Time to raise our prices...

[Tea Clipper]

Yep, I just noticed one of our suppliers recently changed their prices. The good news is that not all of the pen kits went up, it seemed like they all did, but no, a few of the popular kits did go down in price. The recent rise in gold may have something to do with it because 24k and Gold Ti definitely went up whereas some of the Platinum prices went down.

My prices are formula based, so any change (up or down) in my cost is reflected in my final price. For those who do not use a formula, what action, if any, do you guys do? Flat rate (say 10%) across the board?

Anyway, I don't mean to start a price war here. I'm just curious to hear how others deal with this. Heck, maybe you guys already switched prices Jan 1st as part of the "new year - new prices" business model.

Thanks for you civil response in advance.

 

[Hayseedboy]

Do you mind sharing your formula?

 

[Tea Clipper]

Oh, also, since some prices really did go down, I plan on lowering my price to reflect that. In one sense, it's counter-productive since if customers are willing to already pay a certain price, why would I lower it? On the other hand, if you go with market forces/supply and demand then my costs are not relative to the asking price and thus only my profit margin would +/- in response to supplier changes.

It is not my intent to discuss specific pricing formulas here. I would like to hear how these changes effect other pricing strategies different from my own.

Thanks!

 

[rlharding]

They don't affect me at all. I don't make a living, nor a big part of my income from turning. When things go up I just figure out in my head if I am still happy with the profit margin. If I am I don't do anything about it. Neither would I reduce prices if a product goes down in price. With so many suppliers selling the 'same' kits I am hard pressed to find a consistent price anyway.

 

[sbell111]

Originally posted by rlharding

They don't affect me at all. I don't make a living, nor a big part of my income from turning. When things go up I just figure out in my head if I am still happy with the profit margin. If I am I don't do anything about it. Neither would I reduce prices if a product goes down in price. With so many suppliers selling the 'same' kits I am hard pressed to find a consistent price anyway.

That's exactly how I would handle it, and I try to consider our pen sales a business.

In my mind, pricing is based on perceived value and a customer's willingness to pay. As long as we are still satisfied with our profit at that price point, we will continue to sell that pen. If customers were not willing to pay a price that allows us a 'happy' profit, we would stop selling that pen.

Not using a formula to calculate prices allows us to tier the prices for our pens in a way that directs a customers perception of quality to give us a nice profit, but it isn't really cost-based.

 

[Tea Clipper]

So if you have been selling a pen at a certain price that gives you a happy profit until one day costs risen enough that you no longer make said profit, you're telling me you will stop selling that pen?

How do you know what a customer's willing to pay if you don't continually test it? How many stories have you heard where as soon as a company raised their price did customers start to flock to them?

I think higher prices are inevitable and that consumers are less resistant to small, periodic changes. However, Wally world is lowering prices everyday - so if we catch a break, shouldn't we pass that on to our customers?

 

[rhahnfl]

Wally World jacked their prices on a certain carbonated beverage I drink... so did everyone else around town. While Wally is still the cheapest, I no longer wish to pay that price so I have taken the healthier path and will be drinking water when my current supply runs out. I price my pens by what I think I can get for them and still afford to buy more materials to make new ones. I'll negotiate and generally drop my price to make a sale figuring it'll lead to another. Of course I don't make my living doing pens... then it might be a whole 'nother game.

 

[Daniel]

I use a formula as well. But I also will allow some cost fluctuation before changing my prices. mostly this is because changing all the prices on my web site is tiem consuming and I have to consider that in what value there is in changing them. lately it seems costs are going up every time I turn around and have had to start raising mine.

 

[GBusardo]

Originally posted by Tea Clipper

Yep, The recent rise in gold may have something to do with it because 24k and Gold Ti definitely went up whereas some of the Platinum prices went down.

I spoke with a jeweler friend who carries a few of my pens. He tells me how much actual gold goes into plating a pen. Believe me, gold going up would have very little to do with the price of pen kits going up.