Questions on Pricing

[Denise]

If I am recalling correctly, that advice goes back to Matt Eberle, a well respected saddle maker in High River, Alberta who has helped a lot of people increase their skill in building saddles over the years. He is 80+ years old and still going strong. Well worth listening to...

[D.A. Kabatoff]

Bob,

I like your analogy about not selling a $10.00 bill for $5.00. In the saddlemaking world I see it happen both ways... people trying to sell a five dollar bill for ten. Often lack of experience shows in the product and I even believe some makers don't have an eye or aptitude for quality. There are people (customers and makers) who can look at good and bad hand stitching as an example, and not see the difference... even when you point it out, it sometimes falls on deaf ears. These same makers try to charge the same for their work as someone with more experience, finer skills, and a reputation.

As for dickering, I simply won't do it. The price of my work is the price that I feel appropriate for the level of craftsmanship I feel I'm at. It is based partly on my work vs. other saddlemakers and partly on what I need to get to feel good about what I'm doing. I don't put my work or prices in the category of some of the elite modern makers, but I also won't compromise on quality or work for peanuts. As Denise mentioned, I much rather do something extra and not charge for it... when this is possible or appropriate, I do it but I don't tell people this upfront; more of a suprise as an appreciation for someone who may or may not have the means but is still trying to get the best gear they can while still recognizing my dedication by not dickering on price.

Darc

[JohnBarton]

Mulefool's post made me remember something we discussed once with a good customer: "If you have a special customer you want to reward somehow, make something extra and give it to them rather than cut the price on something. As they saddle up they will remember that you gave them the extra breast collar long after they have forgotten the $100.00 cut on the price of the saddle." Makes a pile of sense to me.

This is so true. I use this all the time to reward customers for their patience. I will also use it instead of giving a discount when someone wants to bargain with me.

I grew up in the flea market so none of my prices are set in stone although they are glued down pretty good. I like to bargain sometimes and I don't mind if someone does it with me as long as they are not way out of line.

I'd rather always do a little extra though rather than give money away.

For one of my recent customers I tooled the inside of the pocket and the inside of the lid. I know every time he opens that pocket and lid he will think of the pleasant surprise he got. And I get the gratification of seeing some of my colleagues following suit :-) (of course I borrowed the idea from Peter Main - hopefully Peter I can return the favor someday by doing something you think worthy of borrowing.)

Sometimes it's the little things that make such a big difference in your own satisfaction with a job well done but also in cementing a good relationship with your customer.

I also want to add something to what Bree said about not underpricing your work. Basically I have found that when you work cheap you tend to be sloppier and then if something goes wrong, whether you have to redo some parts before it goes to the customer, or worse after it's gone to the customer and they bring it back, then you have no room financially to cover that loss.

The saying goes "if you don't have the time to do it right the first time then where are you going to find the time to do it right the second time?"

I tell you what, I would rather give a piece away than work my ass off on it for less than I would get at McDonalds.

Lastly, if you make it a habit of dropping your prices to get business then the customers don't respect your or value your work.

In my opinion that is.

[kevinhopkins]

Hi...just wanted to second what John said... lots of good thoughts there. I have a rule here at SLC, that applies to every single employee. Here it is: You can do anything that you want to here. All I ask is that you have a good reason. If you make a decision that I don't think is the best, I'll let you know, and we can go down the road, and we'll all be smarter.

I think there's a time and place for everything in business. I don't like dickering, but I can't say that I won't. One guy wanted a machine from me at a real discount. He worked for Sears. I asked if I could get a really good discount on a lawn mower.....

I don't mind giving something away, as long as I feel the reason is there.

I don't mind dickering, as long as I feel that it's the right thing to do at the time.

I don't mind being hard as a rock on prices, as long as I feel that it's the right thing to be at the time.

I don't mind sending someone to the competition, as long as I feel that it's in the best interest of the customer.

I guess my point is, there really isn't a right or wrong when it comes to pricing, as long as you do your best for your customer, and are at peace with your decisions. I've rambled enough!

Kevin

[JohnBarton]

I don't mind sending someone to the competition, as long as I feel that it's in the best interest of the customer.

I want to expand on this point a little and add that I don't mind sending someone to the competition when it's in "my" best interest.

Sometimes I get someone that is downright hard to deal with and while normally I view such customers as opportunities to make loyal customers out of them once in while there is that one that just rubs you the wrong way.

I don't mind giving those people a detailed map to my competition's shop. :-)

[crissy]

One of the hardest lessons one has to learn in business is charging what you are worth and charging what the market will bear. Ingvar Kamprad, the founder of IKEA, said "profit is resources."

He said this in response to the criticism that a large portion of IKEA's goods are made in places like China and Africa. He said that because IKEA makes a healthy profit they can afford to demand better working conditions for their production partner's workers, they can afford to do more to build a better world. Now I don't know that IKEA always uses it's profits so altruisticly but I do know that the lesson applies to all of us.

Another way to say it would be this quote from Mark Twain, "of course clothes make the man, naked people have little to no influence on society."

The lesson is that with profit you can afford to be generous. When you charge what you are worth and what you need to charge to stay in and grow your business then you can decide when to make a sweetheart deal or give someone a break. But when you are always undercharging because you are either unaware of what you should charge, or because you think the customers won't pay then you will be constantly under pressure because what you take in won't cover what you spend and you will spend a lot of your time scrounging for business.

It's funny but the more you charge the more people respect your work. This isn't a license to steal obviously. Your work has to be good enough to stand up to scrutiny. But, as shown previously in this thread, it doesn't have to be the best in the world to charge the most for it.

I try to build the best case I can every time. I don't charge as much as some who don't build as good a product as I do. However I do have a healthy profit built in so that I can continue to grow my business. On the other forum I belong to I am constantly lambasted as if my product costs pennies and I am charging dollars. I wish.

The point that I make to them is that it doesn't matter if the product really did cost pennies and I charged dollars because what really matters is that customer who bought the case feels that it was worth everything that they paid for it and more. I don't care how much my competitors sell their cases for, whether the cases are higher in price or lower in price or how much profit they have. I care about two things, that they are truthful in how they sell their cases and that we deliver the best we know how to make. If those two things happen then I find that we are able to get and retain loyal customers who don't think about price. And those customers are overjoyed when I sometimes give them extras like tooling their name for free or an extra pocket or free shipping. I do this for repeat customers on an individual basis.

It all starts with standing up for yourself and asking for the price you want and need. Don't be petulant about it, don't treat people who lowball you or get sticker shock with disdain. People are generally ignorant about these things. I once had a guy complain about the price and then he came to watch us work and when he left he said, "I can't believe you charge so little for as much as you do".

People have by and large lost touch with what "value" is. They see a row of finished goods on the shelf and they have no connection to what went into making it. They see your little booth at the craft fair and think that a little booth at a country craft fair must equal low prices. This is partly due to the fact that we live in a world where we don't really have a connection with the person crafting our goods and partly due to a lack of education. When we aren't taught the real value of time and expertise then we tend to undervalue them and overvalue that which isn't expertise but instead comes in a pretty wrapper.

18 years ago I used to flat out go off on people who questioned my prices. I also used to sell out a lot to get business. I was at both ends of the spectrum.

Somewhere along the line I realized that people just didn't know how to see the value in what I was offering them. They were either completely ignorant of what it took to make a cue case or they were completely bamboozled by the slicker marketing of my competitors. So I became a teacher and devised ways to pitch the product that educated them about the process and what kind of mental and physical effort goes into making the product. This seemed to work really well and led to a small army of "educated customers" out there selling for me and showing off their knowledge.

I am not saying that this approach is for everyone but it sure did help me to think about it and have the right thing to say handy that didn't sound like a rant against my competitors nor sound like I was accusing the customer of being a fool if they dared to question my prices.

I firmly believe that this allows me to be more confident about asking for and getting what I feel our work is worth.

nothing more need be said, this is a philosophy one can build success on.

[tonyc1]

the sign in my shop states: "GOOD THINGS DONT COME CHEAP

and..CHEAP THINGS DONT COME GOOD"....................

That is a great sign!!

I once had "I didn't do my apprenticeship with Jesus, so don't expect any miracles" and it sometimes raised a laugh!

Tony.

[rickybobby]

Good job! Remember this... Once you start pricing on the cheap... it is VERY difficult to get your customers to accept your pricing on the premium end. You stereotype yourself. You make yourself a cheap commodity. It's hard to turn straw into gold.

It is much easier for a premium pricer to fall on bad times and have to part with something of high value for less. And that is a very easy sale to make. You can have exactly the same product at exactly the same price but the PERCEPTION of the value to the buyer can be determined by the normal pricing of the seller's other merchandise. It's not logical but it's true.

So since none of us are producing millions of units at the lowest possible cost... none of us should be pricing our wares at the lowest possible price on a daily basis. Custom work is PREMIUM work. Charge accordingly and make the customer believe that they get PREMIUM work from you no matter what they actually pay as a result of wheeling and dealing.

My $.02

All the posts in this thread have merit, especially in these rough economic times. This is a good thread to read on occasion because it reminds us of WHY we need to figure out "How much to charge" The better question to bring forward is "How do I sell this for a fair price?" Bob has a great idea that has been used in the business world for years and that is Job Costing. How many times have you figured out how much leather/materials cost you AFTER you have given the customer a price? Its to late then, you think you will make it up on the next piece. That is a spiral downward that is the sure sign of a beginner/rookie people recognize this and can spot it from 10 feet away. Job Costing forces you to know your prices, at least in the materials dept. Keeping track of time will tell you how long a project takes. Try it!! I have, it will suprise you how long some things take to build and how little other take and you can price these accordingly, you have a better understanding and explination to the customer when they ask you "your time to build" something.

I use a stop watch and a sheet of paper like Bob for my time studies. As far as how much to charge for labor by the hour you need to look at your level as a craftsman and decide what the customer should pay for your level of craftsmanship. It always takes longer to make something you have never done before than something you have done dozens of. Practice and expanding your abilities will help you with pricing. Making projects for stock will polish your abilities and help you with the materials/time per job to do a cost analysis. This will help you when asked "How Much" Tell customers you need to research material costs and get back to them with a price. I know somtimes this needs to be done "on the fly" so give them a Ball Park figure, if you have been doing the Job Costing you will have a better understanding and at least be closer to the final price.

Bree has a good point not to be known as a discounter, this cheapens your work and lets people know you are desperate for a sale. No one likes getting less than they think they should for their craft and pieces of work. Asking a high price only to discount it after it does not sell at a event is not a good feeling, price it right and selling it does, it puts another piece out in the community with your name on it which hopefully will bring others to you for work. The customer bought it for a fair price, you sold it for a fair price, everyone wins!!

Bottom line is "Know your costs!!" Expand your abilities and talents and your business will build the correct way on a solid foundation it may be slow but it should be steady and controlable.

Thank you to all that have added to this thread. It is a good source of information for all leatherworkers.

Rick J.

[JohnBarton]

Well, if you are able to have this attitude and sell everything you make for whatever price you choose to then this is the final word on pricing:

From a cue maker on my other board in response to a thread complaining about him being hard to get a hold of.

"Please take me seriously when I tell you, I don't care. I don't come on to AZ much anymore & when I do, it can be for whatever purpose I choose. If I want to enjoy the forum & read through all the news, that's what i'm going to do. Sometimes I get tired of the nagging & nit-picking, so I do not even bother to open my PM's. Nobody is going to even begin to control me by micromanaging my time & keeping track of when I visit the site. Again, I don't care. I'll do what I want, when I want, with no permission needed. Sugartree is my gig, not yours. If you don't like it, don't work so hard at involving yourself with it. No harm, no foul. Have a nice life. It's just a piece of wood for crying out loud.

I build what I want, when I want, & for whom I want. I don't advertise or try pushing my cues. I don't ask anybody to buy my cues. So if you are wanting a cue directly from me, you are thereby stepping into my world & in my world, it's my way. Who do you think you are getting upset & calling me out in a public forum when things don't go your way? Exactly where in the big scheme of my life do you feel you fit? Really?

Let me be very clear about things. If you don't like me or my outlook on cuemaking, then don't try getting a cue from me. It makes no difference to me. There's no reason to be foul & offensive. There's no reason to begin assuming wild ideas of why I do things the way I do. If you want to vent about things not working out the way you wanted, then fine. But understand it's you who chased me asking for a piece of my time, a piece of my work. I never sought you out to hassle for a sale & you never seen an advertisment of mine where I was advertising that I wanted to work for you. So keep things realistic & put your feet on the ground before you begin pointing fingers.

Understand that my words are not foul intended. I'm simply telling you who I am & how I see the situation. I stand behind my work 100%. I will repair a cue that has a flaw, given that it's my fault & not the result of abuse or tampering by somebody else. I love my cues, regardless of how I feel about who owns them."

If you can get to this level or have a REALLY GOOD and SECURE day job then you won't need to worry about pricing. :-)

[Spence]

I had to laugh at that, John.

I was the same way about my ropework back a thousand years ago. My attitude pissed off a lot of people, but others were knocking at the door. I even got some museum restoration work because of my "attitude."

I'm not nearly as good - yet - with my leatherwork, but "whatchout!" lol.

[Patrice]

It's always a pleasure to read every interventions in this post.

I'm pretty lucky to have a day job i like and enjoy (i'm a diplmomed teacher here in Quebec). But, as i'm groing older, i would like to work part-time leather and part-time leatherwork.

I will give you a pretty clear example of what i have seen this very weekend.

Each year since 1967 in the little village of Saint-Tite, there's this, "Festivale Western de St-Tite". There's a lot of people (about 500,000 to 600,000) during the whole week. There are also lots of littles booths selling cowboy hats and leather belts made in Mexico.

Every seller's sales the belts (all the same and comming from Mexico). The prices? 30$ canadian for mass made belts. All belts are of the same designs and are roughly dyed and roughly hand-painted. The leather use in the belt looks good, but when i see the how mexican belts are finished, i can really be proud of what i am doing.

Of course, i can't ask the same price as other better belts maker here, as i have a long road to go, but my belts are better finished than every belts i have seen out there.

But people keep buying them. I wonder how can i make a customer who are willing to pay mexican belts at 30$ to buy from me a hand made belt for 60$ ??? I was thinking about making a video showing every aspect involved in making leather goods( hide cutting, pattern making, tooling, dying, finishing, assembling) to show how much time and efforts goes into any hand made leather. I'm not quite sure that people notice little details that make carefully hand crafted items much more superior over mass making cheap products.

I would like to make my name out there in Sain-Tite and would like to offer : belts, hat bands, leather belts buckles, lady's handbags and cow-boy cuffs. I did not see any of those products and still figuring if any customers would like to buy any of these stuff?

Also, the booth prices are very high depending if you are in a hot spot (2000$ booth only) or in a more quiet secluded spot.

So, right now, i'm thinking about making samples and let them in display in a store to see how customers would appreciated them.

Feel free to post any comments. And please, excuse me if i made some mistakes in writting. I don't have the chances of writting in english every day

Edited September 14, 2009 by Patrice

[whinewine]

It's always a pleasure to read every interventions in this post.

I'm pretty lucky to have a day job i like and enjoy (i'm a diplmomed teacher here in Quebec). But, as i'm groing older, i would like to work part-time leather and part-time leatherwork.

I will give you a pretty clear example of what i have seen this very weekend.

Each year since 1967 in the little village of Saint-Tite, there's this, "Festivale Western de St-Tite". There's a lot of people (about 500,000 to 600,000) during the whole week. There are also lots of littles booths selling cowboy hats and leather belts made in Mexico.

Every seller's sales the belts (all the same and comming from Mexico). The prices? 30$ canadian for mass made belts. All belts are of the same designs and are roughly dyed and roughly hand-painted. The leather use in the belt looks good, but when i see the how mexican belts are finished, i can really be proud of what i am doing.

Of course, i can't ask the same price as other better belts maker here, as i have a long road to go, but my belts are better finished than every belts i have seen out there.

But people keep buying them. I wonder how can i make a customer who are willing to pay mexican belts at 30$ to buy from me a hand made belt for 60$ ??? I was thinking about making a video showing every aspect involved in making leather goods( hide cutting, pattern making, tooling, dying, finishing, assembling) to show how much time and efforts goes into any hand made leather. I'm not quite sure that people notice little details that make carefully hand crafted items much more superior over mass making cheap products.

I would like to make my name out there in Sain-Tite and would like to offer : belts, hat bands, leather belts buckles, lady's handbags and cow-boy cuffs. I did not see any of those products and still figuring if any customers would like to buy any of these stuff?

Also, the booth prices are very high depending if you are in a hot spot (2000$ booth only) or in a more quiet secluded spot.

So, right now, i'm thinking about making samples and let them in display in a store to see how customers would appreciated them.

Feel free to post any comments. And please, excuse me if i made some mistakes in writting. I don't have the chances of writting in english every day

Patrice:

why would you try to compete with the junk? The people who buy the cheap belts will ALWAYS continue to buy the cheap belts- if those particular vendors wouldn't be there, they still wouldn't buy from you- they'd buy their cheap junk belts at Walmart.

Find a niche: find something no one else is making, or can make,

develop it

sell it at a fair price.

My son & I

do not make wallets (with a very few exceptions)

do not make belts,

do not make sewn soft goods,

and yet we are developing a nice name for ourselves in creating Celtic/Renaissance specialty items that others are not making,

and our waiting list for custom orders is 8 to 12 weeks right now.

But it was a long & somewhat painful process to find that which does work in our area.

While I have a few 'sheridan' & a few 'western floral' pieces, they are merely examples of what i can do. They don't sell in our area, so I don't make them & expect them to sell; likewise, I have lots of keyfobs (that don't sell, at least in our area) & lots of belt buckles (that don't sell, at least in our area), and lots of many other things that don't sell- but these are basically left over from the learning process mentioned above.

Good luck, Patrice, find your market & develop it.

russ

[Patrice]

Hi! I just received today, Artisans & money. Earning a nice living as an artian, by Joe Rollings.

I'm only at page 9, but it look promising!