I used to have a wedding video production company. When we raised prices above 2k we also saw an increase in business. My thoughts were if I am more expense than 90% of my competition, there must be a reason. It also helped us not to work with clients we didn't want. People who paid more money were less needy and "trusted" the process.
Being a wedding photographer, I do understand this perspective as I have seen the same results. But on the flip side, that's a dangerous piece of advice to give, in any industry. You have to know that you are ready to produce that quality of work. You don't want to be on the wrong side of the Dunning-Kruger curve. I've known several photographers who took this advice from RU-vid "photographers" and ended losing business because when you charge $3000 for a wedding, clients expect you to know what you are doing. Many people have gotten in over their heads and gotten scathing reviews because of it. My advice is to progressively raise your prices (this goes for woodworking too) so that your price goes up with your experience.
I learned this lesson (the hard way) many years ago. I was an artist living in NYC and selling my work in street markets. I mostly sold in Union Square at a price point around $20. I did very well there so I decided to try a market in SOHO.... I didn’t sell one pice for three days. Then another artist told me to raise my price from $20 to $50. I thought they were crazy... if they weren’t selling for $20 why would they sell for $50? He explained to me that no one in SOHO buys anything other then coffee for under $50. If it’s less then that, they assume it’s not worth owning. I raised my prices and made $500 in three hours the very next day. Price your art for what it’s worth and people will see it. Don’t hide it’s value behind a discount sticker. ✌️♥️
Natural reaction to a higher price is the appearance of higher value and price and value don't often match. People really do think if they spend more they always are getting a more valuable product when that is not the case.
@@fireballxl-5748 TBF there's some evidence that the effort we go through to get a thing can make us appreciate it more. That's no excuse to lock people in need behind arbitrary make work. But for non-essential goods and things that we seek out to make our lives more fulfilled . . . maybe it's not a bad thing. I've a got a giant back log of cheaply purchased games I've never played. And a lot of them are really good games by all accounts. But I regularly use my switch and play the physical media I walked to the game store and paid full price to buy. Likewise, firing up a streaming service to watch something, and then just flipping through the options for hours.
When the value of your product exceeds the price, people will buy. People pay for perceived value! Build value in what you sell... Like personalization or features or benefits and people will buy! Great video!
You two hit the nail on the head. Amazing how many people think nothing of spending $250 on a pair of sneakers for their kids to wear to school but they will argue till they are blue in the face trying to convince you that the box-jointed custom made, custom engraved box you want to sell them for $75 is just too high! They can get a piece of crap from Michaels that's falling apart with no custom engraving for just $29.95! I heard the story from back in the day when Olivetti made computers. They weren't selling very well...so they increased the price on their computers and they couldn't keep up with the demand. Funny how that works. I am just a hobby woodworker who manages to sell something on occasion and I always feel guilty when I price something to someone. I'm not going to feel guilty anymore and I'm going to charge what I need to so that it's worth my while. Thank you both!
I took a class in high school back in the 70s that I never forgot. The teacher explained why people who work in advertising can make as much as MDs. She explained the "bandwagon" theory: convince people that a product is something that a person just has to have from skinny jeans to a SawStop table saw and people will pay no matter what the price.
Another consideration when pricing. If your cost is $80 and you sell for $100, then profit is $20. And if you raise price to $110, then your profit INCREASES to $30, a 50% increase. So you only have to sell half as many boards to get the same profit. It took me a long time to understand this and put it to work. PS...thanks for the thought provoking video
If your cost is 80%, you're doing something wrong. But your point is right. Just don't want people to think it costs $80 to make a $100 cutting board. Cost should be around $20-30 depending on lumber costs. Based on our current bad economy at least.
This is valuable information.... I sent this to my wife. She is a baker (cookies, cakes, ect). Her work is so amazing that several people have decided not to eat the cookies just because of the art she does. On the other hand the cookies are the best cookies anywhere. The problem is she severely under charges for the amount of work she puts into them.
When I retired I started making custom furniture and figured if I tripled my cost and paid myself a really nice hourly wage and figured if I sold a few pieces a year I would be happy, found myself needing to hire help to keep up with my orders. Took some time to catch my breath and doubled my prices and got even more business. Doubled them again and orders slowed down enough that I could keep up and 1 order a month or so was still paying all my bills.
Premium pricing is valid only for premium markets and premium products. Not everyone has access or ability to find and fulfill. Being in a LARGE METROPLITAN MARKET to build personal relationships is a major part. Texas and Houston have oil money and population. Why they moved from ND.
I learned a long time ago that when a product says "MSRP" (Manufacturer's Suggested Retail Price for those who may not know), it's a price set by the store, not the manufacturer. Yes, the store/dealer, in order to boost the sale price, sets the MSRP.
It even works for years sales. We tried selling an old car radio, it still worked, but we no longer had a use for it. It was priced €15 or some similar low price. A lot of people took a look, but nobody asked about it. When we upped the price to €50, it was sold an hour later (after a small haggle for €40). Apparently people didn't trust the low price we asked.
The phrase about loving your work...best ever! This will be a sign hanging in my work shop. 😆 And, about not lowering your prices...preach! It's all about perceived value baby!
Time and material + how many you want to make + how well you make them + how you market it + demand you created = better profit. Buyer pays shipping because they vary can kill sales as people see free shipping as a discount so include it in time and materials.
Some thing I learned years ago, as a photographer, from Peter Hurley, an extremely successful headshot photographer, is if you are booked up(or extremely busy, for a particular month, you raise your prices the next month. If you are still booked up the next month, you raise your prices again. You keep doing this every month until you level off and that is where you find the sweet spot for your price point.
Oct 2022 Peloton just laid off a bunch more people, and stock is going down. Luis Vuitton, not so much, lol. I just raised my individually hand crafted item pries for the craft show this weekend. Thanks for the quote at 8:32: "Enjoying your work is a bonus, not a form of payment."
Fantastic advice! Those shoes are worth $1,000 to someone for sure, just not you or me. The person buying them would think I'm crazy for spending $300 on a fountain pen. Everyone has passions. Selling into them is good for you because you make $$$$ and good for them because they get to enjoy the pride of ownership every time they slice an onion.
My dad use to have a booth at an antique mall. He would buy furniture and have little things in there to buy. He had gotten an bunch of cheap wrist watches that he paid $4-5 a piece for and so he priced them at $12.50, but never sold one. One of the guys at the booth next to his said the issue was they were too cheap. He raised the price to $30 and sold 5 that weekend. People equate price with quality. It is a mental thing.
Thanks for the tip! Right now, I'm just learning and practicing my craft, but I'd eventually like to start selling some stuff. Good to know people like you are out there hustling and making it work!
You guys inspire me. Honestly I’m scared to list my first piece for sale. But I think tonight when I get home, I’m going to try to sale my first project
I had an auto repair business i bought from a friend. He charged $55 and hour and brought in customers that couldn't afford his prices. When I got the business I upped my labor to $90 and hour (which was more inline with the local dealerships) and changed the price structure on the parts for more profit. My business grew. I got rid of the people that couldn't afford to fix their cars and brought in people that could afford to pay for their car repairs. So yes pricing will determine the customers you bring to you business. But quality also plays a big part. If you're going to ask a big price you better give a great product or service. That's just my $95
You charge as much as the Dealership but your work isn't worth as much as theirs you don't have the ability to offer the warranties on services they do nor the billion-dollar backing for any mistakes made.
Commenting for the algorithm and to say thank you. A couple years, I was making and selling rough cut garden beds from lumber I got from my local sawmill. I made some profit, but they were a surprisingly large amount of work for the amount I was making. I decided to increase the prices to over double what the materials cost. People were still happy with the price, even though it seemed like too much to me. I even tried offering to sell them the lumber directly, but people wanted them cut and drilled. I realized I can't value them at what *I* think it's worth. I need to set them at a price that someone without my skillset or tools would value them at. Also I like the shoes. I wouldn't buy them, but yeah, they're cute.
Pricing is always a struggle and every time I feel like I've gotten it right, someone tells me I've under priced and should be charging more. It's all a part of the self-doubt that comes with being a new woodworker/maker - "is my stuff really good enough?". Once we believe in ourselves, our customers will too! Thanks for the vid guys!
I tell every entrepreneur before we begin our talk (I advise entrepreneurs for a university entrepreneurship center) "I'm going to listen to everything you say, and at the end of it I'm almost certainly going to tell you that you're doing too much yourself, and you need to raise your prices." There have been times I didn't tell them they were doing too much, but so far I think I'm batting 1000 with the prices thing.
I am rarely motivated to comment but THANK YOU for this video. I am an artist/craftsman and I have watched a lot of videos on everything about my craft - this is one of the most valuable I seen. In less than 10 minutes, you hit enough "Eureka" moments that it became hard to see though the water in my eyes. When you said "If you want people to appreciate your work and genuinely love it - price it that way!", I shouted out loud (too bad SOL already has a meaning) and hit Like and Subscribe. I am anxious to discover what else you will teach. If one of your goals for this video is to foment change, you have succeeded.
I am a hobbyist, but when I do try to make a go of a woodworking business, I will never sell at craft fairs. I will try to sell at art festivals where people value art. Also, if you are going to ask anyone what you should charge, you need ask someone that buys expensive items, someone that actually spends money on quality.
I have seen this idea before and have experienced it myself. I always am afraid of pricing too high, but it's important to value your time appropriately.
This was super helpful. I make knives and I definitely sold myself short on the first few so far. Thank you for your video. This is my first one I've found from you guys. I subbed! I found that a couple of my first customers were comparing my prices to knives they see at Walmart or other similar stores. It was difficult trying to get them to understand that those knives were made from sub par materials and by machines. I guess if the potential "customer" doesn't like my price, then I must move onto a different customer. 🤷 My time is in short supply and it's worth a lot to me. I guess I have to find a balance in there somewhere though. My time shouldn't be priced TOO high, right? ☺️
Dunno how I missed this video, but you're spot on! I price my goods for those with disposable income, not those looking for a deal. I love woodworking but I also love my free time, so I charge accordingly.
Great tips and it's 100% correct. Another very very important thing is your name!! If you call your firm "Glen's woodworking" or "Better Letter" you are sure to get less money than if you name your company "Diotony" or "Castello". Your name has to be like a persons name, but with a foreign ring to it, Italian, French or something. You can use local names, but it makes it harder to promote.
This is probably the most important thing I needed to hear today! Thank you guys so much for making this video. Haha, I've actually done jobs where I've only made 2$ an hour, and this is what I do for a living.
I would like to Thank both of you.This has changed my way of thinking on pricing my products. And it makes so much sense.Thanks again and I have subscribed.
Almost 10 years ago I bought a 2006 Ford 450 with a Lance 1181 camper on it. New it would have cost over $130,000 I paid $60k for it. You can't get an equal new truck for $60k let alone with the camper. The camper by itself will cost that much. The value of an object is what someone will pay for it. Bracket price anything you make, charge 3 different prices at 3 different times and see what price works. I made a Scentsy display stand for someone. It had electric outlets on it to plug in diffusers, lights, fancy(no charge, labor of love). They came back from a show saying more people wanted to know where they could get the stand than were interested in the product on it. "You could make a fortune selling those!" They thought, untill I told them the time and material cost that went into it. I'd have to charge $500 for a less than 3ft wide by 8 inch high stand to get the material and labor back. No one selling Scentsy is going to pay that. You have to sell a lot of pretty smells to make it worth that much.
I learned this lesson at age 6. We had a batch of 6-8 week old kittens advertised for free. Not a single taker but when we changed the ad to $5 a kitten they were gone in a week. No shots or even a vet visit.
Yes, this is a common misconception that you have to or need to undersell everyone or be the cheapest to make money. I found that companies will raise the price but they usually advertise an upgrade or add to the product ( New and improved for jest $$$) at minimal cost to them but bump up the price considerably. It's some sort of incentive."The "BIGGEST ! factor" in the price of a product often isn't quality or effort - it's "BRANDING" ! yourself ! ! marketing and promotion. You said it you have to put in the work and find your market this will also give a starting price point.
Ahhh man I would recommend a basic economics class. Price isn't created in a vacuum. Seller set the initial price but up/down is dictated by the market. Too high and you get no sales to low and you get no sales. Quality is also a major factor.... that helps to dictate the price range. But you are 100% correct on you should not be pricing your own product and you certainly should not be setting you price based on some arbitrary group of people. If you're creating a luxury product you should not be trying to put it on a Walmart budget and if you're creating a bargain product you shouldn't be pricing it at a Vuitton budget either.
Serious question guys, on a topic that is threatening to crush my nascent business. You said in this video you are paying $8 to ship. I went to price shipping recently and couldn't get a price under $15ish to ship 1 pound to California! $13ish locally! In Maine if that helps. Tried Usps, Ups, Fedex, all pretty equivalent. Well all my products will weigh several pounds. Charging $30, $40, $60 (if it were 4 pds) just in shipping - I can't imagine customers putting up with that. Wood products like you sell must weigh more than a pound. How are you getting $8? That's more in line with what I had expected. Please, I would appreciate any help you can give. I can access a local market that would allow me to skip shipping, but that's only summertime and of course, only local people. It's going to make my business plan collapse, and I'm thinking of walking away. Thanks, this was a great video.
I was in a restaurant supply store that caters to the larger high end restaurants. I saw various styles of cutting boards and could not believe that the prices were so low for maple, hickory, walnut and the mixture of the three woods most expensive one there was only 80.00 plus tax for a 3 inch x 20 inch by 20 inch maple/walnut with hickory wrap with a juice grove and storage for clean knife. I was tempted to purchase those and resale. Because time I buy the material, design , shape, finish and seal , market I could not sale for the low low price of 80.00USD. That store also had pizza baking board, cedar for fish, Bread boards, cheese boards and various other wood products for décor, display and cooking usage.
LoL, great content! I have been tinkering out of my basement making urns, cremation rings, pens and cutting boards for a few years. I am often told I should start an ETSY shop, but by items made are gone as soon as they are made. There is no time for me to build inventory. I guess I better raise my prices! It is fun to do though. Great job you two!
I have always enjoyed your content, but as a prospective woodworker, I appreciate this series even more (even if it is your first episode of the series). You guys are awesome.
I love all your videos , you’ve both inspired me to start woodworking again but this time to make money as a business. I’m making farmhouse coffee tables and the biggest one is 51”x24x15.5” I sell one about every week... I hope you’ll have some advice for me!! my question is. How can I reach more people??!. As of now I’m posting on Facebook market ... thank you any advice is much appreciated!.
What is an item worth? Whatever someone is willing to pay for it. Michael Jordan Rookie card, for example. What's it worth in Mint Graded Condition? Whatever the highest bidder pays. That price now sets the standard...lol. How do you price something out? Cost of materials. What is your time worth? What does the object mean to the buyer? Lots of info you could add to what you want to sell, to get the price, you should make.
So you guys rock and are full of knowledge. Love your videos. Noticed Jenny had a Guinness shirt on and reminded me of a set of Guinness corn hole boards I made.. they were so nice the customer paid me $400. For the set and felt bad that I charged too low. I wish I could post a picture of them on here because they were def very nice.!!!
I built a garden bench to sell a couple years ago and no one bought it. The next year I raised the price $40 and sold 11. I didn't change anything else, I even used the same photo.
As a table builder and new business owner, I did myself a favor and stopped by RH and One Kings lane. Reason? I’m in Florida, yet I’m not targeting All Floridians, I’m targeted the millionaire homes and new arrivals from New York and the east coast... bc to them, a $3k table is cheap compared to the $10k they would spend in New York ;)
Pricing is about perceived value and everyone has different perceptions. Unfortunately in most of the world the value or worth of everything (including people) is only considered in regard to money.
You are correct there is no set price and you are free to price your product anyway you see fit but there is an average price and that is what people are looking for. They want the best product they can get that is closest to the average price or less. You job is to produce above average products and sell them as functional works of art. Price it for what you feel it is worth based on that and if they don't want to pay it they can have average instead of exceptional.
I just watched a video yesterday by a guy in Alaska who makes cutting boards. I went to his website and saw some of his boards are priced as high as $500. For a F*#%ING BOARD?
I make things, and my wife is a hair stylist. I regularly say: if nobody goes, "wow, that's too expensive for that", then you need to raise your price"
This video reminds me of a truck box my best friend was trying to get rid of. He took it off his truck, and put it by his driveway with a sign on it that said "Free!" It sat there for 2 or 3 days, no one even slowed down to look. So, we're talking on the phone one day and he's telling me about it, and how he wanted this truck box GONE. So, I told him, "Put a sign on it for $25, $50 dollars. It'll be gone in hours." He argued good naturedly with me, on the "they don't want it for free, why would they pay money for it." I told him to just do it. And he did. Later that day, I get a phone call from him, and he's laughing. "Dude, you were right. I can't believe it. Put a sign on it for $50, someone 'stole' it. It's gone." We had a good laugh. Perceived value is worth more than actual value. I learned that somewhere ... and constantly forget it when I go to bid or price something ...
I think what the companies like Peleton, Nike, etc. have in common is marketing. High-quality photos and videos to promote their product. I think that doing that with your product could give you great results. I sell handmade walnut cutting boards for about $120 in my area while other people struggle to sell for $80. But I also use my portrait studio to take studio shots of my cutting boards! I need to do a video!
I thought the price of the peloton was ridiculous but the wife had to have one and would not settle for any other bike on the market. And…. Oh did I mention there’s a monthly subscription for the classes?! Oh well, it made her happy and she almost has a hundred rides in 9 months. I just wished it would have been a $150 pair of shoes instead. 😂
"Back in the day" I did animated 3D logos for companies. This was when animation software ran on DOS or Amiga and rendered frame by frame to a Betacam SP tape deck. Anyway, I found that not only did pricing high just make sense, customers who pay a premium are almost easier to please than if I cut someone a break. The latter would often begin a sentence with "Can't you just....". Nope. Good. Fast. Cheap. Pick two.
$150.00 for a pair of tennis shoes? Thank God I am a cheap skate with no mortgage! It was difficult to watch your entire video after that comment, but I did.
I find it easier to lower prices than to raise them so I price high to start and offer a sale price or % off if sales are slow before lowering the price. I sell unique vintage items and sometimes I’ll raise or lower the price to get noticed on eBay.
I call this the Kohl's model. Everyone loves going to Kohl's and seeing the receipt that says "you saved $200 this trip and only spent $42.50." The fact that they never sell anything full price doesn't matter. People love to feel like they're getting a deal, so there's zero risk to overpricing anything. If you're way high, lower the price a little and probably still get more than you expected.
Everything you say is so very true. The problem though, in some cases, is finding the market to sell to who is willing to pay what your work is worth. For some products and services I have sold, it has been easy to find the right places and customers to market to. Other things you sell can be a challenge to find the good customers/clients and even then you can stumble into a honey hole of tons of great customers or it can be one or two here and there. I'd love to see you make a video on ways you have found to find the best places to market and to find the best customers who are willing to pay what your products are worth. I would love to weed out the bargain shoppers, but I feel like raising my prices aren't enough to do that. I also need to get my products/services seen by those who will pay the higher price. Depending on where your items are displayed, raising price may weed out the Walmart shoppers and attract the big buyers or it may just slow down sales, in which case I'd say it would be time to find better places to market.
@@Jawsjawsjawsrg "If a man is dumb, someone is going to get the best of him. So why not you? If you don't, you're as dumb as he is." - _Arnold Rothstein_
You are absolutely correct with this concept. I am a massage therapist, and when I raised my prices to the point of being the highest in my area, I got MORE new clients. And several existing clients said, "It's about time!" I should clarify that my work is not your typical Swedish or deep tissue massage -- I specialize in resolving chronic pain. But it's true that if you give people quality, they will pay more for it. And the more they pay, the more they appreciate it.
My biggest issue is wood movement. I flaten the boards and cut to size , or even finish a product to come back the next day and the board is warped or twisting possibly cracked. I try to use wood 7-10% moisture content. Any tips?
Hey you guys as a woodworker for the last 35 to 40 years I have to tell you that this is extremely valuable information I wish I would’ve learned these lessons early on instead of trying to be the cheapest guy thinking that would get me sales and work you’re absolutely right we as custom manufacturers cannot compete with Walmart or target or any of the big box stores that just isn’t our market if people come to you wanting something cheaper their not your customer I don’t want to sell 1000 things at one dollar apiece I want to sell one thing for $1000 or more thanks guys keep up the good work!
The trick is you need to price your work to the clientele you want to attract. Do you want to attract the garage sale crowd that will haggle over price? Or do you want to attract the crowd that will pay top dollar because they value quality?
Lmao 😂 reminds me back when my friend took some stuff to the flea market to sell, he had a really nice like new typewriter and was only asking $20.... nobody even looked at it 😡 I told him he wasn’t asking enough money for it. So I took the price he had off and put a new price of $50.... Lord behold he had people looking at it and ended up selling it for an offered price of $40. Lol 😂 yes sometimes a lower priced item will not always attract a buyer.
Finally, someone else who understands pricing! I learned long ago that the lower the price, the more problems I have with customers. The higher the price, the happier the customer and the least problems I have with them.
Now you are speaking my language....I have had people say 'that's expensive!'. Just learn to respond - 'I guess, it isn't for you'. They are always going to be those who are going to try to lowball your art/product price. If you cave in, I believe it means that you don't believe in your own work quality, or that you don't believe that you can sell in that price. I have seen people grab a few sticks glue them on the board and sell them for thousands (not a typo). I am not suggesting that you do that, but don't cheapen your work. I now build for people who CAN afford my work.
This is really good advice/perspective. My wife wanted a large wood sign she saw at a craft fair to hang in our dinning room. It was about 4' long, said "We Gather Together To Give Thanks" and priced at $225. I told her don't buy it, I will make you one. The sign I made, from old fence pickets I got for free and some OSB scrap, was much nicer than the $225 sign and it cost me less than $10 in material and about 2.5 hours of my time. I would never dream I could sell that sign for $225 but here was my wife ready to pay that price.
Following you guys all the way from South Africa. It's so on point with this video. Woodworkers all over complain that they can't make a living with wood work only to cut their prices to the bone in the believe it will generate more sales. That leads to my other pet hate, people that want to run a business but say they don't want to do sales because it's not in their nature.
