Product Pricing for Profit - A Maker's Perspective
Рет қаралды 9,194
Күн бұрынHow do you price products and sell them to make a profit? Why do makers deliberately try to price themselves out of business? And why would we even use services like Etsy, knowing that their motive is to take even more of your money? There are many questions that Makers ask on a regular basis, so in this video, I will walk through some of the challenges posed by selling sites such as Etsy, and some of our own difficulties that we struggle with as makers when it comes to pricing products for profit. I will use the example of making and selling cutting boards, but this discussion applies equally to any product that you might try to sell on a site like Etsy, Shopify or even your own website.
I will walk through some concrete examples of generally bad sales behaviors on our part and the somewhat dubious practices of selling sites to hopefully provide some food for thought on how you can make products AND a decent living at the same time.
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@ahinther Жыл бұрын
Thank You! I used to make (can't now because people expect cheap) beautiful hand-crocheted baby blankets. I would sell them for $25-35 (which was ridiculously underpriced). I had a "friend" ask me how could I charge so much because she could get a similar one at WalMart for $10. My response was, "Go do that then." My blankets took 40-80 hours to make and were one-of-a-kind. They were definitely NOT similar to anything at WalMart. Now I only give them as gifts.
@SteveMakesEverything Жыл бұрын
Well not to pick on WalMart, but the basic problem is the people will race to the bottom of the market. You need too decide if you want to build KIAs or Porsches. With one you get mass appeal but your margins are either small or negative. With the other your margin is higher but you sell a lot less. Personally I would rather sell fewer but actually make some profit. 😁
@gameonuk9169 Жыл бұрын
100% agree Steve, I simply refuse to work for pennies, if I wanted that I'd go fill shelves in a store somewhere. As always great video Steve. 👌👍
@SteveMakesEverything Жыл бұрын
Thanks
@PaulyD0859 Жыл бұрын
I too am annoyed by people who have no idea how to value their product. They ruined ebay 20 years ago, too.
@SteveMakesEverything Жыл бұрын
I too struggle to understand the reasoning that giving away your hard work will somehow make you successful
@PaulyD0859 Жыл бұрын
@@SteveMakesEverything it's the same logic as buying a truck load of watermelons for $1 each, selling them all for $1 each and thinking you need a bigger truck.
@SteveMakesEverything Жыл бұрын
@@PaulyD0859 I like this analogy - it's very accurate.😀
@coenmarc Жыл бұрын
Steve you’re the calm and clear eye’d voice of reason. Thank you for posting this.
@SteveMakesEverything Жыл бұрын
Wow, thank you. Most of the time I'm really stressed trying to get customer projects done, but you never see that on camera😀
@jcktravler1722 11 ай бұрын
Thank you for the encouragement to keep our business profitable. I've purchased plenty of items from Etsy, but when I started this endevour, I decided I wasn't interested in their terms. I'm primarily using word-of-mouth advertising and carrying my large customized water bottle everywhere I go. And believe it or not, it's working! Thanks again for the great content.
@SteveMakesEverything 11 ай бұрын
Yes, this is what I do too. Etsy is a hobby for me rather than something I depend on. I sell more from my own site.
@atbvip Жыл бұрын
The worst is when people seriously underprice their work and say “it’s just a hobby for me. I’m not trying to get a profit.” I get it bc they’re just trying to do something in their spare time but at the same time it lowers the whole market price when everyone sees those prices and then expect you to have that same prices
@SteveMakesEverything Жыл бұрын
Absolutely. I was at a craft fair as a spectator a while ago and talked to a person turn very nice Christmas ornaments and selling them for $5. I asked how long it took to make them and the answer was about 45 minutes. He gave me the “retired guy” speech. I figure it was costing him at least $10 to sell one of these. Retired or not that makes no sense.
@robotsnthat Жыл бұрын
@@SteveMakesEverything I've seen this on 3 occasions - I rarely go to craft fairs tbh. I bought the complete stock of the pieces I though would be good sellers, and on-sold them between 2-4 times what I paid for them. Wasn't worth my effort to make them at that price. Biggest mistake I made was not approach them to make them in bulk for me to on-sell 😀. As you say, you can't compete with retirees.
@SteveMakesEverything Жыл бұрын
@@robotsnthat We've all lived through this - sometimes without knowing it. Sometimes it's "Seller beware" too
@rickpouley2857 Жыл бұрын
I totally agree! I would rather make a few items and charge more, than want to sell a ton of items for cheap... I am more interested in quality over the quantity... Great video!!
@SteveMakesEverything Жыл бұрын
Thanks
@chrisdixonstudios Жыл бұрын
Steve, The key is to have enough quality products to make with accurate time, materials and expenses. Such that your earnings for your precious time is sufficient and accurately understood. Places like Etsy are necessary markets as their marketing power, economies of scale and consumer confidence are hard to match in the unnatural online worlds of Biased and Paid Search results. So, branding across many channels, social media and partners is part of online marketing. Because the truth is small business can not afford the volume of Paid search big companies do to overcompete. My Etsy sales are such that they also force another 5% advertising fee, like or not if you sell over $5,000! Yet, I totally agree with you about quality. Fair Profit margins usually more than make up the difference of lost sales due to fair pricing and allow sanity in long workweeks. Decades ago I wholesaled $50 small 9 inch pelican sculptures..Now for decades our own croney government allows fake, unfair trade and shipping policies with CCPee that closed my growing smaller items business. So now I make big, lifesize pelican highest quality Statues only retail direct, at $700+. Quality Art craftsmanship keeps up with inflation. Production of smaller items is a numbers game. Professional Laser engraver/cutters and cnc milling can be automated for certain items in 'your' niche for profits ..but everything changes many time since I started woodcarving ducks in 1976.
@SteveMakesEverything Жыл бұрын
You’re raising my point about Etsy. They aren’t really interested in helping you get large and successful because then they need to start giving you discounts. Sounds like you are on a better track now - sell less but earn more
@chrisdixonstudios Жыл бұрын
@@SteveMakesEverything 100%. I add Etsy costs onto Etsy items. If we did the math on % profit, above shop labor rate. Say 10% corporate profit of gross. $10 of $100. Raise gross price from $100 to $110, only 10%. But 100% more profit at $20. Losing 10% sales over price increase still makes you $9 of profit. But usually raise prices when already booked or into busy seasons to equalize production limits, ie no loss of sales. Easily reinvest any above the majic $10 to increase volume, tools and/or products so no gross shoprate loss in long run. Now you can keep making quality worth waiting for, and why I am always booked months ahead. The struggle is real but my 3 kids and lovely wife have a rock of stability to persue happiness..God willing..of whom I thank for love, talent, and sparing my home after a massive direct hit with hurricane Ian last week.
@cccs777 Жыл бұрын
If I could give this a double thumbs up I would! SO TRUE!
@SteveMakesEverything Жыл бұрын
Happy I’m not alone in my frustration 😁
@weboflies999 Жыл бұрын
I created some coasters and put them out on my site. Hopeless like you said, but I felt I had to cover that base nonetheless. Just to master the jig skill etc. Seems like more obscure and niche items sell better.
@SteveMakesEverything Жыл бұрын
You will find coaster in my stores as well but it’s a product that is so oversold. The only way to make money on coasters or keychains is to sell to businesses who want promotional items for their customers
@guynotes777 Жыл бұрын
Thanks for the great information and love your rational. I'm just starting out and knew I was not going to undercut myself. I have many ideas and have picked up ideas and once I am more experienced, I will be putting my items out there. Thankfully I have a great friend with your wood working experience that is excited to delve in to lasers with me..
@SteveMakesEverything Жыл бұрын
Excellent. Welcome to the rest of your life 😁
@herbertbrowning6753 Жыл бұрын
Yes Steve your spot on. I make custom knives, I don't sell volume but do sell quality. Really enjoy using my laser to engrave/ design in lightburn.
@SteveMakesEverything Жыл бұрын
Nice! I’d like to believe that quality still matters to some people and they will be willing to pay for it. For the things I make, they won’t leave my shop if they have even a minor flaw. If I wouldn’t be willing to pay for it then I wouldn’t ask a customer to.
@drdave611 Жыл бұрын
I quite agree with your comments. However, I'd like to offer a couple of additional observations on setting prices, based on our own experience as makers (marquetry images including portraits as well as marquetry-enhanced items: boxes, cabinets, mirrors, clocks, etc. (We have never sold on Etsy, as nearly everything we do is heavily customized. But, we HAVE used galleries occasionally.) 1. It's important to understand your market. We are in the Denver area. The reality is that pricing in Denver must be different than it is in the SF Bay Area. Sometimes by 2X. 2. Quality matters but so does your efficiency and skill. If it takes you twice as long to make an item as it takes another person because you are just not as skilled yet, you should not expect to charge twice as much because you "deserve" the same hourly rate as the more skillful maker. The customer should not be expected to pay a premium for your learning. Improve your skills so you can improve your profit margin. 3. The very best makers/artisans/artists may eventually get to the point that they can charge an "art premium" because of their reputation (Nakashima or Maloof as woodworkers, Kopf as a marquetarian). But as a guideline, you should expect to work for at least 10,000 hours before you will be able to do this. No matter how creative your work is, in most cases, your sales will initially be determined by the VALUE you provide. Your coaster example is a good one. We carried a product which was a small hand mirror, 3" in diameter, all hand crafted with a marquetry image on the back side. People loved them. But, the simple truth was that the market price in our region was $35-40. They were completely unique, one-of-a-kind pieces, but they would not sell at higher prices. (But, in a gallery in California, they would sell for $75!) It became clear that in order to make these items viable, the entire process must require under an hour. By using batch methods as much as possible, we were able to usually do this. But, it still meant that we could never place this item in galleries since they typically wanted 50%. Which brings us back to #1: know your customer and market.
@SteveMakesEverything Жыл бұрын
These are excellent points and certainly topics worthy of separate videos/discussion. In the video I really only touched on #1, which as you’ve pointed out is the center of our universe. Like you, I focus mostly on custom work which is what really pays the bill. I have dabbled with Etsy and my own store for standard products. My own site is better, but in fairness to Etsy, I haven’t put a lot of effort there.
@noelhanigan9628 Жыл бұрын
Great video and 100% agree. It costs money to be in business. Taxes Insurance and equipment, are just a few items.
@SteveMakesEverything Жыл бұрын
It seems obvious but often Makers think only of the cost if an item rather than the running costs of a company, so they usually only charge for labor and forget about growth or ongoing maintenance.
@TheLouisianaHobbyGuy Жыл бұрын
*Good advice Steve!* Joined!
@SteveMakesEverything Жыл бұрын
Awesome! Welcome aboard!
@TimoSund Жыл бұрын
Quite the truth on the video. The famous ”other guy” is always cheaper/quiker etc when compared to my prices. Why customers then approach to me asking for lower price than that other guy? Once customer to be started with oneliner ”.. I know You’ll make it cheaper than xxx, will I get some added discount?” That was probably easiest no to say.
@SteveMakesEverything Жыл бұрын
There people who will pay proper prices for truly handcrafted unique items. They will never ask for a discount and in fact may ask how much more they can pay for exclusivity. As a result I will almost never make two items that are exactly the same, and then I’ll sell that notion to buyers. How valuable would the Mona Lisa be if there were several of them originally painted at the same time? I get to tell customers “You will be the only person to ever own a cutting board like this one”.
@TimoSund Жыл бұрын
@@SteveMakesEverything Very true. Just got pm of personalized tealight. Prize is not negotiable.
@engravingworld Жыл бұрын
Excellent that's the way to charge
@SteveMakesEverything Жыл бұрын
Seems to work for me
@scubacopter9584 Жыл бұрын
Here's my problem: I grew up broke. Most of the country (USA) are not middle class, they're working class. I'm tired of makers deciding that the working class don't deserve quality. I wanted nice things growing up, and I want nice things now. It shouldn't take a certain class to have/afford nice things. Good news is our customer-base shouldn't overlap.
@SteveMakesEverything Жыл бұрын
To be clear, it didn’t say that a certain class shouldn’t get quality. I build everything with the same quality regardless of price. However it stands to reason if you want to make more money as a maker you need to sell to people who have it. The point of this video isn’t to inspire you to ignore any particular audience, but rather to avoid selling at prices so low that you are forced to either work 24h a day to eke out an existence or worse, sell things at a loss. If you have found a market where you are comfortable that’s fantastic
@haleylikescheese Жыл бұрын
I completely understand what you mean. That's why my knee-jerk reaction is to give things away. It's definitely hard to balance. I'm personally striving to get myself and my family out of the cycle and then I'd like to work towards finding ways to get quality to some that maybe can't afford it. Also, Steve- I appreciate how you handled a differing point of view.
@SteveMakesEverything Жыл бұрын
@@haleylikescheese We all have a perspective that we feel is important. Regardless of what demographic you want to focus on, it is important to have actually have a market focus. If it helps you achieve your goals, then you are in the right place.
@Terry_Genereaux Жыл бұрын
Hey Steve I have a LM2 with a 5.5w output laser head any recemedations on a compatable upgrade to a 20w output laser head or a different unit that I can cut faster
@SteveMakesEverything Жыл бұрын
I know you can buy a generic 10W laser module upgrade but I haven't seen any after-market 20W module upgrades yet. Really though, the upgrade price would probably be comparable to just buying a new laser. When replacing the laser module you are essentially replacing the component that represents about 80% of the laser's cost, so you would probably be better off selling the laser you have and buying a new one.
@digiital Жыл бұрын
There is no way that board was handmade by the seller. I bet that they bought the board made overseas. Sooooooooooooooooooooo many sellers on etsy are selling stuff NOT made by them.
@SteveMakesEverything Жыл бұрын
It would be beneficial if Etsy force people to declare the country of manufacture, so everyone knows where things came from. There is a lot of misrepresentation out there
@douglasbarnes4035 Жыл бұрын
As an esty shopper. I’d estimate that half the sellers are resellers.
@chain3519 Жыл бұрын
Etsy has definitely turned into a drop shipper marketplace :(
@digiital Жыл бұрын
@@chain3519 etsy doesn't care it's all more $$$ for them.
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