How to price your work - my 2c

[Gulrok]

9 hours ago, Spyros said:

Sorry Gulrok, I didn't quite understand what you disagree with.  Everything you said makes sense to me.  My main point is to avoid becoming a cost accountant as much as possible (you still have to do it a little bit) and focus on becoming a market expert instead.   I mentioned a simple way of testing your market and your price as an example, but there are many more.  It looks like you already doing it and know a lot about this.  If you have the ability to A/B test your product and your size justifies it, then absolutely go ahead.  Great stuff.      

Sorry. I didn't specify. I just disagree with the slow price hike. I use to do something similar, but I actually found that I slowly lost a bit of business with it. Actual with belts as that's my main product. We raised our prices a few dollars, and lowered our conversion rates, resulting in more hand/thumb twiddling and less making. A few dollars affected us that much. Things like that is why we've now built shipping cost into every product and offer "freeeeee shipping"!!! Because we were finding that people didn't care about a lower product price as long as they free shipping. We'd have a $100-$200 abandoned cart over $7 shipping. 

That's why I was recommending the A/B product testing IF possible. Because most of what we think is all anecdotal until scientifically proven. 

 

Edited July 19, 2020 by Gulrok

[Lfrog]

I dont agree with the slow price hike in the scenario you gave, although in certain instances it may be ok ( If you have reached your current production capacity for example). I am a great believer in manufacturing efficiency. In the grand scheme of things the leather/hardware cost is a small percentage of the overall product's retail price. In the example you gave with leather belts, say the material cost was $15, with a selling price of $50 and a sell through of 10 units/week, if you can produce 5 extra belts per week that will make a meaningful difference to your weekly nett profit margin. More importantly it will increase the rate you generate free cash (money  left over after everything has been paid out, including taxes etc.)

[chrisash]

Marketing is not looking at competition and copy their price

You can control your price by good marketing, which is giving a person a good reason to buy the item at your price

It may be just explaining your story where your leather came from and how it was made, what your QC is like, or you can spend millions telling the same story with variations just like Hermes, Rolls Royce or LV or any other premium company does

A website, Etsy or Facebook are all marketing area's that most people just display there goods just like a store front window, little or no effort made to give a reason to the buyer to buy, Information is king, a Photo may sell a item at $50 where the whole story may get you double that with more customers. Look at the advertising and marketing Apple does to sell its over priced items

If you are any size business you know your costs down to the last penny its in your monthly accounts under Profit and Loss and Balance sheet, but i guess many small businesses just don't bother with accounts apart from year end when they find out that profit they thought they had has disappeared