice actually, and both times the low price cost me more than it ever earned.

The sell-out that made me feel sick

My first proper collection sold out in about an hour, and the only reason it went that fast is that I'd priced it 10% under the woman on the next stall. I knew that while it was happening, which is why I spent the hour feeling sick rather than pleased. A sell-out in an hour is just a discount announced to a room that was already willing to pay full price.

It cost more than the margin. My buyers were makers, so their own customers spent the next month asking for fabric nobody could get. And the 10% came off the woman on the next stall too, because the people who cleared me out would otherwise have been buying from her.

Here's what that price really was. Before anybody else had the chance to tell me the work wasn't good enough, I told myself, and I did it with a number.

What selling out in an hour actually tells you

Let me put real numbers on it, because the fear does its best work when everything stays vague.

Say you've made 40 of something and the going rate for similar work is £28. You price at £25 to be safe. That's £120 gone before you've even opened, which is annoying but survivable.

The bit that stings is the clock. If all 40 go in an hour, the demand was there to sell all 40 at £28, quite possibly at £30, over a day or a weekend instead. A sell-out that fast is the market telling you there was room in the price, and you found out an hour too late to do anything with it. At £30 that's £200 you handed back to people who were already reaching for their purse, and in handmade, where your hours are the whole supply chain, £200 is not a rounding error. It's evenings.

And it doesn't end with that one launch. Your regulars watched it happen. Price low once and they learn that hovering at your launches gets them your work at its cheapest, and now you've trained your best customers to treat every launch like a clearance rail. That lesson takes a lot longer to unteach than it took to teach.

Cheap doesn't read the way you hope it does

We price low because we think the buyer will read it as generous, or at least as good value. That's not how it lands.

Nobody buys handmade because it was the cheapest option, the supermarket already won that contest before you got up this morning. They buy because they want the thing, and the person behind it, and the small story of how it got made. Inside that decision, your price is doing a strange job: it's one of the only signals the buyer has for how much you rate the work.

Price under everyone else and the buyer doesn't read confidence, they read doubt. The cheapest listing on the page quietly asks, what does she know about this that I don't? You made the thing, you know its worth better than anyone browsing ever could, and the number is where that belief either shows up or doesn't.

Price from the value and your hours, not the fear

My first digital product went up at £2.50. That was daft of me, and I can say so comfortably because it sold 157 times anyway.

157 sales at £2.50 is about £390. And the thing I had to sit with afterwards is that those 157 people didn't buy it because it was £2.50, they bought it because they wanted what was in it. Even if only half of them would have paid £10, that's more money for exactly the same work, and I never gave a single one of them the chance to say yes. The low price didn't create those sales, it just quietly shrank every one of them.

So set the number from the two things that are actually real:

• The value to the buyer. What the finished thing does for them, what it would cost them in time and materials and failed attempts to make it themselves, what nothing else on the page offers. Their price is a fact about their business, not a ceiling on yours.
• Your capacity. Handmade has a ceiling a factory doesn't. Your price decides how many of the thing you must make to pay yourself, so every pound you knock off is a promise to work more hours for the same money. Would you make that promise out loud?

Notice what's not on the list. The fear that nobody will buy at the honest number is not pricing information, it's a marketing problem wearing a pricing costume. The real question is who already knows the collection is coming. If nobody is waiting, no price is low enough to rescue it. If people are waiting, you never needed the discount.

Building that waiting is the part I'd actually spend the energy on, and it's the whole of the Handmade Launch System, the weeks in front of the date where the selling quietly happens. Built for makers who'd rather launch to people who want the work than discount it for strangers.

The low price is how you reject the work before anyone else gets the chance