pricing

[greenoak]

we have a product ...we make it....its pretty high priced for here..... its a great item and something we are known for and its known to be a great deal....
its somethiNG THATA HELPS SET THE TONE here and we sell maybe 5 or 6 a month...sometimes more..... our average saleis probably 50$$$ this product is 550$$$ to 600$$.... we have 350 in it and sell it for 550...... our operating expenses are between 20% and 30%....so many ways to look at this.... in antiques we hardly ever get to double on the expensive stuff and have always made our living doing that way..... the item is one of our handmade counters with beautiful antique recycled ceiling tin amd all new construction.... they are big and NICE...
raising the price to 750 would very probably cut the sales in half...or worse... thats my guess anyway...
so what would you do? you can s ee it on our facebook , blog or website..

[Patrysha]

You might be surprised...you could raise the price and double your sales if you showcased it in the right market, but not, I think, without a way to ship...and you've said you have no interest in that...

[Dee2x]

If I understand you correctly, you’re currently at a 36.36% margin with this item but want to put it to 53% margin. This would raise your gross profit from $200/item to $400/item. If you currently sell 6 per month, you gross profit is $1200 a month. If you raise the price to $750 and sell half as many, your gross profit is still $1200. I think you risk losing customers with such a drastic price hike. I think the better approach would be raising the price incrementally over a longer period time.

[Spider]

You have a lot of regular customers, I believe. A lot of people watch what you do and listen to what you say. While it is true that a much higher price could bring increased sales, it's hardly guaranteed, and lower prices could increase sales, too. I'd be worried when those regular customers see me suddenly increase the price and then have to reduce it because the ploy didn't work, they'd think the worst that I was trying to gouge unsuspecting customers.

You are currently only making $480 clear a month (6 x $80) Jacking the price up to $750 with a corresponding 50% reduction in sales means you would clear $840 a month (3 x $280) and that is an additional $4,000+ profit per year. But if the $750 price tag drives your sales to 1 a month, you reduce your annual profit by $2,400!

What would I do? I'd creep the price up a bit - $575.00, for a few months, $595.00 later - and keep going until sales slipped - but I wouldn't make a big increase. You can always blame small price increases (and decreases) on fluctuating materials prices.

I hope that helps.

[Steve B]

I think you are all overthinking this thing. Raise the price to what you want it to be and see what happens. You have hundreds of other items. I don't think any regular customers are going to make any big conclusions about your motives if you raise the price on one particular object. The ones that already bought it will think they got a bargain.

[billbenson]

I tend to agree with Steve B on this one. You can always say you got a good price on the first shipment but you are paying more now for this item. I doubt anybody will ask anyway.

[greenoak]

thanks for the replies....last week i did what was mainly suggested...up a bit..fronm 595 to 650.... then we come down a little from there...
.. i just dont want to get in a situation where the price is all wrong..been there a couple of times...
..making 2 0r 300 on one sale is pretty nice....
i dont think the math works if you really put the 25% in overhead in there.... but the little raise seems right...
he customers would probably notice, they come a lot..

[huggytree]

i vote to double the $350 you have into it to $700.......$750 is too greedy....if you double your $$ your doing well

on small parts i double the price, but on large ones i only charge 35%

(under $10 double, under $50 1/2 markup, over $50 35% markup)

[greenoak]

thats a good point huggy....a lot of things can be marked up easier....
a really bad thing happened to us tho...we had this picture business...and the carpenter and expenses kept creeping up and we didnt change the prices....our price was already pretty high for the customers....it was wholesale in competition w iththe chinese........ towards the end we were sending 2 people and our big truck out for 6 days for only 1000 profit.... it was just bad all around...
i dont want to do all that work again for so little.... our original choices really help or hurt!!!