the dollar is down
As Australians selling our wares on a site that is based in another country, (not to mention with customers in potentially many countries), one of the things we need to consider is how our pricing translates to other currencies and how this affects both our prices and practises and how it might affect our customers.
At the moment, Etsy only allows us to list our items in US dollars (although they say that in the future they will be able to support more currencies). For much of this year so far, the exchange rate between Australian dollars and US dollars has been fairly steady, averaging around one Australian dollar to 93 US cents. At this level, converted amounts are still fairly much the same and not a lot of effort was needed to ensure that you were pricing your items in a way that would ensure you cover all your cost and profit requirements.
Since the beginning of August, however, the Australian dollar’s exchange value relative to US dollars has started to decline and we are back to a level that we haven’t been at since the middle of 2004. At the end of last week (today’s rate is not yet available since our business day hasn’t yet finished and the US one hasn’t even started) one Australian dollar would get you 0.6514 US cents – we can probably round that off to 65c. With such a big difference now in the value of our dollars to those we must sell in online, we must now give more consideration to the pricing of our items and try to figure out how to best work with the exchange rate to maximise the benefit for both us as sellers and for the customers that we want to buy our work.
The most obvious advantage is that in listing items in US dollars, we can choose a number that sounds much smaller than the actual price to us. For example, say you have something that you have worked out you want to make $50 on – this is your time, your materials, other expenses and profit. When you translate this into US dollars, it is only $32.55. The smaller sounding the number, the better! This works well for us and for our overseas customers, but what about our Australian ones?
Something that some sellers are doing is selling to certain people in Australian dollars and everyone else in US dollars. Some are opening the offer to all Australian customers, some decide to restrict it to customers who are also members of DUST or other teams. How does this work? Simple: decide how much your item is worth – maybe $10. List the price on Etsy as $10 (US). State on your shop somewhere that you’re doing an offer that Aussie customers can buy your items at the prices shown but in Australian dollars instead of US – you simply send them a modified invoice when a purchase is made. If an Australian buys your item, you’ve made what you wanted to make off it. If a foreign customer buys your item, then you get a bonus: they’ll pay you $10 US dollars, which means you actually make about $15.35.
Another option that I have seen is offering free shipping to Australian customers. For many types of items, postage within Australia is available at quite reasonable prices – especially if you are conscious of how you pack things to ensure you get the best price possible from Australia Post. (Keeping things small enough to be posted as a letter rather than a parcel is one thing to try, and the prepaid satchels are also good value.) Depending on how you work your prices, you may need to make some adjustments to make sure you aren’t going to lose out yourself by doing this, but many of us probably already have at least something built into our pricing to account for packing and/or posting related costs.
You might also want to do some shopping around when you are looking to buy the materials you use to make your art, especially if you are buying from overseas. A local supplier will mean that you aren’t paying in a currency with more value than ours, and you should be able to save on what you’d pay to have it shipped here too. If you really must get supplies from a specific place overseas, and you know people who use similar materials to you – why not organise a group purchase? The more people who join in, the more you can save. Almost certainly you will save on the shipping of one larger parcel to the person organising the purchase; and many stores also have special pricing available for bulk orders that none of you would be able to qualify on your own but can do together by pooling your orders into a single one. Check the forums if you are interested in this, there has been some talk about this already.
Do you have other ideas that could help our members to make the most of the current economic situation? Share them here in the comments or on the forum, and let’s all help each other out.
Article by Jade. Check out my etsy shop at http://scherre.etsy.com.
Tags: australian dollar, currency, jade, money, scherre
October 27th, 2008 at 11:03 am
Thank you for a very well constructed and helpful article. I guess like most of us Aussie sellers, I have been pondering the best way to handle the situation, and you have set out all the options in a very clear and concise manner.
I am thinking of taking the option of keeping my prices as they are and advising local buyers to pay the amount in Aussie dollars instead of US dollars. I will have to stop procrastinating and take the tedious step of amending all my items. There goes the rest of the day!
Regards
Robyn
October 27th, 2008 at 11:09 am
Fantastic Tips, Thank-you :)
October 27th, 2008 at 11:20 am
Thanks for such a clear and useful explanation. I was trying to figure all that stuff out, and you’ve done it for me!
October 27th, 2008 at 11:38 am
Thank you for explaining that in such an easy to understand way. I’m off to change my announcement.
October 27th, 2008 at 12:11 pm
Great article, I’m offering my items in AUD for Aussie buyers. Thanks for the tips!
October 27th, 2008 at 12:19 pm
Thank you for an article with very useful tips. I have been reducing my prices on Etsy so that Australian’s don’t have to pay too much more than my AU price in my eBay shop. I’m going to consider your tip of offering Aussie buyers to purchase eg USD$10 price in AUD$10 and adjusting the invoice. Although I do have a question, can you adjust an Etsy invoice and if so, how? I tried the other day but couldn’t see the option. I ended up just sending a PayPal ‘money request’ to the buyer instead.
Thanks again for a very informative article :)
October 27th, 2008 at 12:40 pm
Economy? I’ve had the best week in sales on Etsy this week than I’ve had since June! :D
A good article with alot of tips- I’m about to offer free postage to Australians in my store.
Conversion- I’m not doing it. Since I started in my shop, I’ve always pretended that the amount we list is in $AU, so I was always getting what I wanted, and sometimes with a dollar or two bonus. Now that the dollar to dollar conversion is more unbalanced, I’m still listing my prices as roughly the same. Why? Because by the time the conversion comes around, I am actually getting what I want for one of my pieces but was in the past to afraid (or lacked the confidence) to ask for.
For example, a wrist cuff of mine at $US56 is actually worth $AU90, which is more realistic for me since so much work goes into construction, layout, material sourcing, dyeing fabrics etc. It’s a price that admittedly frightened me, but when I stopped to think that alot of people will spend $30 on a factory t-shirt without blinking, it’s a realistic expectation of the market. Interestingly, it only turns out to be £35 -perhaps that’s why I’ve been getting more UK customers!
Having said that of course, I am having a sale when November hits. (You’re the first to know!) It’s not quite Christmas shopping time for us but the postage lag means smart Non-Aussies are buying from us now to make sure it gets to them in time.
Anyway- good article and certainly worth considering, but I would warn people to take care they don’t shoot themselves in the foot in an effort to please the customer’s wallet. Put yourself first! :)
October 27th, 2008 at 3:01 pm
TwinkleStarArt: there isn’t an option in Etsy to do this. I have in my announcement that people can either wait for me to send an amended invoice – which will be simply a paypal invoice for the adjusted amount, or they can go ahead and pay, and then I’ll refund them.
I’ve been reducing my prices too, but I really like what Penny-Elizabeth writes, that’s a really neat idea! And you’re right about the prices, even if we think they sound expensive, people will pay it. I did read somewhere once, quite a while ago, that someone hadn’t had any sales at all, put all her prices UP, and then had lots of sales!
I think we’re all too used to living with a devalued dollar.
October 27th, 2008 at 4:28 pm
Thanks for that article…I asked that question in a forum this morning! Great timing : )
I wasn’t sure what to do here without things getting too complicated but I’m thinking of offering free postage to Australians…that should work out fair!?!
Oh also it’s a great time now to transfer any money you have sitting in paypal in US dollars into your australian bank account. That is presuming the dollar difference does not increase further!!
October 27th, 2008 at 7:31 pm
Thanks melanie for confirming that Etsy doesn’t give the option to adjust invoices. I thought I was a bit dense for not being able to work it out. I suddenly feel smart again knowing that what I did with sending a PayPal money request for the proper amount is the correct thing to do :)
Oh the decisions, decisions, prices UP prices DOWN, I think I’m going to have to sleep on that one!
October 27th, 2008 at 7:51 pm
Great article and helpful comments! I’ve started including in my product descriptions in Etsy an AUD price for each item and offering direct deposit to Aussie customers. I’m still thinking about my postage costs though and possibly lowering them. I am also thinking along the same lines as Penny-Elizabeth and am going to have a November sale (insider tip!) – something along the lines of a flat rate discounted postage fee to encourage those Christmas shoppers. It will be interesting to see how Christmas shapes up this year with everything that is happening financially.
October 27th, 2008 at 10:04 pm
Fantastic ideas…i will be adding to my store that buyers will pay one price…either US or AUD thanks Jade
October 28th, 2008 at 7:45 am
Thanks for all that interesting and useful info! I had been wondering what to do about the exchange rate. I already reduced my postage prices when I realised I was charging ‘too much’ in AU dollars. I think I will keep my prices the same, but offer free postage for Australians, and maybe a free gift as well!
November 1st, 2008 at 7:21 pm
A great , well written article.
I started by saying I would take the listed price in A$, but then the aussie dollar dropped further and I started altering my listed prices. (I have done about half). I have changed them to 70cents to the dollar,since that seems to be a long term average.
Interestingly before I did that I sold two items to an australian buyer and I was feeling a bit bad about the A$ price being so high. Then the same buyer wanted to buy something else (it was an item I had reduced the price on) but didnt finish the paypal part of the transaction. When I politely convoed her about it she said that the exchange rate now made the item too expensive!
I guess it’s all relative!
November 9th, 2008 at 3:10 pm
Jade – many helpful and simple tips…
I must go and see if anyone else wants to join our Fire Mountain group purchase – I need some things for a custom order.
And thanks for the clarification on the invoice – I also looked to revise one and couldn’t see how… now I know.
November 11th, 2008 at 8:57 am
Hi Jade, this is an illuminating article. Thanks for your thoughts. Another tip – - if you must order from the USA (as we honestly hope you’ll do), the discounts you get by group ordering can be stretched even farther if you buy at wholesale prices. Our company Rings & Things has this price structure, and in fact we’ve got quite a few Australian customers. Check out our site!
–Dave
at Rings & Things
December 19th, 2008 at 1:44 pm
Really thought provoking and practical strategies for a common problem for those of us in Oz….