Cost of Pen Kits-Just One Man's Opinion??

[Randy_]

The following comment was posted in another IAP thread; but was a little OT from the original thread. Thought I would start a new thread and see what everyone thinks??

Originally posted by jenamison
... I wish they would work a little more with the pen-turner instead of against us in the rising cost...

I suspect that everyone in the "food chain" has the same opinion. Manufacturers think the raw materials are too expensive, importers think the manufacturers are too high, turners think the importers are too high and pen buyers think the turners are too high. If you look at a hundred dollar pen, it starts off as a few pennies worth of brass, gold, plastic and wood and each step in the process adds cost to the final product. 75 to 80% of the final cost of a pen is added by the turner. Seems to me that a couple of dollars more or less for the initial cost of a pen kit isn't really going to have much affect on any pen-turners bottom line??

I recently read that it costs $100,000 for an import license. You have to sell an awful lot of $3 pen kits to make back that kind of money. Most of us turn pens on a $250 lathe. I'll bet that the manufacturing tools for the pen kits cost a thousand times that much??

 

[btboone]

The $250,000 is on the low side for most of that equipment. It's more like $650,000 for the high tech stuff. Don't forget the container load minimum orders it takes for buyers to deal with those companies overseas.

 

[wdcav1952]

I for one find the pen kits amazingly inexpensive when you consider the precision we demand of them. I get annoyed when parts are too tight or too loose when pressed to place. Then, I remember that I can get basic slimline kits for under $2 and I am ashamed of myself. I agree that when I buy a premium kit that I expect more of it. Overall, when I buy a $3 cigar kit, have a great time making it, and sell it for $35 to $40, I consider the suppliers to be "my bestest friends!" []

 

[wayneis]

Personally I don't have a problem with the prices of kits. i agree with what has already been said and will add that if we want to keep having new kits and better material then there are costs involved. This is no different that any other business, there are RD costs, importing costs, advertising, and on and on that the Companies that we buy from have to consider. The way that I look at it is that we are pretty lucky to be able to do something that is so much fun and actually get paid to do it. Most people are just going to have to work at this like they would any other business and start small and work their way up the ladder. I know that I have, I didn't start out making and selling the Statesman or Jr. Gentleman's pens, I had to work hard to be able to build up my customer base so that I could buy these top of the line kits and make the pens that I do now.

Wayne

 

[wicook]

I live in Canada, so I get hit with additional delivery fees and then import duties and taxes on the kits I order from CSUSA, BB, and Ryan. However, it's still cheaper than buying kits from the couple of Canadian resellers. I don't really object to the kit prices. As Wayne and William said, we get a lot of fun for not a bunch of money...and then we get to sell or give away the things we've created. That's got a lot more value in my book than what the kits cost. []

 

[Ron in Drums PA]

I amazed how cheap pen kits are.

I could buy a slimline kit complete with a refill, for less than what one single refill costs at Staples.

 

[alamocdc]

Go ahead, guys. Keep it up and they'll raise the prices! []

 

[gpadgham]

it takes money to make money.... I imagine that the prices bother those who make pens to sell less than those who just like to make pens as a hobby and give them away as gifts, etc....

 

[Rifleman1776]

Quantity manufacturing makes per item costs very-very low. Particularly from third world countries. Cost of equipment and import licenses is insignificant compared to the volumes of 'stuff' that come into this country. A $100.00 pair of Nike shoes cost about $1.00 to manufacture. When I had my gun shop I received offers of wholesale import exempt firearms in large lots. One item I remember well was a brass frame Remington Army style .44 cal. cap and ball revolver. Purchased by the gross (144), they were $4.00 each. The retail was $100.00 to $150.00 depending on who was selling them. And everyone along the line was making a profit before that $4.00 price was reached. I'm one who believes the pen kits are way overpriced.

 

[wdcav1952]

Frank, you know that Griz is going to jump on this one. BTW, how can a slimline kit for under $2 be overpriced, even in Arkansas?

 

[Ron in Drums PA]

Originally posted by Rifleman
<br />Quantity manufacturing makes per item costs very-very low. Particularly from third world countries. Cost of equipment and import licenses is insignificant compared to the volumes of 'stuff' that come into this country.

---Snip---

I'm one who believes the pen kits are way overpriced.

The parts may be made in third world countries, but I buy from resellers who are in the USA who seem to like making a living.

 

[Old Griz]

Originally posted by wdcav1952
<br />Frank, you know that Griz is going to jump on this one. BTW, how can a slimline kit for under $2 be overpriced, even in Arkansas?

NOPE Griz is not going to jump in on this.... NO WAY, NO HOW [][]
I buy my kits and accept the prices because I know that I am getting quality. 'Nuff said

 

[Dario]

Kits, as anything else we buy, are market driven. It is free enterprise after all...whatever the market will bear. []

 

[Rifleman1776]

Originally posted by wdcav1952
<br />Frank, you know that Griz is going to jump on this one. BTW, how can a slimline kit for under $2 be overpriced, even in Arkansas?

Amount of dollars isn't the issue. If that same item could be sold at a profit for fifty cents, then $2.00 is overpriced. Fully completed and packaged pens can be bought anywhere for way under a dollar. And they have identical or very similar mechanisms as our kits.

 

[wood-of-1kind]

While the $1.70 pen kits are a bargain, how can the retailer justify the pricing for the $30.00 kits? Yes, they are nicer and will cost more to manufacture but come on guys look at the price spread. I think that the better pen kits on the high end of the spectrum are OVERPRICED.

-Peter-
Once again i"m putting in my two cents worth (that I like holding on to).

 

[Rifleman1776]

Originally posted by Dario
<br />Kits, as anything else we buy, are market driven. It is free enterprise after all...whatever the market will bear. []

Agree completely. They charge it because we pay it. Maybe one day somebody who is now in the reselling buisness makes the proper contacts and will start importing their own kits at reduced prices. That's free enterprise also.

 

[Dario]

Originally posted by wood-of-1kind
<br />While the $1.70 pen kits are a bargain, how can the retailer justify the pricing for the $30.00 kits? Yes, they are nicer and will cost more to manufacture but come on guys look at the price spread. I think that the better pen kits on the high end of the spectrum are OVERPRICED.

In this case I do agree that it is overpriced. They are nice but NOT THAT NICE! (for me to buy)

Maybe they will lower it down...I think there is not much people buying those kits at that price []..again supply and demand thing.

 

[wood-of-1kind]

Lower prices will lead to higher demand (high end pens) as Dario states in his ECONOMICS 101 lesson. The casual turner is for the most part denied the opportunity at the upper (quality/look)scale.Hope this post gets to Nils at CS so that we may all catch a 'price break'.[]

 

[DCBluesman]

This is a very interesting thread. I think there a couple of different elements that deserve addressing separately.

For the traditional/standard kits we have loss leaders in slimlines and cigar pens. In the slimline we get 5 machined parts for less than $2. In the cigar, we get 11 machined parts for less than $3. Markups betwwen raw material cost and our price really don't influence me much as I cannot get anyone to machine this number of parts for such a reasonable price. If I match the components to a piece of generally available wood and I buy in lumber dimensions and cut my own blanks, my investment in the wood is about twenty to thirty cents per pen. Being able to turn a handmade pen with an investment of less than $3.50 is a pretty good deal in my book.

Moving up to the higher priced pens, what tends to happen is that the plating material and embellishments goes up in terms of market cost. It surely is more expensive to use sterling silver in a pen body rather than gold-plated nickel. Do the costs go up proportional to the price we pay? I'm not in a position to say one way or the other. What I do know is that basic manufacturing setup costs are about the same for many of the kits. If I can sell 100,000 24k slimlines versus 10,000 Barons, the recovery of my setup costs is ten times as great for each Baron. That certainly explains away some of the cost.

Another factor is demand. While many pen makers have no interest in rhodium finish with 22k gold embellishment, there are some who clamor for this. It is fair for a manufacturer who provides this upscale set of components to be compensated for the added costs as well as the added risk of not being able to sell out the inventory.

The market being what it is, if a distributor overprices a kit, other vendors can, and possibly will, come out with a competitive product at a better price point. While our markets are neither perfect nor free, they are close enough to both that supply and demand will tend to determine the appropriate pricing and ultimately whether a product succeeds or fails.

Yes, there is a huge disparity between the cost of a 24k slimline and a rhodium with 22k Statesman. And it is more than the simple raw material cost. It's that way with most everything we buy in a free market economy. You can buy a basic 26" Color tv for well under $200 where a widescreen LCD tv may cost $2000 or more. The LCD doesn't cost $1800. A plain chrome zippo lighter can be bought for $15 where the sterling silver version is $140. There's certainly not $125 worth of silver in the lighter.

Pricing is an inexact science, but the market will drive either the price or the success of our kits, much as it drives other purchases in our lives.

 

[nilsatcraft]

I had a hunch that this thread would have my name in it eventually []. Penturners pull us in two directions. There are those who want as many $2 pen kits as possible. Then there are those who would like a high end, higher quality (and therefore higher priced) pen. We do our best to appease both types ane everyone in between. Although many of the turners in this group (myself included) aren't going to be turning too many pens that start out with a $50 kit, there are plenty of people who want higher end pen kits than that. Our job is to provide a full range so that all types of penturners can find what they're looking for.
Also, whether the parts for a pen cost $.30 or $30 to make, there is a lot more that goes into a pen than simply making it and selling it. There are many steps to creating, producing, marketing and selling a product. The same goes for any product out there. We feel, like many of you, that our prices are fair and we do our best to keep our prices competitive. We also make an effort to provide sales for special interest groups, like the IAP. Many of you probably know that all of our pens are 10% off for members of the IAP right now. We appreciate the input from everyone and we will continue to provide high quality pens and products at affordable prices. Thanks!

 

[Rifleman1776]

We can only relate to our own experiences. The $1.50 Nike shoes that retail for $150.00 are a case in point. I once worked for Coors. The cost of the beer in a can is so small as to be almost immeasurable. At Microsoft, even after development costs, the cost, per unit for software can be measured in pocket change. You pay $100.00 to $1000.00 for that item. In my case, maybe I should have bought a couple gross of those $150.00 guns for $4.00 each, or the $50.00 wool blankets for $1.00 each. And, today, maybe I should buy 20,000 one dollar seam rippers for a nickle per. Maybe the $2.00 slimlines are loss leaders, but I doubt that. And, I hope not. I do want the likes of Bear Tooth Woods, Arizona Silhouette, and even ole Nils & Company to make a profit. If they don't, they won't be here later to provide what we need. Nils is right, there are other costs. Nike has to pay the athletes tens of millions of dollars to get the promo they want. Coors has to keep the Silver Bullet flying. And, I wouldn't want their CEOs to have to scrape by on anything less than $10 mil a year.

 

[Doghouse]

Frank, it is like my wife's father used to say... Well if selling me that car is going to cost you money, that is fine don't sell it to me. Nice tongue in cheek! [] I have found that you get what you pay for in most of the kits, after they have been out for a while. Initial cost does seem steep on some of them. Then again, if there is a call for rose gold kits and people are going to pay for it... I don't blame the retailers for getting what they can.

Nils, in case no one has said so recently we do appreciate the fact that you do provide us a discount.

 

[Ligget]

I buy all my kits from the USA, Ok so I have to add delivery and import duty to get them to Scotland.

But I would rather do that than pay the "over the top" prices expected from suppliers in the UK.

It is the "principal" that makes me purchase from overseas!![]

 

[Ron in Drums PA]

Originally posted by Rifleman
<br />The cost of the beer in a can is so small as to be almost immeasurable.

When I hear this argument I usually ask "How long and how much would it cost you to make it yourself"

What you are paying for is the cost of the can along with the imprinting, packaging, advertising and shipping of the name brand. Don't forget the salaries of the broom pusher and everyone else up to the CEO (don't forget the shareholders). I never understood why people object to others making a living.

OTOH, I guess we could all make a beer line at the local brewery every Friday night with our favorite mug in hand. That would be fun.

 

[Dario]

Imagine the buyers of the "handcrafted pens" complaining how cheap the kits and wood are...and the pens are priced at $20-$150 dollars!!! [}][][]

Just another curve ball.

 

[Rifleman1776]

Originally posted by Dario
<br />Imagine the buyers of the "handcrafted pens" complaining how cheap the kits and wood are...and the pens are priced at $20-$150 dollars!!! [}][][]

Just another curve ball.

Big difference from mass manufacturing by people who earn $7.00 a week and craftsmanship by those of us here.