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product cost vs selling price (Read 678 times)
 
jeff bernaeyge
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product cost vs selling price
Mar 27th, 2017 at 9:02am
 
I was just wondering if other turners that sell their item figure out the actual cost of their item then figure out the selling price.

cost of item= material cost+ labor+ other consumable.
price of item= cost + profit.

at least that's the why I think. its a business. been to to many shows with other turners that sell there items and super low prices.
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Al Wasser
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Re: product cost vs selling price
Reply #1 - Mar 27th, 2017 at 9:50am
 
It really boils down to what will sell at what price.  Your formula might work but what do you do with free wood? For labor are you fast or slow.  If you just started turning tops it may take you 15 mins each and soon it is 5 mins.  You also do not recognize work quality which is a variable.  Wyoming Woodturners suggests that Dia. X Ht X 2.5 works for his bowls in his area.  There is no formula that is hard and fast across the US --just too many variables
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Ed Weber
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Re: product cost vs selling price
Reply #2 - Mar 27th, 2017 at 10:43am
 
We have had many discussions on this topic and while a few things are similar across the board (basic calculations) the majority of the variables are not.

Determining the cost of a piece is math.
Determining the selling price of a piece is an art.
The profit margin can vary greatly depending on who is selling it, where it's being sold, and so on.
jeff bernaeyge wrote on Mar 27th, 2017 at 9:02am:
at least that's the why I think. its a business. been to to many shows with other turners that sell there items and super low prices.

I can't speak for anyone else but I've seen the same thing too many times.(not just woodturners)
Many people who sell are hobbyists and not in it for more than enjoyment and enough profit to continue their hobby.
I know how much my pieces cost me and I sell for a profit, always.
I know people get down on those who sell at what seems to be below cost but I look at it this way. It's nothing more than a business/competition factor that you can't change. I don't like it any more than anyone else but it will always be a factor, so you just have to accept it.
If you want to sell/compete and make a profit, you either have to,
A. sell the same item at a lower price (obviously you can't compete with the "at cost" sellers)
or
B. sell a different (unique) or better (higher quality) item
JMO

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Don Stephan
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Re: product cost vs selling price
Reply #3 - Mar 27th, 2017 at 7:39pm
 
Jeff

In addition to what has been said, there are craft shows with very low entry fees and there are juried art shows with higher entry fees. 

My experience with the general public is they don't know how to compare quality, and often don't care.  Most want a big salad mixing bowl, 14-16" diameter, and a few will buy a natural edge walnut bowl.

My suggestion is to visit as many arts and crafts shows as you can this summer, including community craft shows and regional juried art shows.  See what is offered for sale at what price, but perhaps more important see how many visitors are carrying purchases.

There will always be people willing to undercut your price just for the thrill of a sale.
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Grant Wilkinson
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Re: product cost vs selling price
Reply #4 - Mar 28th, 2017 at 10:48am
 
Just to add to the complications, there are "galleries" that sell turned pieces. They typically take somewhere around 40 -50% of the sale price as their commission, at least in my area. So, add to your selling price their take, assuming you want to net the same amount you would if you were selling directly.
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John Grace
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Re: product cost vs selling price
Reply #5 - Apr 16th, 2017 at 6:44pm
 
Ed Weber wrote on Mar 27th, 2017 at 10:43am:
Many people who sell are hobbyists and not in it for more than enjoyment and enough profit to continue their hobby.


Well said!  I know I'd feel much different if the show I participate in had other turners who I felt I was under-cutting.  But for myself as the hobbyist turner and like you said...I'm simply trying to move my pieces along, pay for the odd new tool here or there, and enjoy when my customers feel they've gotten a good deal on something they'll actually use.
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Re: product cost vs selling price
Reply #6 - Apr 17th, 2017 at 9:39am
 
John Grace wrote on Apr 16th, 2017 at 6:44pm:
I know I'd feel much different if the show I participate in had other turners who I felt I was under-cutting.

IMO, Many people are too quick to anger and complain that the hobbyist's are under-cutting them. This can be true at times although in my experience, more often than not, these same people that are doing the complaining are guilty of trying to sell above their heads. (trying to sell mid-level work at a high-level price)
Too many times I've seen sellers who seem to tell themselves that they're in it for a profit, so therefore they're somehow entitled to better sales. The often belligerent "I'm here to make money" crowd.

IMO, It's the work that warrants the selling price, not the reason behind the sale.


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John Grace
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Re: product cost vs selling price
Reply #7 - Apr 17th, 2017 at 2:55pm
 
Ed Weber wrote on Apr 17th, 2017 at 9:39am:
IMO, It's the work that warrants the selling price, not the reason behind the sale.


Can't disagree with that either...good points!
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Melvin Rowe
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Re: product cost vs selling price
Reply #8 - May 12th, 2017 at 9:02am
 
One important aspect is branding.  Think of designer jeans vs discount store brands. How can one sell for a hundred dollars and the other for twelve? The name and reputation of the designer plus the designer's marketing.  Of course the designer jeans may be more stylish and of higher quality, but mostly people are paying for the name. So your marketing material is very important.  Tags that tell your story, professional looking business cards, etc.
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Don Stephan
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Re: product cost vs selling price
Reply #9 - May 15th, 2017 at 7:27am
 
The original poster said in part "it's a business."  My suspicion is that the majority of wood turning vendors at neighborhood shows do not regard it as a business but instead as a hobby, so "profit" is not a consideration.  Their time is free, overhead is zero because they turn at home and it's a hobby.

The end result, I suspect, is that the general public does not see woodturning  as ever being an artisan activity deserving of "profit."  Their perception has been so skewed by low neighborhood show prices that the public does not believe the turners see their work as having real value.  If the asking price for a bowl represents about $5 per hour of time to make it, why would the public feel it is anything more than a commodity, no different than a far east factory product?  And if that is the case, the public doesn't care about professionalism, conscientiousness, and so on - it's just a cheap birthday gift for a friend!
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Ed Weber
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Re: product cost vs selling price
Reply #10 - May 15th, 2017 at 9:05am
 
Don, I don't disagree with you.
Don Stephan wrote on May 15th, 2017 at 7:27am:
The end result, I suspect, is that the general public does not see woodturning  as ever being an artisan activity deserving of "profit."  Their perception has been so skewed by low neighborhood show prices that the public does not believe the turners see their work as having real value.


IMO, one reason many think like this is that too many people work the formula backwards and/or don't sell at the correct place.
If we agree that selling price is cost + profit that's a starting point but selling price is also what the market will bear.
When I said working the formula backward, I meant.
Trying to create a piece with a built in selling price, dictates where it should be sold. This puts you in a position of trying to balance time, quality, overhead etc, to maintain a profit margin. When doing this, typically one aspect of the piece suffers.

It seems to me that too many are guilty of one of two things.
1. trying to sell at "market price" for low quality work (how cheaply can I make this and still get market price)
2. selling at "market price" with little to no profit (As long as I break even I don't care)
Neither one of these scenarios is good but there is a third option that many never consider.
Sell at a different venue that reflects your work's actual value.
If you don't want to sell your work next to the guy who makes items out of hot glue, glitter and clothes pins. You either need to try another venue and/or raise the quality of your work.

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Re: product cost vs selling price
Reply #11 - May 16th, 2017 at 6:15pm
 
I had great hopes of selling   at a new venue,   then
   the county closed it down
    after installing  water extinguishers, handy cap  ramps,  they had to many more hoops to jump thru.
Now  i only make bowls for  Christmas presents birthdays,  etc
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