How do we calculate a price for......

[Wood Butcher]

OK, here's another slant on this pricing issue. I am to deliver two pens engraved, filled with black and in a maple box to a repeat customer tomorrow. The original order was for 50 pens and, after doing all of the due diligence of getting a deal from my supplier for 50 of everything, the kits (Sierra gold), acrylic acetate blanks (all the same), maple boxes, the engraving with me doing the fill work I then added all of this up and figured the time to drill, paint tubes and holes, turn and assemble and, finally, came up with a selling price of $42.00. I asked the customer if they intended to issue a 1099 misc and he indicated he would. I then quoted a price of $56.70 telling him that the tax for it being a sole proprietorship, the state tax and the PITA to deal with the paperwork cost me 35%. He said he understood and had no problem paying the higher price.
Question #1, how do you calculate the issue of taxes when quoting/pricing your products? Question #2, do you allow a little for the savings of buying in quantity? I am charging this client about 10% more for the smaller 2 pen order and my cost increase will be that and maybe a little more.

I don't mean to belabor this cost thing but new pen makers are asking about this and have few sources for input that applies to the craft so this will be of significant help. Thanks for the input.
WB

 

[OKLAHOMAN]

It's just me but I never discount for quanity, if I sell a pen for $100 and the customer wants 30 of them he's going to pay $3,000 for them. My reasoning is two fold first when I was doing shows I would make 30-40 pen at a time that I got my regular price for so I now have to make 30 that I sell cheaper...Not me! Second I just don't understand why we have to discount for quanity, last time I was at Macy's and bought 10 shirts they didn't offer a quanity discount, and just yesterday I was at Sam's and the owner of a business bought 102 gift baskets for clients and employees and paid full price (I was behind him in line).
Explain to your customer that it takes the same amount of material, same time and besides that is boring as hell. I will say it is a good thing to get if thats what you want but why give it away. Bill your 10% is the most I would discount but your original price with a box @ $56.70 just IMHO way to cheap, but as has been said if your happy so be it.

 

[PenMan1]

EVERYBODY's answer to this question should be different, because that we all have different expectations from selling our pens. Butcher, you DID say that you had no interest in staring a new business. BUT, for those saying that they'd like to use pens as a supplemental income, I'd almost BET that your pens are under priced.

Last year, 3 categories of our "indirect expenses" more than doubled our direct "cost of goods sold". These 3 "indirect expense" categories were 1.Show and Jury Fees, 2. Travel expenses and meals 3. Credit card fees.

I DON'T KNOW what the correct answer IS for YOUR business, but I do know that formula pricing is USELESS for our business.

Respectfully submitted.

 

[PenMan1]

I'm ON BOARD COMPLETELY with Roy's no discount idea, EXCEPT that if that $100 customer orders 30 of 'em, I'LL SHIP EM FREE

 

[gbpens]

In many businesses production pieces, think easy to duplicate, always carry a spoilage or failure cost. For custom design art pieces it is "time and material." Development of proto types are part of overhead and therefore built into all prices.

 

[Phillikl]

Totally agree with the discount methodology, with 2 exceptions:

If client is to special order a set of say 30 pens of the same type I would probably kick a 10%sh discount or so, or give a couple "select" pens that I have in inventory. Reason being, I can streamline productivity and normally kick out 30 pens in the time it would take to 20 custom pens, still a 23% increase in sales vs time.

Second, if I have a few pens or styles that aren't moving in inventory and need to "part" with them, may offer them discounted with purchase of 1-2 other "prime" pens.

All in all the question always applies; what would it take to part with a pen. When dealing with the general public, coworkers, family and friends, you will have your favorites, and you will have your not-so-favorites; I find the price fluctuates quite a bit with a particular persons demeanor. While that may not be the best business model to follow, when my pen making hobby starts being the sole source for the mortgage and light bill, things will definitely change.

Merry Christmas!
~Kendall

 

[Smitty37]

I'm ON BOARD COMPLETELY with Roy's no discount idea, EXCEPT that if that $100 customer orders 30 of 'em, I'LL SHIP EM FREE

Hmmm..Still both you and Roy expect and get (probably) quantity discounts when you buy from your suppliers.:biggrin: When you sell to 30 people you process 30 payments, create 30 receipts or invoices, pack 30 packages for shipping, create 30 shipping labels and other things as well. Hence, it seems to me that you do quite a lot less work to sell 30 pens one at a time than you do to sell 30 at one per customer. I know it is a lot less work and cost for me to sell a lot of product to one customer than to sell the same amount to to 30 customers. But, whatever works for you is what you ought to do.

 

[OKLAHOMAN]

Smitty, one thing you need to remember is your now in the WHOLESALE market where quanity discounts are expected but when I was selling my pen I was in the RETAIL market a completely differnet marketplace #1 and yes I did get a discount when I bought my products because I bought in quanity on all my supplies so thats what my selling price for one pen is based on so if someone wants 30 my cost per pen is still the same. Now with Classic's that's a completely differt story as now I've joined you in the wholesale business:wink: .

I'm ON BOARD COMPLETELY with Roy's no discount idea, EXCEPT that if that $100 customer orders 30 of 'em, I'LL SHIP EM FREE

Hmmm..Still both you and Roy expect and get (probably) quantity discounts when you buy from your suppliers.:biggrin: When you sell to 30 people you process 30 payments, create 30 receipts or invoices, pack 30 packages for shipping, create 30 shipping labels and other things as well. Hence, it seems to me that you do quite a lot less work to sell 30 pens one at a time than you do to sell 30 at one per customer. I know it is a lot less work and cost for me to sell a lot of product to one customer than to sell the same amount to to 30 customers. But, whatever works for you is what you ought to do.

 

[Smitty37]

I would not quite agree with that. Wholesale implies selling to retailers for resale - I don't do that, I sell to end users and I do not sell wholesale quantities. I don't think that 1 to 20 of an item represents a true wholesale transaction.:befuddled:

q

Smitty, one thing you need to remember is your now in the WHOLESALE market where quanity discounts are expected but when I was selling my pen I was in the RETAIL market a completely differnet marketplace #1 and yes I did get a discount when I bought my products because I bought in quanity on all my supplies so thats what my selling price for one pen is based on so if someone wants 30 my cost per pen is still the same. Now with Classic's that's a completely differt story as now I've joined you in the wholesale business:wink: .

I'm ON BOARD COMPLETELY with Roy's no discount idea, EXCEPT that if that $100 customer orders 30 of 'em, I'LL SHIP EM FREE

Hmmm..Still both you and Roy expect and get (probably) quantity discounts when you buy from your suppliers.:biggrin: When you sell to 30 people you process 30 payments, create 30 receipts or invoices, pack 30 packages for shipping, create 30 shipping labels and other things as well. Hence, it seems to me that you do quite a lot less work to sell 30 pens one at a time than you do to sell 30 at one per customer. I know it is a lot less work and cost for me to sell a lot of product to one customer than to sell the same amount to to 30 customers. But, whatever works for you is what you ought to do.

 

[alphageek]

I would not quite agree with that. Wholesale implies selling to retailers for resale - I don't do that, I sell to end users and I do not sell wholesale quantities. I don't think that 1 to 20 of an item represents a true wholesale transaction.:befuddled:

q

I disagree Smitty. You can argue the qty needed to wholesale, but we are not the end users. Your products get assembled, added to, and things made from them. From there they are sold to a end user (or given away, etc). Re read what Roy said and replace the term wholesale with retailer and most still is true.

Your earlier comment about time saved in invoicing,etc doesn't ring true either. You are selling mass produced items. People expect a discount on multiple quantities because of the reduction in overhead of production, not paperwork. Most of us don't discount our pens for volume since the biggest factor is time spent making them, which doesn't go down with a volume sale for 99% of our situations.

 

[OKLAHOMAN]

Well Smitty the question by the OP was selling pens you and now I sell parts to others to make pens either for them selfs, to give a way or sell. Might not be in what you think of wholesale but its not retail in my view, selling wholesale is not necessarily selling in quantities . Just y opinion.

I would not quite agree with that. Wholesale implies selling to retailers for resale - I don't do that, I sell to end users and I do not sell wholesale quantities. I don't think that 1 to 20 of an item represents a true wholesale transaction.:befuddled:

q

Smitty, one thing you need to remember is your now in the WHOLESALE market where quanity discounts are expected but when I was selling my pen I was in the RETAIL market a completely differnet marketplace #1 and yes I did get a discount when I bought my products because I bought in quanity on all my supplies so thats what my selling price for one pen is based on so if someone wants 30 my cost per pen is still the same. Now with Classic's that's a completely differt story as now I've joined you in the wholesale business:wink: .

I'm ON BOARD COMPLETELY with Roy's no discount idea, EXCEPT that if that $100 customer orders 30 of 'em, I'LL SHIP EM FREE

Hmmm..Still both you and Roy expect and get (probably) quantity discounts when you buy from your suppliers.:biggrin: When you sell to 30 people you process 30 payments, create 30 receipts or invoices, pack 30 packages for shipping, create 30 shipping labels and other things as well. Hence, it seems to me that you do quite a lot less work to sell 30 pens one at a time than you do to sell 30 at one per customer. I know it is a lot less work and cost for me to sell a lot of product to one customer than to sell the same amount to to 30 customers. But, whatever works for you is what you ought to do.

 

[Smitty37]

srongly disagree

I would not quite agree with that. Wholesale implies selling to retailers for resale - I don't do that, I sell to end users and I do not sell wholesale quantities. I don't think that 1 to 20 of an item represents a true wholesale transaction.:befuddled:

q

I disagree Smitty. You can argue the qty needed to wholesale, but we are not the end users. Your products get assembled, added to, and things made from them. From there they are sold to a end user (or given away, etc). Re read what Roy said and replace the term wholesale with retailer and most still is true.

Your earlier comment about time saved in invoicing,etc doesn't ring true either. You are selling mass produced items. People expect a discount on multiple quantities because of the reduction in overhead of production, not paperwork. Most of us don't discount our pens for volume since the biggest factor is time spent making them, which doesn't go down with a volume sale for 99% of our situations.

By law, the person who opens the kit package is the end user. That's why each kit package is labeled as to where it originated. If you buy a kit from me and incorporate it into another product, you are still the end user as far as the kit is concerned. Your buyer has no recourse with me if it fails, only to you and you may or may not have a recourse with your supplier depending on the terms and conditions under which you buy.

On the other issue, if all of a sellers sales are over the counter or on the internet, he/she will usually spend a lot more time making 30 sales of one pen then in making one sale of 30 pens. That time is valuable too, is it not? If sellers ship pens it will cost them a whole lot more time to package 30 one pen shipments than it will to package 1 thirty pen shipment; and, it will cost a lot more in postage or or carrier fees. They are other costs that say many (not all) pen makers can offer quantity discounts without impacting the bottom line.

Suppose you are at the last hour of the last day of a three day show. You have 30 $300 pens left on your counter and customer comes up and says "Give me 10% off your marked price and I'll take them all." Would you turn down that offer? I sure wouldn't.