As the recession bites, take a minute now to consider if you can be all things to all customers. Can you really sell at the retail prices that will keep your distributors happy AND give your direct retail customers a good deal? After all, one of the advantages you have as a small company is that you do not have to do a 1 to 8 or 1 to 10 cost/price ratio, as all the "biggies" must. You can sell for a price that makes your goods far better value - and in the current climate, that counts more than ever.

We solve this dilemma by setting our recommended retail prices higher - for distributors - and giving our direct customers a deep discount. It's one way and seems about as fair as anything can be. But is it the time to consider other ways? Look at your customers, your distribution and your prices (and, as ever, costs) and see what's really working and what needs to be changed.

If you can provide value that's way better than the corporates can - whether because of individualism, innovation, price or a bit of all three - don't hang back, now's the time to make this happen.

A few months ago we sold some bags to a shop that hasn't dealt with us before. When they received their shipment I got a worrying email in which they said they were disappointed that our messengers show our online shop address. They wanted to sell our bags for more than we charge and felt that customers would be turned off if they found out the retail price we charge.

How did I write back? By explaining that we are not keen to sell non-branded pieces (we work hard to build our brand) but also that nowadays, whether or not you put a website address on a tag is largely irrelevant. People will find you by your brand name anyway - or more simply by googling some of your more distinctive features. We would love to go on working with this shop, and I hope they've thought about this and will order again.

I tested our what I said recently by guessing what a customer googling for us would be likely to do. Here's the result of "cats baroque prague" (our care and origin labels say that the bags are made in Prague, even if you ignore the Baba Studio brand).

If you are wholesaling to other shops you'll hit this pricing issue time and again. Because, as I explained to the shop owners, with or without a website address, customers will probably be able to find the designers of most products (provided they are pretty distinct) if they really want to. Things have changed totally - and now a large part of the world is well and truly networked. Nowhere to hide, even if you wanted to!

So what do you do? Do you charge your own price and let retailers set theirs - and risk annoying the retailer if you end up under-cutting them? Do you charge the retailers' retail price from your own shop - and risk scaring off customers because the price is too high?

Do you refuse to wholesale? (many now do) This certainly solves the problem but may be very limiting -and a bad business decision in a recession.

There is no definite answer. But if you hope ever to sell your pieces through shops you will need to begin with pricing levels that shops could live with. And be aware that customers will be able to make comparisons - whether you or the shops want them to or not.

People who are newly starting a small business run a real risk of thinking, "What can I make?" rather than, "What's really wanted?".

The overwhelming number of cowls and fingerless gloves on Etsy provides a wonderful example. When did you last, honestly, wear a cowl? When have you found fingerless gloves preferable to ordinary gloves with fingers?

The reason for this stuff is that it's far, far quicker to make than full-sized scarves and conventional gloves. It uses less yarn too. So you can sell it for a much lower price - within more people's budget. AND it can look spectacular in a photograph. Seductive for a maker, no?

But... it's a trap not to fall into. Ultimately, these products are - in person rather than in a flattering picture - not all that practical or desirable. Okay, make them beautifully and photograph them well and you may well sell a few. But do you honestly expect to sell many? Do you think there will be repeat customers for something as quirky and niche (and maybe not in a good way) as this?

When you are planning your products, ask yourself first and foremost what customers really want. If it's something you can't make to realistic timescales or budgets, consider if there is another way - maybe you can use some ready-made components? Perhaps you can get lower-cost (please not lower quality) supplies? If there is no way - move on and think again.

In the end, you can't compete by offering people something they don't really want. You CAN compete by offering your own beautiful, unique or better version of something that there is a real demand for.
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Small disclaimer. This is not aimed at any particular Etsy sellers, including those shown in the screen shot. It's intended just as a general observation and comment.

Today I got up feeling better and more energised than I have for a few days and settled down to plan our bags for the next six months or so:

• I counted a final 2042 tarot bag prints - which have taken a month to produce. There are more than 100 images in all and it was a lot of work. But exciting.
  Never before have we done even as many as 200 bags in a batch, but by working this way we think we can considerably cut costs and so keep final prices down. This will be important next year. But doing so many at once has felt slightly crazy. Maybe it's another sign we are growing up as a studio.
  
  
• I designed a new wearable pouch. More on this over the winter but the intention is to go ahead quickly with this one as it will be beautiful, useful but also priced well below $30. Again, this is the result of thinking for a couple of months now about how we can offer some very affordable designs while actually improving quality. It will very quickly be available in ALL the tarot bag prints too. This is good I think.
  
  
• We discussed Alice, animal toile and other cushions. Now whatever we do, these can't be low prices - though they will be way lower than, for example, cushions like these - and I think at least as good in design and quality. But we have done what we can and now we will go ahead with a smaller batch than originally planned, just to test the water. They are gorgeous, quirky and special. I think we'll be fine with these.
  
  
• We confirmed the way we want to go on the shoulder bag saga. For nine months now I've been trying to produce a new shoulder bag to have in addition to our current one. Finally we are getting there though this one has been a continuous story of two steps forward, then one back. Now at least we have an agreed plan.

1. Find ways to keep your costs down. I've said it before and I'll probably say it endlessly through this "crisis". At the same time though, don't drop your quality whatever you do.
2. Think about new products that provide really great value. Use your creativity and your abilities and see what you can come up with. Test out your ideas and then - get going.