I would suggest you get your head straight now. You’re lucky that
customers have said your prices are low and they understand
fabrication is more. Think about who’s smarter. They say you’re low
and you can’t bring yourself to raise them.
Anyway, about pricing - I usually stick with the materials +
time=wholesale x 2 = retail price formula, and I've had many
friends and even customers tell me my prices are too low. I just
can't bring myself to charge $35 for a cast piece that cost $2 and
takes 10 minutes to finish.
Firstly, I have quietly come to your shop window and watched you
work (nicely clean bench ) You’ve never taken only 10
minutes to do anything, shoot-you’ve spent that much time in the
"john" reading Lapidary Journal.
You have to consider that if you arrive at 9, leave at 6, take an
hour for lunch, that you have AVAILABLE 8 hours of which to produce.
You don’t. You’re lucky to get in 5-5.5 hours. Why?
Remember the bathroom break? You have to ADD in breaks and down time
to the “10 minutes” to do something.
Your cost times two isn’t a bad place to start but you said “labor x
2”. My question is where did you get your labor quote from?
$35 per hour is completely unimportant. It’s how many minutes to
multiply it by.
At $35 per hour YOUR way, might be 15 minutes, or $8.75. But if you
did a REAL time study, you’d find it might be 30 minutes or $17.50
Double $8.50 and you get $17.
Double $17.50 and you get $35.
Figure you’re OFF by 40% and by years end you could have collected
$14,976 MORE money. Just on this one mis calculation.
Many wholesalers double there costs. If you’re doubling for RETAIL,
you’re missing out.
You should at least triple your labor rate and 2-2.5 to 3 times your
materials. Easily 3-5 if you’re making directly for retail.
Jewelry stores who BUY silver jewelry usually get 3-5 time markup.
I started my business last September, and I still feel like I'm
being cocky if I charge a fair price for my work!
You’re not cocky, you’re scared and price by quilt. I bet you’re
young (in your 20’s, early 30’s?). Start having mortgages, kids,
wants and desires and you’ll get over this guilt pricing. It’s not
easy, took me 12 years to get over it. It was real easy. The Internal
Revenue Service helped me a lot! (They don’t take no for an answer)
I have noticed that customers really do equate higher prices (to a
point) with higher quality; this seems especially true of
fabricated pieces (as opposed to cast). I thought I would have a
great deal of difficulty explaining why a constructed piece the
same size as a cast one costs twice as much, but most folks seem to
understand that there's more work involved.
My suggestion now that the light has shown upon your head to DOUBLE
ALL TIMING starting from today, then multiply it by your itty biddy
Picking up on the thread on price tags , I too hate the look of
them, but I'm shy about asking when I'm shopping, so I try to
spare customers that hassle by making them visible. It is amazing
how many people will ask "How much is this?" when the price tag is
stuck right on or next to the thing they're looking at, however!
Think about this folks. We are the ONLY BUSINESS where the customer
is REQUIRED to ASK PERMISSION TO EVEN VIEW OR TOUCH an item. Think
about it. You can sit in a $80,000 Jaguar without permission in a
showroom, ladies can try on at least one show of a $300 pair at any
show store. You can try on a $500 suit, touch a $10,000 painting but
you have to ASK PERMISSION TO SEE A STUPID $25 silver chain!
Yes! Everything is under lock and key. So make it easy. If their
eyes LOOK at a piece, don’t ASK them if they’d like to see it, PULL
IT OUT and place it in their hands.
You could be signs in the cases “Under $50”; “Under $200” and help
I visited one classy store who had no tags. They took a picture of
every item and put in on a paper with description and price. That sat
under the counter. One sheet per showcase. All they had to do was
look for the picture on the sheet to say a price. It was a very clean
If you raised your prices (your customers have already given you
their blessings) by 25%, and you NOW sell 100 units you’d only have
to sell 80 units to take in the same amount of money.
You’ll find the closing ratio won’t change that much. If you sell an
item for $100 and 7 out of 10 BUY; and you raise the price to $125,
IF you still sell 7 out of 10, you’ll receive 25% more money.
But if 6 out of 10 now buy, you’ll STILL get $750 and have lowered
your cost and time and number of people you have to deal with. You’ll
probably find when you raise your prices, because of your product,
hardly anybody will squawk.
I recently came out with a new, improved pricing book, with more
bells and whistles. For the past 3 years it was $175. This newer one
is $299. My closing ration came down 1 point but my sales have
greatly increased. People who can see the value (you have to know how
to sell-not a dirty word) will appreciate what you do and pay a
"fair" price. Your pricing is WAY “under-fair”.