Somerville creatives let customers in on a little secret
A few years ago, Caitlin Lemaire faced a tough question from a friend: would she rather make more profit off her small business or sell more products?
Lemaire makes handspun yarn from locally sourced wool. The first time she tried selling was at the Somerville Yart Sale in 2023. She priced her products at just under twice what she paid for materials and sold a lot. She was pleased and wondered if she could make a bit more in the future. The next time she set up shop, she priced by the yard, such that each skein would bring in twice the cost of supplies. She sold very little.
“I was frustrated and felt under-appreciated,” said Lemaire.” Maybe people didn’t understand what time was put into spinning yarn.”
Three skeins of Lemaire's handspun yarn. Courtesy: Lemaire.
Spinning one skein can take about 10 hours. The process includes dividing the wool into even pieces, spinning it on either her manual or electric wheel, moving the yarn from wheel to niddy noddy (a tool used to wrap yarn into skeins), then soaking and drying the spun yarn. The wool for a skein typically costs between $18-$20. But prices that reflect those costs were turning people away.
Lemaire was facing a common issue among artists and purchasers of artisan wares: a skewed perception of what items should cost based on the market prices of goods that are increasingly cheaper to manufacture.
The evolution of throw-away culture
Since the 1900s, the world has been trending toward increased consumerism. When technology advancements began to lower manufacturing costs, society faced two options: transition to a less work-centric culture or consume much more rapidly. America chose the latter.
Since then, it has witnessed an increasingly competitive race to the bottom, marked, notably, by the rise of planned obsolescence in the mid 20th century and explosion of the fast fashion industry in the 1970s. This trained consumers to crave newness and to expect social and environmental costs to be written out of their bill as they took advantage of low prices to continually throw away and replace items. It all led to a sort of reverse inflation in customers' price expectations.
Now, the numbers buyers are used to seeing affixed to certain products are unrealistic when mass production is removed from the equation.
Bringing back price transparency
Faced with this dilemma, Lemaire decided her main goal was to share what she made widely and to support her continued craft. She was willing to let profit come second. “I decided at that point that I would much rather sell more inventory to more people - so I could make back what I had spent and so I could get more handspun yarn into more hands,” said Lemaire. “Because it’s beautiful and so special.”
Still, she wanted people to understand what went into the product. With the help of a friend, she developed a new, tiered pricing system. Today, when she sells, she lists three prices for each item. The lowest price reflects only the cost of materials; the middle covers materials plus $2 per hour for labor; and the highest includes a $5 “tip.”
Lemaire said the system works great. While she does not pay close attention to what each skein sells for, she said most people pay the middle or high tier price.
How participatory pricing works
This tiered payment structure is an example of participatory pricing, an approach to selling that redefines market relationships by introducing greater choice—and often accountability—for buyers. It is nearly synonymous with the term Pay-What-You-Want (PWYW), which became popular around 2008, when a leading study in the Journal of Marketing found that, contrary to economic theory, consumers who are given the choice to name their own price rarely pay nothing. Succeeding research associates PWYW with positive outcomes, including greater trust, positive brand image, greater diversity in clientele, and—in some cases—increased profits. However, their results are highly mixed and context dependent.
When businesses use PWYW pricing, they often harness some control by using external reference prices. These are a tool that guide customers in choosing their price, such as suggested minimum, middle, and maximum prices. Using them tends to have an anchoring effect, reducing especially high or low payments, but it can also help achieve social goals. For example, Lemaire set her external reference prices to help raise awareness for what goes into making a handcrafted good.
Others in and around Somerville are adapting PWYW
Similarly, some local event organizers have successfully paired PWYW pricing with external reference prices to increase inclusivity. The Boston Intergenerational Dance Advocates (BIDA) have been hosting contra dances in the Somerville area since 2008 and have used a sliding scale admission policy for years. Even with only a minimum and maximum reference price, organizers found that the average contribution fell near the middle of the scale.
For a while, this allowed BIDA to break even, but over the years, its costs rose and the group began to lose money. The organizers did not want to raise their scale’s minimum and risk pricing out low-income dancers, but like Lemaire, they needed to increase transparency about the cost of production.
BIDA’s solution was to tie payment tiers to people’s self-identified social status. Their external reference prices became “low-income” as the minimum; “dance sustainer”, meaning the payment allows the organizers to break even, as the midpoint; and “dance supporter”, essentially offsetting the cost of those paying below the break-even point, as the maximum.
When businesses should consider PWYW
Contexts like these, where a seller or provider prioritizes the number of sales or inclusivity over profits lend themselves well to PWYW. Though some businesses have seen increased profits under PWYW, it is typically in cases where production or replication costs are low. Otherwise, the method can promote positive brand image and social impact, especially when a business is a side hustle or supports a hobby. It can also serve as a temporary strategy to give a seller insight into what customers are willing to pay for their product or service.
Lemaire’s advice to other sellers considering a PWYW scheme is to be flexible and consider desired outcomes. She passed on the question once posed to her: “do you want to make money or do you want to get your art into people’s homes and hands?” she asked. “A tiered paying scale will work for you if you want more people to be able to buy your product and allows buyers to feel that the decision is more in their hands. Be upfront about what the tiers mean and how those prices affect you and your work. And be willing to make changes to see what is the right structure for you.”
For her, introducing tiered pricing did not increase overall profits. She said that sales still average out to just under twice the price of wool—the same she estimated bringing in at that first Yart Sale. Still, she is happy. People walk away knowing what went into making the yarn and, in the end, she said, “I get what I want, which is to buy more wool and spin more yarn, and get more yarn into more hands.”
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