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Pricing Bulk Orders (Read 1,542 times)
 
Katherine Sakovich
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Pricing Bulk Orders
May 27th, 2014 at 7:38pm
 
I have a local rotary club asking me to price a bulk order of 50, and 100 pens.
They'll be Slimline Chrome twist pens made from Corian, and I'll use a decal process to put their club name on the pen.
The cost of the materials is fairly low. 
I was thinking double the materials cost plus add in some labor.
Would love to hear how some others have determined pricing for bulk orders.
Thanks!!
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Re: Pricing Bulk Orders
Reply #1 - May 27th, 2014 at 9:42pm
 
Katherine, if someone is ordering a bulk order of 20 or more pens, I give them a 20% discount.
HTH
Steve
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John_Voloudakis
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Re: Pricing Bulk Orders
Reply #2 - May 27th, 2014 at 9:47pm
 
Katherine,

Congrats on the order.  Unless you're doing this for charity / friendship, I would think about it this way...

1)  How much do the materials cost?
2)  How much do the supplies (e.g. sandpaper) cost? 
3)  How long do you think it will take you to make them?
4)  How much is your time worth (per hour)? 
5)  Multiply 4 and 3 to determine labor cost.
6)  How much time did you put into the sale?  Add that in at the same hourly rate as above.  The difference between that and how much time it would take you to sell 50 pens one at a time is your discount for the bulk order.  In other words, neither your materials cost or the value of your time are changed by a bulk order (unless you get the pen kits cheaper by purchasing them 50 at a time).  What changes is your selling costs, which should be cheaper unless you had to put a ton of time into the sale. 

Hope this helps,

-John


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Ron Sardo
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Re: Pricing Bulk Orders
Reply #3 - May 28th, 2014 at 8:40am
 
When you have an automated process is easy to give discounts because long runs cost you less.

When you are make one pen at a time its hard to give a discount on quantity because your costs remain the same.

Let me give you an example:
Think of a copier, once you place the document that you want copied on the copier, all you need to do is decide how many copies you need and press start and the job starts to run

Now think of creating 100 unique documents from the beginning in Microsoft Word, each document is different and you need to start with a blank page for each.

How long would making 100 copies of the document compared to creating 100 unique documents?

Yes, when turning 100 pens you can cut all the blanks first then drill all of them next and so on which will save you some time. But you still can only turn, sand and finish one pen at a time.

My point is, "Don't Give Away The Farm" because you want the order. How much of a discount would be based on how much you are selling them to begin with and how much you are willing to cut into your profit and still make the job worth while.

FWIW - When I was doing pens I didn't give discounts on quantities. I would explain to the buyer that each pen unique and hand made and not stamped out by a machine running somewhere overseas.
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Bill Neff
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Re: Pricing Bulk Orders
Reply #4 - May 28th, 2014 at 8:56am
 
DItto to what has been said.  and don't forget that by after 10-15 pens, you'll be getting tired of repeating the exact same thing over and over and over and over...     100 pens spread out over a year not bad, but all at once?    I did an order for 20 pens and towards the end I was thinking, "is this really worth it?"
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Katherine Sakovich
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Re: Pricing Bulk Orders
Reply #5 - May 28th, 2014 at 2:12pm
 
Smiley  Thank you all for the input.   It definitely help us to make a decision.  We certainly didn't want to give away the farm, and we do want it to be worth our time to even do the job. 
So we decided to take the normal price we would sell the pen with decal, which is $20, and for a qty of 50 we'll give a 20% discount and for a qty of 100 we'll give a 25% discount.
Thanks again for your time and sharing of your wisdom! 
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Re: Pricing Bulk Orders
Reply #6 - May 28th, 2014 at 2:32pm
 
My personal thought is that your proposed discounts are too high.

I'd go for at most 10% for 50 and then 15% for higher quantities.
What if they want 200 next time? Would you give them 30%?

If these pens are just a hobby for you, then you can afford to give away money.

If you are trying to make a living doing this, if the money you make off of these is needed to pay bills, then you need to not give away the store.

What Ron  said is right. They have to realize that you are making them one at a  time and by doing so, there isn't much room  for large discounts for quantities.
They are used to buying things like this from pen manufacturers who DO give large discounts because they are geared up for it.
I've seen many small businesses go out of business by trying to please their customer with discounts for fear of losing the job.
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Ron Sardo
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Re: Pricing Bulk Orders
Reply #7 - May 28th, 2014 at 3:20pm
 
Ralph Fahringer wrote on May 28th, 2014 at 2:32pm:
I've seen many small businesses go out of business by trying to please their customer with discounts for fear of losing the job.

Ditto

At 20% & 25% you are giving away the farm.

@ $20 per pen before discount your final price with discounts are $16 or $15 a piece. At that price you can bring more money home by flipping burgers at McDonalds.

Remember, its easier to lower a price than it is to raise a price.

If pushed into a corner try 5% & 7%. If they balk go to 6% & 8%
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Re: Pricing Bulk Orders
Reply #8 - May 28th, 2014 at 3:24pm
 
Katherine, I think $20 is not enough for selling your pens, even the slimline.  For example, I sell my cigar and Gatsby/Wall Street II pens for $50, and that is what I consider a moderate price for those style ballpoint pens. I figure when I'm making a pen, or any other turning, my time is worth at least $30 to $50 an hour.
Just my thoughts.
Good luck and congratulations on your order.
Steve
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Ralph Fahringer
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Re: Pricing Bulk Orders
Reply #9 - May 28th, 2014 at 3:27pm
 
Which brings me to another question... How long does it take to make a pen start to finish?
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Re: Pricing Bulk Orders
Reply #10 - May 28th, 2014 at 3:36pm
 
I'm a Rotarian and I thank you for any discount given to this fine organization. Smiley Rotary is a great not for profit organization, but make sure that you get paid for your time...
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Re: Pricing Bulk Orders
Reply #11 - May 28th, 2014 at 3:54pm
 
I sell plain wood slimlines for $35.  Other pen kits and pens with materials that are more expensive or more labor intensive go for more, all the way up to $125 for some of the more complicated laser cut inlay kits.  At $15 or even $16 per pen, you're not even breaking even.  Think about what you have to do for each pen.  Buy and prepare the Corian, Cut, Drill, Glue in the tubes, Square the ends, Turn, Wet sand, Polish, Apply the decal, Top coat, Buy the kits, Assemble, Package, and deliver.

You will be giving away your labor and tools.  You'll need to sharpen your gouge or scraper 3 or more times for each pen to end with a clean cut.  How many times can you sharpen before you have to replace it?  How much sandpaper are you going to use?  How long will your bandsaw blade last cutting that much Corian? 

OOPS!  I forgot, Buy Sandpaper and finish.
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Re: Pricing Bulk Orders
Reply #12 - May 28th, 2014 at 4:09pm
 
...and don't forget all of the caffeine you'll need!!! Thumbs Up
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