Marketing High Production- Low Price Vs Low Production- High Price

[DavidL]

Shortly I'm going to work this out by my self through some evaluation of the marketplace, but would like some feedback as to where a handmade, hand stitched product will make the biggest impact.

This is hypothetical - If I was able to make a perfect wallet every time on both high production or low production

If I was able to make 300 percent return on high production. 1500 percent return on low production.

Barret Alley - sells at 15-20 times the cost of material. ex. Kangaroo wallet for 195 dollars and cost 15 dollars to make plus there time.

- I don't have barret alleys sales figures, but they have sold over 2000 wallets, based on the number count on the wallets, maybe into 3000 area.

In your opinion low production or high production for best case scenario? Barret Alley has no direct competitor for handmade - naturalist type wallet that I know of.

[Dwight]

The question is do you want to be Neimus Marcum or Walmart?

It's your decision, . . . you have to make it. But I will tell you this, . . . if you are turning out higher numbers, . . . you are turning out more flaws.

The more time you spend on an item, . . . the less chance the customer will be dissatisfied, . . . and generally he'll be more "proud" of the product.

I am personally a craft guy, . . . making one at a time, . . . for one person at a time.

YMMV

May God bless,

Dwight

[DavidL]

Good points. High quality is what I am going for. I personally hate walmart they ruin all the small business in the area just because its 20 cents cheaper to buy bread at walmart then a family own store.

[badLoveLeather]

Hi David. Are you looking to feed a family with your leather income? It can be difficult. I make high end wallets and its been my experience that:

There a many that make better and charge WAY more

There are many that make not so good and charge acordingly

There also are a few I've seen that make wallets that are just as good as mine or better and they don;t charge nearly enough for some reason.

Its been my experience that you need to be comfortable with a price point and what your market will bear.

I looked up Barret Alley and they make great stuff. You can't really be sure how much volume they sell. Besides if your interested in selling wallets in that kind of volume you may want to consider putting in a few grand and several hundred hours of marketing leg work to let people know how great your product is.

I myself think I make great leather goods but not as many people knwo about me as I'd like. If they did I wouldn't be writing this, I'd be shackled to my bench making stuff.

make great leather goods. sell them. use the money to have a good time and make yer life and those around you better

[jk215]

Here is my theory on this issue.

Trying to compete on price is a losing game. If you check out Etsy and the like you will see hand-stitched wallets offered for like $20. Both from beginner leathercrafters and from overseas "companies". Trying to attract the customers who just want the cheapest option just isnt worth your time. Going the high-end route requires equal parts quality product and marketing. Barret Alley can charge $400 for a veg-tan wallet because they have social proof. They are associated with names like John Mayer, Red Wing, and Levis. Are their wallets nice? Sure. Would they be getting that asking price if they didnt have those types of endorsements? I highly doubt it. Marketing and social proof is the same reason Hermes can charge $200k for a Birkin bag. They are masterful craftsmen and have the endorsement of almost every major female celebrity that has ever existed. They have years long wait lists for people willing to drop that kind of cash on a leather bag!

I would say you should find a happy medium. Dont be the most expensive but dont be cheap. Create something unique using different leathers, designs, etc.. and make sure your brand image is conistent and speaks to the demographic you want to attract. There are plenty of people out there that understand the value of handmade items you just have to make sure they notice you.

[Horseshoe]

I'll through my opinion is as well. First I'm not trying to feed the family or make the house payment doing leatherwork. So I'm going to focus on low production high quality work with a somewhat high price. I've waited to seriously pursue selling my work until I reached a level of quality that I'm happy with. I view my work as one off original pieces that are 100% handmade. Just that in it's self would make it difficult for me do be a high volume producer. So I say figure out what you need and go at that way.

[NVLeatherWorx]

@badLoveLeather

You forgot the one that makes a very poor quality product and charges the Saks 5th Avenue price, and there are several of those out there as well.

To the original topic: It is one of those things that you have to figure out based on the level of quality that you are striving to achieve, the level of business success you are working towards, and you can't forget the market to which you are providing the product to. If the base market is the blue collar class then you may have to sell to the lower side of the price range whereas, if your market is the white collar class you can get more money out of the product. With regards to Barrett Alley, they do charge a very profitable price but I can almost guarantee that their philosophy is that they are worth it.

I have made my pricing structure based on my years of experience in this trade (about 40 years), the fact that I still do EVERYTHING by hand (even the stitching), and the fact that I only use the finest leather available (Hermann Oak). What I found to be the most interesting attention grabber at the events I go to is that I put an information card on every item that lists the item number, the style, the design/pattern, the finishing, the assembly technique, the total number of hours put into the piece, the suggested price (based on traditional business pricing models), and the price that I am listing it for. Rarely is there any attempt to haggle when that much information is put out for the buyer to see. I also make it clear to anyone who asks about ordering an item in a different color (considered to be custom) that the price is the same. I only charge them extra for the addition of things or for a non-standard design/pattern and any special design work that may be required. I typically only have one design/pattern of each of the more common items out on display but unless they really want it bad, these are perfect sales samples to generate the custom/special order business model that I have put in place.

[rawcustom]

This looks like the right thread to add my recent internet find that offers a paradox to your scenario. How about high volume with high pricing?

http://www.mrlentz.com/shopping/product/the-minimal-mark-wallet/

http://www.mrlentz.com/shopping/product/the-minimal-slip-wallet-06/

Not sure what his business is like but I applaud him, especially if it is working out. I knew a guy who was trying to sell a cabin he built. It sat on the market for months with no activity and this was during the housing boom. He finally changed realtors and the first thing the new guy did was up the price 50k. He said that most people weren't even going to consider it since it was low priced, so in their minds, low quality. After raising the price he got several offers and sold within a month or two.

[DavidL]

He's a member of this forum actually. I saw one of his post while searching through the forum.

Pricing is around market price. Pretty smart to only use rivets,nothing special, but nothing that will prevent people from buying it. Everything else is on par - his website is done well and his photography is also nice.

If you want to make products that are low priced and only focus on a price war then you will be for the life of that company underselling your products, but you won't stand out as much from the mass of people selling identical items. The ironic part of leather working is that like this product you posted it takes nearly no time to make and cost nearly nothing to manufacture. Bottom line is even at low prices you can still make a little money - no overhead.

The thing is sometime people who don't know anything about the product will buy based on what they are told: "You get what you pay for".

Same thing goes for wine and liquors which are overcharged and endorsed high end headphones. If the consumer thinks your item is worth 200 or if you can convince them that its worth 200 then they will pay for it. If your item is worth 60 dollars real market value and you can convince not only why you should buy product A for 60 but also why your product is better than the competition than you have a start to a good marketing plan. Whether you go for 60 dollars or 200 dollars the marketing plan should always be clear and solid. The 200 dollars item should have more perks, whether rarity (100 units), limited editions, collectors items, rare materials, collaborations, ect.

Unless you intend to sell mass amounts and employ a workforce to manufacture your goods, then exclusivity should be key.

Im starting to lean towards pricing things more high end, and selling something thats unique AND very easy to manufacture. There are people selling t shirts for over 100 dollars and sell out within weeks (very accomplished companies with a history). Falling into this niche of exclusivity allowed them to grow the company in a way that someone who's marketing strategy is only on lowering prices can not get to.

Their core marketing and value proposition are geared in a way to cater to a select portion rather than the mass market and in segmenting themselves from the mass market they fill in a niche, which is where leatherworkers should try to fall into in terms of consumer goods.

[rawcustom]

I agree that you are better off charging more and working at a specialty than gunning for the lowest priced product. Maybe winning the price war appeals to some, but it seems many people fail to account for their time when they set their price. I'm not making a killing at my part-time knife and leather making, but I charge enough to cover my material, supplies, and enough of my time to make it worth doing. I would probably stay with it even if everything went to charity, but I would find myself hunting, fishing, and spending most the time I spend now on knives on plenty of the other fun things in life.

Like I said I applaud him, and not sarcastically. I think its great and gives others like me the crazy idea that someday maybe I can get the same.

[Grumpy Coyote]

This is about strategy vs. tactics. Like others have said, it's not about what you are selling. It's about the *perceived* value of what you are selling to your target market, and what makes your product different than anyone else's.

You start with a couple of strategic questions:

1) Who am I selling to, specifically? (Hint: the answer isn't "everybody" or just "wallet buyers")

2) What makes my product different than the other choices that audience has? (Hint: the answer isn't *just* "handmade" or "mass produced")

Once you have those questions answered, the "mass-produce vs. handmade" question largely answers itself. Start-up costs aside, you pick the most efficient and affordable method to produce the product that still gives you the highest quality differentiated product. If handmade is part of what makes you different, then that's that.

Figure out who you are building for, and why they would pick your products first.

Edited September 4, 2014 by Grumpy Coyote

[DavidL]

This is about strategy vs. tactics. Like others have said, it's not about what you are selling. It's about the *perceived* value of what you are selling to your target market, and what makes your product different than anyone else's.

You start with a couple of strategic questions:

1) Who am I selling to, specifically? (Hint: the answer isn't "everybody" or just "wallet buyers")

2) What makes my product different than the other choices that audience has? (Hint: the answer isn't *just* "handmade" or "mass produced")

Once you have those questions answered, the "mass-produce vs. handmade" question largely answers itself. Start-up costs aside, you pick the most efficient and affordable method to produce the product that still gives you the highest quality differentiated product. If handmade is part of what makes you different, then that's that.

Figure out who you are building for, and why they would pick your products first.

Exactly. The question is what is your value proposition(What makes you stand out and how to differentiate yourself from competitors in certain areas), the more you differentiate the less you have to rely on price wars.

What is your demographic and buyer persona and how does your product effectively fill in the wants of the buyers.

If handmade is your only selling point you are only 1/10th of the way there or in other words your company is 10 percent of what it could be.

To build that perception is the hard part. Start up, filing, management is only the foundation.

[NVLeatherWorx]

Use this for an example: There are several "craftsmen" who sell their wallets and other little personal leather goods at shows, fairs, on Etsy, and the like, and ALL of their product starts out as a pre-cut/fabricated kit from Tandy; they do nothing to the item except dye it one of 4 colors and then stitch it together with the provided thread from the kit. They sell the average Deluxe Triplefold Wallet for no less than $80.00 and it doesn't even have anything that makes it unique. I know of one seller that sells at least 5 of these per week alone, not to mention the 8 Maverick billfolds, 6 Flip Clip money clip wallets, and you get my point. This one person is banking over $1500 per week and his only investment is the kits (which you know he is getting at the rock bottom wholesale price) and the 1 hour (or less) in time spent dying it and then stitching it (which he does by hand but the holes are already punched for him).

If he can peddle this type of an item, there is no reason why those of us who actually make all of our own designs and then cut each piece by hand one at a time, and do all of the other stuff that we do, can't justify why we should be able to charge what is fair for our work. To help people (i.e. clients/customers) understand the difference in quality I actually have some items that are kit based products that I have finished and put together (in a fully professional manner mind you) and use them to show the difference between what is trying to be sold to them and what my product looks and feels like. It typically results in a customer wanting me to make them one of my items and I have never had anyone even ask if I could match the price of a lesser quality/materials item yet. Buying some of those kits will require a little investment but if you go that route to show the difference in quality between mass manufactured materials and hand selected and cut materials, you end up coming out on top every time.

Just an idea; we all have our own methods of finding out niche.

[kwelna]

_{Look, you can't win being the cheapest because there is always someone\some place that can do it for less. It is a loosing battle especially for the "Under Funded" sole craftsman that most of us are. Everyone else is right, make a great product, create a short talk about why your product is high quality, better, different, unique etc. Develope a niche set of products. For me it is good quality leather, my own unique designs, hand made\one at a time products. Try breaking up your display of wares with pictures of you working on leather to show the products are hand made and what that means. I prefer close ups of the work with just my hads being visable. Remember a picture is worth 1000 words. (Do not try and justify the price to a customer. (Another loosing battle IMHO) It has been my experience that if they don't get it, they never will. If they actually buy something (They usually don't) all they will do is whine about it later.....Set a price ( Be realistic and yet profitable) and stick to it. The only way I discount is on a multiple purchase and\or I round down to the nearest dollar after adding tax. (The latter is because I am lazy and don't want to carry around change. LOL) I also think customers appreciate the "litte deal" of less tax. I say this as they usually smile when I tell them; "It's $45.89 with tax....let's make it $45." BUT do not do this until they have comitted to the sale and have given you $, have handed you their credit card of are in the middle of writing a check. It then becomes an unexpected little windfall....Think slot machine....you are varing the reward....}

_{PS, Print up business cards and have them out on the table. It is cheap ($0.03 - $0.10 ea) advertising and may\can lead to custom orders and\or additional sales later. Always place a business card in inside (If psssible) each item you sell, not in the bag, in the item.}

[NVLeatherWorx]

@kwelna: Bingo! That is exactly the approach to take and it works. It doesn't work for everyone as there are the vast majority that have become stuck in the "mega-mart" mentality and they ain't getting out of it any time soon. But if you have your quality product out there and have your pricing established and set (without exception), you will find some success and when you do you will find that those satisfied customers will be helping you gain recognition to those who appreciate what you do.

I always have my Maker's mark on each piece that I make and everything has a business card attached to it, even if it is a custom order that gets shipped out. And when I go to any of the craft markets/fairs or other events that I attend (County Fair, Small Business Fair, etc.) I always take a fully functional work station setup and will be actively working on real items (whether they are going on the display table or filling a custom order); it is amazing how much difference it makes when you are actually making an item right before a potential clients eyes, they see it being done and they start asking about that special something that they are looking for and the next thing you know you are taking information for a quote or calculating out their custom order right then and there.

And, it cannot be said enough, DO NOT attempt to compete against the low-ball kit crafter on price as you will always lose. Quality of materials and craftsmanship will win every time with those who understand what it takes to make a premium quality product and they will never haggle on the price. In fact, I have quoted some simple items (a made-to-order bifold wallet with a simple linear stamped pattern along the bottom section, hand-sewn assembly, no other special requirements, sold for $75.00) that the customer asked me, "is that all?" when I gave him his quote. He actually thought it would be more than that. I make enough of these that when there is no major stamping or carving & tooling being done that I can knock one out in about a total of 2-1/2 hours total labor time. I make it even easier when selling on the local scene by ensuring that I identify to everyone "Price includes sales tax", which I have actually included based on the highest tax rate for the State. I too do not enjoy having cash or loose change out at events as it creates a potential safety issue for myself and those around me. Haven't heard of anyone robbing a craft vendor yet for their cash but it is a matter of time before we unfortunately do and I do not want to be that story that makes the headlines.

[DavidL]

i don't think its entirely accurate that you can't succeed with low priced leather products. Your output of leather goods should be 5 or 6 times more and typically you should be selling something that has a large market (wallets, watch straps, belts).

Quality should be low because of the price and production should be cut down to using clicker dies, machine stitching and pre dyed leather. Leathers, thread, edge paint and other materials are also the cheapest, with below average quality. Buying things in bulk also is the benefit of low end production because so much material is needed and 300-400 sq feet can be heavily discounted.

The other way is for high end where its the exact opposite or somewhere in the middle where there is a mix of the two.