Pricing items and customer expectation vs. reality

One of my bosses recently asked me if I could somehow get an engraving of Spider-Ham onto a Pop-Socket for his son.

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I have just the thing I thought… so I did some work, modified the image so it would be better for engraving… ended up actually vectorizing it in a couple of different ways and overlapping to create two different engrave actions that had different settings. In the end I ran 4 or 5 test engraves before coming up with the final. At 5-6 minutes per engrave, my total cost would be roughly $16-$18. The final product was engraved onto maple veneer so he could just peel and stick it to the Pop Socket. He loved it and wanted more to give as favors to his family for his son’s high school graduation. He wanted 60 total (after I figured how many I could fit on a sheet of veneer), 30 with his family crest and 30 with his wife’s family crest.

I did some math and (incorrectly) guessed at the engrave time. I have a material/laser cost of $0.77 per unit. I quoted him $3/unit to cover my time, markup, etc… He responded that he thought it would be cheaper than that, and his only question was “what is the material cost?” I thought that was pretty rude, as if my time weren’t worth anything. I ended up stating that the material wasn’t all that significant and the laser-time was what really accounted for most of the cost, but I offered $2.50 per unit and he accepted.

Once I got the file set up I found that the actual engrave time was 2.5 hours instead of the 1 hour I had originally estimated. My cost per unit bumped up to $1.53. In the end I spent maybe 15 minutes setting up the file, two test-engraves and then the 2.5 hour engrave-session. Then, I had to weed 60 1.5" diameter circles, which, had we been focused on just that would have been about 1-1.5 hours.

All that to say that he was happy with the product, but the whole time we were weeding, my wife and I were also marveling that this little stack of disks was worth $150. It got me thinking about how much I would pay for one though. A 1.5" diameter, sticky-backed veneer with a custom-engraved logo on it. If I saw it at a Target I would expect it to be priced at $5-$10, then show up on clearance racks for 1/3 that when it didn’t sell (and it wouldn’t be custom). But if I saw it at a craft fair or the like, I wouldn’t want to pay more than $2-$4 for it (which is partially why I chose $3). But then you think about it, and this is a piece of real wood that is custom engraved. The material is relatively low in cost, but not insignificant, but the time spent to set up the files, the laser-time involved, particularly when doing them in mass quantities is very significant, and then there’s time to put on the finishing touches (like weeding). I think $5 is probably pretty reasonable, though I wouldn’t want to pay that myself for one.

Sorry I don’t have an image of the finished product… Maybe I’ll do another with my own custom engraving on it so I can get a good photo.

Anyway, That was very long-winded to essentially ask what you would be comfortable paying and/or charging for something like that? And, for those of you doing paid work, are you finding that people don’t value time and effort and really think that these things should just be the cost of the material?

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I think your original estimate was low, and $5 sounds far more reasonable - the answer to someone who wants to know why it costs so much is “maybe you should talk to a bulk distributor instead of a custom artist” :-/
I mean, I’m happy you got the sale in the end, but that guy probably thinks you got a huge payment for little work while in reality you got little payment for lots of work…
I charge $50/hour for design work

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I had a visitor to my gallery asking about one of my photos. I was explaining how I took the photo and the type of paper it was printed on.

It was actually a chormogenic print so it was an actual photographic paper developed in the traditional sense. I think the print was listed at $340 or there about. Eventually he said “You know, if you used a cheaper paper and sold it for $30 you would sell a lot more of them.”

The difference in paper costs was about a buck. Yeah, saving $1 in materials justifies a $310 reduction in retail price. :wink:

Pricing is hard but then again so is gaining the knowledge and skills you use to ply your craft.

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I have had a few customers like this. I bring them into my shop and show them my design process and show them the laser running (I keep making more business cards). I think it puts it in focus for them that the time and effort to make your one or two “simple trinkets.”

On pricing, I charge a client for a full sheet of material if thy order anything over 4x4". This gives me room to recut, calibrate, and test without having to worry. Charging this way also allows me to throw in some more “freebies” or :gift: .

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This is a difficult hurdle to overcome. When I worked at Verizon, my regional manager had told us, “Not to sell out of your own pockets.” Which is to say, don’t sell yourself short. This was incredibly important when trying to sell “the bundle” - a phone (before monthly payments were an option, but after the free phone days), several accessories, and an in house insurance. Sometimes these bundles added up to well over $600. Was I willing to pay that? Not a chance. The hardest part was convincing the people who were used to the free phone upgrade into buying one of these bundles. It’s all about perceived value.

As an artist, it’s difficult to relay what exactly it is that we’re doing to justify the price we come up with. If I say something about taking up my laser time, they come back with me not having to do anything, it does the work. If I mention the amount of time it takes to design their custom piece, they “know” someone who designs for free. Material cost? It can’t cost more than X to make this, why are you marking it up so much? Because it’s the overall value that I can get it of this material.

Sometimes it’s worth losing the sell, sure, but definitely make sure the customer is aware of why your price is where it’s at. The majority of my customers have questioned my price point, whether it was too high or even lower than they expected, but I make sure they know why I charge what I do. Custom, local laser work is hard to come by, so I can certainly charge whatever I want - you should too.

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I totally sell myself short. I charge 30c a minute for cutting which comes out to $18/hr. I also don’t say how much it’s going to cost until I can at least upload it to the Glowforge app. I don’t do much custom creation, so I’m sure I’m shorting myself on that.

I also don’t take into consideration the post processing. This has lead me down the path of “too much work” for the weeding process and considering handing the item to the customer with the “protective coating” still attached. I haven’t gone through with the thought, but it’s out there as an option.

In the end, the goal is to “pay off” the laser with the proceeds. So, I can justify my actions. If I were to make a real job out of this, then I would need to up the ante.

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I totally agree with trying to educate the customer on what it takes to produce your work. The design and prototyping process is time (and sometimes materials) intensive. If you take that experience and mass produce something in China that gets shipped over by the container, then prices will obviously be low. But that’s not what we do here. We can’t make our nut through volume.

Another major factor is your customer’s demographic. If you’re selling at a craft fair in a high end resort community, your prices should be higher. But if you’re asked to produce something that could, theoretically, be done identically in a huge Chinese factory and shipped over by the container, that customer is going to be thinking about price the same way we all do when we go to Walmart or shop on Amazon. I try to stay away from that work unless the project is stupid easy (like plopping a sheet of PG plywood in the GF and batching out a bunch of simple keychains.

I tend to take the loser jobs if (a) I have the time or (b) I am really excited about the project. Otherwise they get in the way of other work, life, family etc.

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honestly, i hate selling. and i hate explaining my pricing when i do. i generally don’t even try if someone tries to lowball me, i’ll let them find someone else who can do it cheaper. if someone asks in a nice way, i’ll walk them through it roughly. but people either value your work or they don’t.

not that i’ve sold anything from the GF, but when i do freelance design, i’ve been lowballed in the past and on the rare occasion (early on) that i accepted those jobs, they were always a PITA and even less worth it. might not have been worth it at full price, let alone discounting.

you mentioned your boss, and friends/family/coworkers can be the worst customers. especially for pay.

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I think this is part of the issue. You’d expect to pay more for a generic, mass-produced item than a custom, hand-crafted item. Why? If you figure that out, and counter it, you’ll get an answer to your question.

I would expect to pay more for a custom, handcrafted item, as long as it was of good quality. But this is also why I am not eager to get into the crafting business. Too few people value your time or your talent.

I wouldn’t buy a pop socket, so I can’t at all help with pricing. But since you were just charging for the discs, I think you were at a disadvantage in pricing. It’s hard to mark-up veneer. It just doesn’t look like much.

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Though I am not making a living selling stuff made with my Glowforge, in general, I tend to bow out quickly when price is someone’s primary concern.

“The problem with a race to the bottom is that you might win.”

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I agree with what everyone has said so far. Two clarifications:

  1. I wasn’t going to budge from my $2.50 price. If he didn’t accept it, then I was willing not to take the job. For a friend I’d have done it for material cost… but this was my boss.
  1. I wouldn’t actually pay that much, I would just expect it to be listed at a higher price, and fully anticipate that they would have to eventually clearance them out of inventory.

I am also not trying to make a living with my laser, though I definitely intend for it to be part of my desired career. It’s a tool to facilitate parts of that, not the focus. And though I don’t necessarily save the money I get in these jobs for this purchase, the “laser time” that I use to determine my pricing is primarily geared towards the fact that at some point I’ll have to replace the tube at a minimum.

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You are already leaps and bounds ahead, simply because of this mentality. Many folks have a hard time grasping the concept that a machine should have its own hourly rate.

I am of the mindset that we shouldn’t have to justify our pricing to anyone, because honestly they don’t care how/what it’s done or why it costs what it costs. As soon as you go into your justification story just watch their faces as they completely glaze over. Waste of time and breathe. They simply see the cost, see the item, and do an instant calculation in their head “do I want this, this badly?” Sometimes you hit their emotional nerve that makes them squeal “ERRRMUHGUUUUD MUST HAVE!” and they don’t even care what the cost is… and it’s hard to predict when you’re gonna achieve that.

Don’t base your pricing on what you would pay. You’ll smack yourself on the forehead every time.

Other folks, no matter the price, just want to complain about price, or haggle. You could have priced it at 25 cents each and they’d still want to dicker or bicker.

Long story short:

Use this situation as a lesson hard-won. Estimate pricing higher in the future to give yourself the room to negotiate for the folks that like to negotiate. They just wanna play, see what they can do. If you can give them 5% sometimes that makes them feel like they got a deal and that’s all they need.

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The problem you encountered was first documented two minutes after the first caveperson put up for sale the first decorated rock.

Hmm, that you wouldn’t do it for free tells me you’re in a high-demand field. :thinking::wink:

As you’re not in this for a living, you may want to consider dan’s approach - refuse to engage. Once you engage in an argument on the other person’s terms you are pretty much doomed to lose it or just make things worse. Therefore, dan’s irritating, “this is our policy I’m saying no more”, approach is one to consider when people start to “analyze your price.”

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I mean, I’ve made stuff for free for friends, but at some point I don’t want to be out of pocket for the materials, regardless of friend-status. Proofgrade isn’t exactly cheap, though it isn’t that much more than non-Proofgrade, so it’s totally worth it.

And since this is a hobby more than a business for me, I am completely willing to walk away from a job like that if the customer isn’t willing to pony-up.

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I can’t tell by your reply, sorry if I’m being dense, but my target was your boss not your friends.

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Ah, misunderstood. I’m not willing to do it completely for free for anyone really, simply due to material costs… but I could be talked into it by a friend. With someone like my boss, I set a hard target and stick to it.

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Assuming your boss likely earns more than you, so stuff him if he doesn’t like the price. :smiley:

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I honestly think it’s not that people don’t value the work that goes into design and creation of little doo-dads, it’s just that they haven’t got a clue how much time and effort it takes to create.

And you’re not going to educate them…they won’t fully understand until they try to do it themselves. (And if they could do that, they wouldn’t be asking you to do it for them.)

I try to keep a low profile about my capabilities to people who are not also owners of the various machines that I have. Seems to work out pretty well. With the possible exception of my DH and my mom, who want to tell everyone they meet that I do laser work.) :smile:

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I agree. That’s one thing that people tend to forget. Things typically cost less in stores because there’s a factory making thousands or millions of those things. I am not a factory.

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Sadly, we live in an environment where many folks shop on Amazon or Walmart and always want the cheapest price. There are those who combine that feeling with no concern for actual personal skill or talent or a person’s time being a consideration, at all. If I quoted a price for an art piece, there would be no negotiation. I am not interested in an environment like a car dealership. Best of luck.

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