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

[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.