Value added?

[Smitty37]

We frequently have discussions on here about pricing, pricing formulas, value of work shop time, skill of pen turner etc. But we seldom speak of value added. Let me give you an example of what I'm referring to.

ABC turner, buys an Emperor Pen Kit...orders a set of Toni's Poly Clay blanks and does little more than assemble the pen and then asks $350.00 or more for the completed pen about three times the cost of the components....Yet what value did ABC add?

BCD turner, buys a couple of sticks of acrylic and makes a pen from scratch using only perhaps a refill and nib. Spends many hours doing all the work. Then sells the pen for $150,00. Yet BCD clearly added more value than ABC,

My question is this...How much value does a typical turner add to the product? Specifically when using Kits as most turners appear to be doing.

 

[Akula]

ABC added little other than basic skills but purchased everything at a premium.

BCD had much less costs, used more skill in actually making the items.

Will they be the same, doubtful just depending on the skill of BCD

XYZ into the equation; blends/casts their own resin, uses advanced tools for a kit-less fountain pen.

Now XYZ has the less cost involved in this situation (not counting time and experience) and should have the highest roi.

 

[Brooks803]

ABC added little other than basic skills but purchased everything at a premium.

BCD had much less costs, used more skill in actually making the items.

Will they be the same, doubtful just depending on the skill of BCD

XYZ into the equation; blends/casts their own resin, uses advanced tools for a kit-less fountain pen.

Now XYZ has the less cost involved in this situation (not counting time and experience) and should have the highest roi.

I vote for XYZ :biggrin:

 

[maxwell_smart007]

Doesn't matter - perceived value of the final product is all that counts.

"Value" is what it's worth - if Turner A sells it for more than turner B, then turner A had a more valuable product in his market.

Added value only comes into play when you're looking at cost/benefit of your own production, in my mind...do I provide a case, or sell it as an add-on...

 

[Cmiles1985]

There again, value is merely in the eye of the beholder. I certainly mean no offense to anyone using Toni's blanks, or Toni, but the real markup SHOULD be in Toni's blanks, not the final pen. I highly doubt that LeRoy gets 3x cost by putting little baggies of parts together. However, the folks assembling pens from Toni's blanks must be receiving the prices they command as her blanks never stay in stock anywhere they're sold. On the other hand, XYZ casts his acrylic, turns a section, threads everything, puts a high dollar nib in that's well tuned and gets, say $300. The parts and equipment are a much greater initial investment (or can be), the tooling requires far more skill, yet the crafter is making less "margin" than the "assembler" (ABC). It almost makes you wonder if there is any sense (other than joy) to make kitless pens.

Pardon my rambling: I'm eating dinner and typing

 

[SteveG]

The basic answer to your question will likely be all over the chart, because the venue of the sales transaction will heavily influence the price, especially for kit pens. My own venue does not yield high volume, BUT does support a higher than average price point structure. The influence of the penturner's salesmanship will be right in there, having significant effect on whether a sale will even take place. (A high selling price means nothing if there are no sales completed.) So, for example, I will regularly sell a Rhodium Jr. Gent II Rollerball (using a nice blank typically costing $8) for $155, and one of the many Sierra twist styles for $145. I do competent work, with 8 years experience turning and selling pens, following considerable years doing custom furniture work. My venue is a 4 hour weekly time slot at a Kauai Marriott Resort, making "impulse buy" type sales. So the esoteric, custom FP is not something that would sell for me, as I am not at a pen show. I am enticing the unsuspecting tourist who just wanted to go get breakfast poolside, to run back to their room, grab a credit card and acquire ownership of a nice, custom "kit pen" that they had no idea was going to be in their future. I do maintain the same price structure when I do craft fairs, and my products are typically the most expensive grouping of products at those venues. I still make enough in sales to justify doing them, but likely will cut back from 5 to only 2 per year. (I'm gettin" older, ya know!:biggrin

 

[Karl_99]

Maybe I am missing something, but I don't see how doing all of the work yourself adds more value than someone who buys a beautiful poly clay blank and matches it up with expensive components. The final decision on value is determined at the sale.

 

[jttheclockman]

The seller themselves could add value. If 2 people sold the exact same pen but one seller was more known in the pen selling venues than he has added value. Just as is the name on a pen adds value. Make the same pen and add a highend name or symbol to it and it jumps in value ( perceived value)

 

[designer]

Value Added = taking a product and doing work of some sort to it and the value of the product has increased due to the work done to it.

 

[Smitty37]

I did this as a fun exercise to see if anyone would actually answer the question.....Reread what the OP asks. It asks about a typical turner (while they are not uncommon kitless pen makers are not typical) and specifically about people who use kits.... there was no XYZ turner and ABC & BCD were only given as background information.

 

[SteveG]

So Smitty...I talked about my experience, giving actual data points with enough info to figure the Value I add to my product. I am probably a "typical turner", but enjoy a favorable venue, selling "kit" type pens. Did I answer your cleverly worded question?

 

[Smitty37]

Value Added = taking a product and doing work of some sort to it and the value of the product has increased due to the work done to it.

You at least know what 'value added' means.

 

[TonyL]

value add comes in the form of time, place and form utility.
Sometimes just having something at a time when someone really wants it is worth than to that buyer than how much traditional work the seller put into it. That is why popcorn cost $9 at a movie theater. That's what I learned in college anyway .

 

[Smitty37]

value add comes in the form of time, place and form utility.
Sometimes just having something at a time when someone really wants it is worth than to that buyer than how much traditional work the seller put into it. That is why popcorn cost $9 at a movie theater. That's what I learned in college anyway .

To add value to something you have to do something to it --- perform some operation.

Capital gain not value add is what happens if nothing is done to the item.

A good salesman might convince someone to pay $6.00 for something everyone else sells for $5.00 - the salesman did not add value to the product he just convinced someone that it was worth more than it was really worth.

 

[jttheclockman]

I think that is more perceived value than capital gain.

You can also devalue something by adding something to it also.

I think you are playing with words. If a person takes a pen and sells it in a highend store could add value to that pen. Or as i said a well known artist selling the same pen can add value.

But it is your game. Have fun.

 

[Smitty37]

I think that is more perceived value than capital gain.

You can also devalue something by adding something to it also.

I think you are playing with words. If a person takes a pen and sells it in a highend store could add value to that pen. Or as i said a well known artist selling the same pen can add value.

But it is your game. Have fun.

No John T. I am not playing with words.

val·ue add·ed
noun
1.
the amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.
adjective
1.
(of goods) having features added to a basic line or model for which the buyer is prepared to pay extra.

Notice both definitions refer to doing something to the article.

 

[RustySplinters]

I believe there is value added in making it a functional piece of art.

I have other opinions as well but I will keep them to myself.

 

[jttheclockman]

I think that is more perceived value than capital gain.

You can also devalue something by adding something to it also.

I think you are playing with words. If a person takes a pen and sells it in a highend store could add value to that pen. Or as i said a well known artist selling the same pen can add value.

But it is your game. Have fun.

No John T. I am not playing with words.

val·ue add·ed
noun
1.
the amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.
adjective
1.
(of goods) having features added to a basic line or model for which the buyer is prepared to pay extra.

Notice both definitions refer to doing something to the article.

Well I guess you are going to continue. But here are a couple examples of devaluing.

Take one of Eagle's blanks. Now you decided to add a celtic knot to it.You added an article but devalued the blank.

You have a baseball signed by Babe Ruth. You now added your name to it. You again added an article but devalued the ball.


Just because you add more items to said basic item does not increase its value. It increases its price. Take 2 cars. One a volvo and one a Ford. The Ford had more items added to it to bring it up to the price of the Volvo. Both the same price. The Volvo is more valuable than the Ford because of reliability. Perceived value. Now if you are saying price equals value than again play with words.

That is it I am out of here. Not worth the effort. Have a great day.

 

[Smitty37]

I believe there is value added in making it a functional piece of art.

I have other opinions as well but I will keep them to myself.

The question is not whether there is value added but what is the value added by taking a pen kit and a blank and turning it into a completed functional pen.

Whether a pen made from a kit is a work of art or not is an entirely different question, not the issue here at all.

 

[Big]

Is there a quiz, I totally hate quizzes when I slept through the class to begin with. Good question though and I am completely guilty.

 

[Smitty37]

I think that is more perceived value than capital gain.

You can also devalue something by adding something to it also.

I think you are playing with words. If a person takes a pen and sells it in a highend store could add value to that pen. Or as i said a well known artist selling the same pen can add value.

But it is your game. Have fun.

No John T. I am not playing with words.

val·ue add·ed
noun
1.
the amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.
adjective
1.
(of goods) having features added to a basic line or model for which the buyer is prepared to pay extra.

Notice both definitions refer to doing something to the article.

Well I guess you are going to continue. But here are a couple examples of devaluing.

Take one of Eagle's blanks. Now you decided to add a celtic knot to it.You added an article but devalued the blank.

You have a baseball signed by Babe Ruth. You now added your name to it. You again added an article but devalued the ball.


Just because you add more items to said basic item does not increase its value. It increases its price. Take 2 cars. One a volvo and one a Ford. The Ford had more items added to it to bring it up to the price of the Volvo. Both the same price. The Volvo is more valuable than the Ford because of reliability. Perceived value. Now if you are saying price equals value than again play with words.

That is it I am out of here. Not worth the effort. Have a great day.

John, why do you insist on trying to make up your own definition of something that is clearly defined. "Value added" as I pointed out above has two definitions one as a noun and one as a adjective. Neither has anything to do with the comparitive price of two different items. It has to do with the value of the item before it has operations performed on it versus the value after performing the operations. Value and price are not the same thing at all, you are the one suggesting that, not me.

Further, no one suggested that everything that can be done to an item adds value. Further no one has suggested that making a change to an existing item is adding value. Value added applies to producing an item, not making changes to an existing item.

 

[Kragax]

I have found in past business ventures the value is the "perceived value", in other words what ever the market will bear.

 

[designer]

My question is this...How much value does a typical turner add to the product? Specifically when using Kits as most turners appear to be doing.

I re-read the question.This is just too easy nowafter thinking about it. The value added is total cost subtracted from the sale price. LOL

Sorry but I just could not resist. Just seemed a simple answer.

 

[nativewooder]

As usual, answers all over the board. My idea of the "value added" to the pens I sold depended on how well I turned and finished whatever blank I used with the kit. And while I was overwhelmed with the "wizardry" involved in the casting of plastics, they seemed to me to be one-way blanks. So I decided to purchase the best blanks that I could find and still afford to put on my favorite pen kits. And I was surprised at the number of people in my age group who wanted minimal finishes on a pen with wood because that was what they wanted to feel, while most of the younger shoppers all wanted the bright colors of plastic. Even retired, with all my equipment given away or sold, I find I still have a LFRB with leftover blanks like amboyna burl, honduran rosewood burl, all the various maple burls, etc. "Future Gifts"!

 

[Smitty37]

My question is this...How much value does a typical turner add to the product? Specifically when using Kits as most turners appear to be doing.

I re-read the question.This is just too easy nowafter thinking about it. The value added is total cost subtracted from the sale price. LOL

Sorry but I just could not resist. Just seemed a simple answer.

Not exactly....value added works like this...how much value do you add to a square (or round) piece of wood by cutting it to a specified length? How much value do you add by drilling a hole through that cut piece of wood? How much value do you add by coating a brass tube with glue and inserting it in that hole? The list goes on. Note that those operations are the same regardless of what you paid (or didn't pay) for the blank.

 

[TellicoTurning]

This may have nothing to do with Smitty's question, but I believe that we are not selling a pen, or in my case a bowl, peppermill, wood stemmed wine glasses, etc.., but we are selling the artistry in making those items... without the artistry my bowl is just a piece of wood that's been hollowed and shaped, but it's still just a piece of wood. Same with a pen, it's just a piece of wood or plastic that has a few components in it...

 

[wwneko]

It seems you want to know the value added for each operation in pen turning. Obviously itemizing operations that is a waste of time. As you acknowledged, there is A LOT more that goes into a pen than the pen kit and blank cost and my "value added" which could be considered labor/shop time. Everything I do adds value or I wouldn't do it.

My value added for all operations is approximately 30$ for a single tube and 40$ for a double. In advanced situations where I may be doing a specific finish or something like inlay that your typical turner doesn't do or do well, then there's more value added. Selecting the right blank for the right kit, value added. My eye for shaping a blank to match a kit, value added. Casting your own custom blanks, value added. Everything that we do is a value added, that may be why you aren't getting specific answers.

 

[designer]

Thank you Smitty. I was right then.

Now if you are looking for each cost itemized and very specific, that might be nigh impossible. How many blanks can I cut on a carbide tipped table saw blade before I have to resharpen it? Was I cutting Iron Wood or pine during that time? Am I down waiting for it to be sharpened or do I have the expense of a backup blade to put on? What is the time to change it?

These questions will go on and on. In real life, if you have a dedicated saw for blanks, the time to change a blade is added into the overall time for X number of pens and then averaged per pen. Crap, where did I put that blade wrench this time?

Cost estimating is a whole field that is very specific and will vary by location and personnel doing the exact same work. The more data you have the more explicit and accurate you can be. Do you have a time study/lean Mfg expert with a stop watch writing Everything down and timing each step? If not, it is a guestimate is all. Enough guesses and you will be more accurate. But wait! that person has become more efficient so the cost went down (assuming no raises or benefit increases).

Hard costs like the cost of a blank for a duck call is easier to quantify than labor is. Artistic addition to the end product is also in the category of hard to quantify and a personal thought pattern. The customer also has an idea in their mind as to what the artistic value is. Who is right? The artist or the customer? Nope I am not going there. Perceptions and ideals are not quantifiable unless you just came up with the latest version of the pet rock.

I think if you took every member here, asked enough questions to answer all possible variables, added everything and then averaged them, you would still be wrong. Someone making bottle stoppers for friends that are very nice may not be able to put them in a jurered show. On the other hand, does that person know exactly to the second and penny how much it cost them to make? Probably not in all reality. They are not wrong if they are happy with the outcome and the customers are happy.

I guess what I am throwing out is the difference between Subjective and Objective data. One is quantifiable and one is not. One can have a price set and the other changes and is variable and therefore cannot have a specific dollar value put on it other than a guess. By guess I mean comparing to local market prices is all. I know there are a lot of other variables, but that is the only one I am referring to here. Be gentle with me on this one.

 

[Smitty37]

Thank you Smitty. I was right then.

Now if you are looking for each cost itemized and very specific, that might be nigh impossible. How many blanks can I cut on a carbide tipped table saw blade before I have to resharpen it? Was I cutting Iron Wood or pine during that time? Am I down waiting for it to be sharpened or do I have the expense of a backup blade to put on? What is the time to change it?

These questions will go on and on. In real life, if you have a dedicated saw for blanks, the time to change a blade is added into the overall time for X number of pens and then averaged per pen. Crap, where did I put that blade wrench this time?

Cost estimating is a whole field that is very specific and will vary by location and personnel doing the exact same work. The more data you have the more explicit and accurate you can be. Do you have a time study/lean Mfg expert with a stop watch writing Everything down and timing each step? If not, it is a guestimate is all. Enough guesses and you will be more accurate. But wait! that person has become more efficient so the cost went down (assuming no raises or benefit increases).

Hard costs like the cost of a blank for a duck call is easier to quantify than labor is. Artistic addition to the end product is also in the category of hard to quantify and a personal thought pattern. The customer also has an idea in their mind as to what the artistic value is. Who is right? The artist or the customer? Nope I am not going there. Perceptions and ideals are not quantifiable unless you just came up with the latest version of the pet rock.

I think if you took every member here, asked enough questions to answer all possible variables, added everything and then averaged them, you would still be wrong. Someone making bottle stoppers for friends that are very nice may not be able to put them in a jurered show. On the other hand, does that person know exactly to the second and penny how much it cost them to make? Probably not in all reality. They are not wrong if they are happy with the outcome and the customers are happy.

I guess what I am throwing out is the difference between Subjective and Objective data. One is quantifiable and one is not. One can have a price set and the other changes and is variable and therefore cannot have a specific dollar value put on it other than a guess. By guess I mean comparing to local market prices is all. I know there are a lot of other variables, but that is the only one I am referring to here. Be gentle with me on this one.

The question is not a question of cost, or how long it takes to perform the operation or what tools are used, it is how much is the value increased by the operation regardless of how you perform the operation.

It is also not a question of the price the final item brings in the market. There are numerous factors not related to value that have huge impact on prices. Venue being just one of them.

 

[Smitty37]

This may have nothing to do with Smitty's question, but I believe that we are not selling a pen, or in my case a bowl, peppermill, wood stemmed wine glasses, etc.., but we are selling the artistry in making those items... without the artistry my bowl is just a piece of wood that's been hollowed and shaped, but it's still just a piece of wood. Same with a pen, it's just a piece of wood or plastic that has a few components in it...

You are absolutely correct this, while it might be perfectly true, has nothing to do with my question.

 

[jttheclockman]

Smitty in my eyes you don't get it. I am not making up definitions. You are trying to combine the words cost with value. They are not the same things. No one is going to be right here because it is your definition and you will not see past it so go for it. Every drop of glue used adds value. Every grain of sandpaper used adds value. Every turn of the blade adds value and on and on and how stupid does this sound. So please let me fade away into the night. There is no answer here. :turtle: I assume you got what you wanted a debate.

 

[Smitty37]

It seems you want to know the value added for each operation in pen turning. Obviously itemizing operations that is a waste of time. As you acknowledged, there is A LOT more that goes into a pen than the pen kit and blank cost and my "value added" which could be considered labor/shop time. Everything I do adds value or I wouldn't do it.

My value added for all operations is approximately 30$ for a single tube and 40$ for a double. In advanced situations where I may be doing a specific finish or something like inlay that your typical turner doesn't do or do well, then there's more value added. Selecting the right blank for the right kit, value added. My eye for shaping a blank to match a kit, value added. Casting your own custom blanks, value added. Everything that we do is a value added, that may be why you aren't getting specific answers.

Labor and shop time are costs...value added is not costs. Just to take a simple example...gluing a tube into a drilled blank. Whether that takes you 2 minutes or 2 hours the value added does not change -- the cost changes a lot.

 

[designer]

I agree. Venue is just one of the variables as is artistic ability and a whole list of others. No argument there.

Since you eliminated the hard quantifiable numbers of cost, equipment, supplies and other things that can be quantifiable, the rest would fall under the category of variables then the way I am looking at it. We are back to subjective again. You eliminated objective.

Since what each of us think is the proper value added is for each individual step changes and is not based on objective facts, it is simply subjective again.

I am having trouble with why the question. Not knocking you at all, just a bit unsure. Are you looking for hard numbers for each and every step as far as to what the value increased?

The value of a pen does not increase immediately when you rough the tube up prior to glue up. It does add to the final value versus not doing it in the long run. Short term, not really because the tube does not come loose for the customer right away. If I understand you correctly, you want to know what the value added is of roughing the tube then. Is that correct?

 

[designer]

In industry even raw material is marked up to add value to the end product. As are coolants, grinding wheels etc. Costs, but the added margin add value to the end product.

 

[Smitty37]

Smitty in my eyes you don't get it. I am not making up definitions. You are trying to combine the words cost with value. They are not the same things. No one is going to be right here because it is your definition and you will not see past it so go for it. Every drop of glue used adds value. Every grain of sandpaper used adds value. Every turn of the blade adds value and on and on and how stupid does this sound. So please let me fade away into the night. There is no answer here. :turtle: I assume you got what you wanted a debate.

John . I have stated very clearly that what value added is....it is not related to cost. Taking longer to perform the same operation does not represent more added value but it does increase costs.

If costs exceed the value added it might well determine whether or not a maker will continue putting pens together (if he/she is putting them together with profit in mind) but they will not affect the value added.

Also, it is not my definition it is the accepted economic definition of "value added" and you refuse to accept it.

 

[Smitty37]

In industry even raw material is marked up to add value to the end product. As are coolants, grinding wheels etc. Costs, but the added margin add value to the end product.

Value added is an economic term. If company A can make a widget in half an hour and company B can make the same widget in an hour starting with the same materials both have added the same value. But not necessarily at the same cost or with the same processes or equipment.

 

[designer]

Wow. Now, that is an idealistic and simplistic outlook.

Yes, but did they add the same value? Let's assume the end product meets the product requirements. Not always the same quality, but the same requirements have been met to specification.

Let's for the sake of discussion that company B (or A you decide if you would rather switch them) had a much prettier and appealing product that just barely met the lower limits of the requirements. Company A not only met but exceeded the specifications required, but was not quite as aesthetically appealing but still acceptable. Who has the most value added? Company B because it is purdy or company A because it lasted and performed better?

At time of purchase the answer might be one and down the road it might be another answer.

Again, you are asking for Objective answers to a Subjective question. Only a presidential candidate can answer it (we all know their reputations on objectivity). In real life there is no way to answer it.

 

[designer]

And yes, this does answer your question in summary form. Reason? You determined the value added for each individual step to arrive a the selling price.

Do me a favor and setup a spreadsheet for each step involved and the costs, labor and the next column with the value added. Theoretical numbers of course. I bet it will be a lot easier for all of us to understand that way.

 

[Smitty37]

Wow. Now, that is an idealistic and simplistic outlook.

Yes, but did they add the same value? Let's assume the end product meets the product requirements. Not always the same quality, but the same requirements have been met to specification.

Let's for the sake of discussion that company B (or A you decide if you would rather switch them) had a much prettier and appealing product that just barely met the lower limits of the requirements. Company A not only met but exceeded the specifications required, but was not quite as aesthetically appealing but still acceptable. Who has the most value added? Company B because it is purdy or company A because it lasted and performed better?

At time of purchase the answer might be one and down the road it might be another answer.

Again, you are asking for Objective answers to a Subjective question. Only a presidential candidate can answer it (we all know their reputations on objectivity). In real life there is no way to answer it.

Not so. I gave a specific example and you changed it to get to where you want to go.

I said that both the starting materials and the end product were the same. If they are even slightly different I could not have made the comparison.

Most countries in the EU collect a value added tax, which gets passed along with products and finally along to the consumer. It is a popular consumption (sales) tax because the final consumer does not see it as a separately stated item.

 

[designer]

No two end products can possibly be the same. If they are, your test instruments are not finite enough.

You have made subjective and objective statements and the same with your question. Pick one or the other.

I am so glad I live in the USA and do not live in the EU. The VAT tax has always been a point of contention across the board because of subjective views that cannot be quantified.

Still waiting for the spreadsheet by the way.