my pricing formula

[Rifleman1776]

I currently have a pen in "Show Off..." that is priced at $40.00. It is a Tn gold European with stabilized Big Leaf Maple burl wood. Glad to say, it came out well and is a nice pen. Some have said I should ask more for it. That's a compliment and I appreciate. However, after some experience marketing (and trying to market) my pens I have settled on a pricing formula that seems to be working well and is fair for me. I used to use the '3X' rule. Just take costs of materials and multiply by three. But, many of my pens are sold in a store that doubles my price. e.g. and $80.00 pen is priced at $160.00. In some cases, I felt I was pricing myself out of the market. So, I have revised and find that my new formula is working out better. I am selling more pens and making a fair profit for myself. What I do is take cost of material, double that then add $10.00. The $10.00 is for shop overhead and amortization of tools. For example, the Euro: Tn gold kit: $7.50, blank was about $5.00. That's $12.50 doubled = $25.00, then $10.00 added is $35.00. And, yes, you caught me, the pen is $40.00. I added the $5.00 because it is an exceptionally nice Euro and I wanted to set it above the rest I'm offering. BTW, I always price blanks at $5.00 even if they were given to me or I cut the wood myself. Everything has value and the idea is to make a profit. The $10.00 for overhead was not scientifically arrived at. It's just a number I feel comfortable with.

 

[ashaw]

Frank
Just sent you and e-mail.

 

[Dario]

Frank,

My pricing is somewhat similar to yours. I use the 2x (kit + blank) formula plus constant but I try to use $15.00 - $25.00 as my constant (lower price for single barrel pens since I turn one barrel at a time).

I don't take this as a hard rule though, just my baseline. I adjust depending on how nice the pen came out.

 

[gketell]

Alan,

That is a nasty teaser. If you have something that would benefit us all then please post!!

Thanks from the Newbie trying to learn!!
GK

 

[ashaw]

I did not want to step on Franks post. But a lot of turners under price their work, including me. Once I went full time into this My pricing model is as follows.
Cost of kit (Note non discounted price).
Avg price of blank.
Ancillary materials - Glue, mandrels, boxes etc
Labor
---------------------------------------
net cost
x profit%
---------------------------------------------
Gross cost

Retail is just double of Gross Cost.

Franks formula is very similar to what I use.
Anytime a customer (Not a dealer) wants to know how much my pens cost it is always retail not wholesale(Dealer Cost). I sell only through dealers but if I was selling directly to a customer it would still be retail price. You can always lower your price for a certain customer but it is very hard to raise your price.

Couple of things to keep in mine are taxes. In my township if I was retailer I would have to pay taxes on gross receipts and taxes on units sold. In my case since I wholesale I only pay taxes on gross receipts.

 

[Ron in Drums PA]

Should be: (((Net Cost x 2)+ Shop Time) x Profit% = selling price) + value (If needed)
Where value is for unusual and or nicely figured blank.

 

[beck3906]

Question....
If you pay $250-350 to enter a good show, where do you account for the cost of the show?

Thanks
Rick Beckham

 

[Ron in Drums PA]

Good question!

The easy answer is Shop Time

The "not so easy" answer is learning how to figure your per hour rate, or your Shop Time

 

[Rifleman1776]

Originally posted by beck3906
<br />Question....
If you pay $250-350 to enter a good show, where do you account for the cost of the show?

Thanks
Rick Beckham

At the end of the day over a stiff drink. []

 

[ashaw]

Why not use the max. show cost you will pay for the year and divide that by the number of pens, toppers, etc you will be selling.

 

[ctwxlvr]

The way I handle show cost is an expense called show fees, and it in the end becomes part of the overhead cost of the selling. As to how much it adds to each pen there is no way of telling ahead of time, so it comes out of the "gross profit" of each show.

 

[arioux]

Hi,

I use the Walmart approach, wich means:

The price of the other guy in my town that make pen minus 5%[}][]

Alfred

 

[cdcarter]

I'm inclined to have a "big bore" premium on anything that requires a hole bigger than a 10 mm. It often takes a bigger blank, and to avoid splitting, I usually cut it oversize (requiring more wood) and stop short of the end, then saw it off. This requires two sawing steps. And big-bore drilling just does slower. All seems to justify a bigger price tag -- maybe $10.