Pricing on making wholesale items? + Business marketing tip

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#1

With a real, live Glowforge in my front room, I can now make awesomeness to sell. I’m getting nibbles on custom ornaments for business to give to their customers and have little idea how to price them. If you have real-life examples of how you price one-off items and wholesale items, that would be awesome!

To promote my new business and find customers I have been using Instagram. I follow and like posts from Georgia artists, makers, Realtors, etc, and if they follow me back I message them to thank them and ask them if they have any needs for laser cut items and customize my suggestions to whatever business or item that they sell. Out of 3 so far :smile: I have had 2 replies of “Yes!!!” and one “Future wholesale?” So pricing is starting to come up!

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How to Price Glowforge Projects
Cost for renting glowforge time?
Run time profit calculation?
#2

There have been a fair number of pricing discussions, worth searching for. One of the consensus conclusions is “More than you would think.”

One principle to remember is that it’s not so much about the cost to you as it is about the profit and avoided cost for them. If it makes them money to buy from you, they’ll buy. (And the ones who want to lowball your prices may be customers you wouldn’t want for the long term.)

(Anecdote: back when my mother was a cpa, I asked her how she could justify spending thousands of dollars every year for tax software. Answer: it let her do a typical return in a few hours instead of 10-20 hours, which meant more returns, which meant more clients for the rest of the year, which mean way more thousands of dollars in billings. The company priced the software based on its value to the practitioner rather than how much it might have cost to produce.)

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#3

Materials + Labor + Profit = Cost

Problem is sometimes Cost doesn’t equal Value. You need to charge what the majority will pay. If you think a design is truly a one-off, it can cost more. If you’ll design it once and sell a thousand of them (with minor customization), then it can be cheaper. For example, I made an acrylic heart sign for my Wife. Some folks at work saw it and I immediately started getting orders for it. ~$15 in material costs with the LED base. I can’t calculate my labor because I suck at Illustrator so it took me way longer to design it than it would if I knew what I was doing. But, in this case, all I have to do to make more is change the names and date and press the button. I’ve been selling them at $30 and everybody’s happy. On the other hand I made something else (that I won’t reference because even though I don’t think it breaches ©, it’s a completely original piece of art inspired by a popular franchise) that cost me ~$30 in materials. The first one I sold the person wanted to pay $40. I told him that at $40 I literally wouldn’t make any money on it… $50. Sold. The 2nd sale of it I confidently said $50 and the guy didn’t blink an eye. He just said “Oh yeah. I want it.”

I suggest price things a little high. You can always come down if you absolutely need to. Much more difficult to raise a price. You just need to justify your price so that it approximately equals the value to the customer.

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#4

I’m not sure who said it here but someone said “if you’re not embarrassed by the price you are asking too little” and I have been living by that without anyone ever questioning it.

I just did a job for work (on work time so design time and my labor was covered) and I billed $1.75 a min ($105 an hour). After submitting a bill for $400+ my boss came over and said I charged him too little. That the average rate for something like this in our industry is $200 an hour and mine was more convenient so I should be asking for double. Needless to say, next time I’ll be charging him more haha

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#5

I have been making and selling things for a LONG time. A few things I have learned…

If you ask 10 different people about pricing, you will get 15 different answers.
Bottom line is if you are going to make a living at it, you need to make a LIVING at it, and not just scrape by.
There will always be people that think you charge too much. There will always be people that think you charge too little.If you are making an actual living, and you are comfortable with your prices, you are probably good.
It’s always easier to come down in price than it is to say “oh, you really want this, let me up the price a little”

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#6

Also if you struggle to keep up with demand, charge more to reduce it.

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#7

Thanks for those suggestions and anecdotes!

I have read many of the pricing threads, but most lack concrete examples of what people are actually selling (Thanks @Tom_A for including that!).

For example, say=

  • I put 20 minutes into design time($25/hr * 0.3hr= $7.50)
  • My cost of material estimate is how many of that item I can cut from one sheet of :proofgrade: ply (15/$12 = $0.80)
  • Estimated laser time of 6 minutes ($0.75/min * 6= 4.50)

So 7.50+0.80+4.50 = $12.18 would be at-cost for a personalized ornament. So cost is roughly, $10, wholesale $20, retail $40 :sweat_smile: For a simple personalized ornament, I don’t think that would fly. As a price check I looked at what people on Etsy are doing, but the prices there range from $4.50 to $20, no where near $40.

Another pricing scheme that I tried on was the “How many can you make in a day; your day should be worth $500”.

  • Cut 8 an hour, 8 hours (to give leeway for changing out pieces)
  • $500/64 per day = $7.81 each

I think that price is supposed to include everything in it, although if you multiply by four(retail) it still comes up high for a one-off, ~$31. Now if that is retail price, great! Or if retail was times three, $23 I could see, although that is pushing it still.

Say a Realtor wants to order 30+ ornaments on ply to send to past clients, how would you price it?:thinking:

Thanks for all of your input, btw. It is hard for me trying to value something like this because it is out of my experience range of fine art, which is a whole 'nother pricing metric :roll_eyes:

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#8

this. so much this.

i have had this conversation with my brother in law, who runs his own computer business. he used to have a lot of residential customers who always complained about the cost, were always a pain in the ass, and who he made little money on.

so i kept saying to him, “if these people are paying you, for example, $20 / hr and you’re working 50 hrs a week to keep up and you hate working for them, bump your prices to $30 / hr. the cheap customers will go away. the good ones who appreciate your work will stay because it’s still reasonable. then instead of needing to work 50 hrs a week to make $1k, you need to work 33 hrs a week and you can use those extra hours to find new customers willing to pay more. win/win.”

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#9

I’ve done the same. And I thought some things… People will buy absolute crap. The stuff I’ve made I’d have to charge more for, but it also doesn’t just rival what they’ve made, it completely crushes what they’re peddling in quality. In both cases, people would get the quality they paid for. But the question is, are they willing to pay more for a better product. And that’s not always the case. But it’s certainly worth the shot.

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#10

You’d be surprised what people will pay for hand made goods, especially customized. You can always plan on discounting it.

So say you stick with your first example: the base cost is $12.18 I would probably sell it for $25-$30 plus shipping. That’s $7.88-$12.88 profit + paying yourself for designing. You can entice people with free shipping (people LOVE free shipping especially on Etsy) or discount your product when you’re slow. Run sales at 25% off and people will feel that they are getting a good deal (cough cough glowforge…)

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#11

I have a work shop full of power tools, a 3D printer, several expensive art programs and also a nice CAD setup. These have been accumulating over the decades and it scares me when I actually tally up the investments.
I have never tried to get a return on these items because I wanted them to make cool stuff and never thought about it as an income, but more of a hobby. I just really enjoy making things and wood is by far my favorite medium.
Now with a Glowforge on the way, the amount of assets in the workshop will be insane.

My usual response when I made something and someone took a shine to it was to give it to them. Made the wife crazy and she would say rude things to me. Especially with the 3D printing since some of the items took a lot of time prepping the files and more time getting a viable print of the thing. But I made it just to see how it would come out and really had no desire to mount it as a trophy, so…

Now I am retired and have more time for hobbies, and what I have done is cut the wife loose with the items made. She is ruthless and charges what I think are crazy amounts, but it all sells when she locates a buyer. All she asks is what did the material cost and then she seems to ask three or four times that amount (or more if she senses a weakness or shallow market). Ruthless almost seems like a weak term with this woman. She is ‘all in’ with the buy low and sell high concept and if she wants to push me aside and grapple a buyer, she has my blessings, heh heh.
I don’t have a clue if this is a good method, but she sells a lot of knickknack, wood crafts, and one off items I have created.
If you are actually looking to make a living at this (or a return on investment) then starting high and dropping as market demands does seem like a good method. I have seen lots of items for sale on the Web that seemed stupid high, and it begs the question of do they really think it is worth that, or are they just setting a start point for negotiations?

TL:DR Someone said it well. I reckon → More Than You Would Think. Especially with a lame dude like me that tends to give away the store.

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#12

Another thing to bear in mind is if you retail items but there is a possibility to wholesale them in the future you need to apply a double mark up so you can sell at a lower price to a wholesaler and you can both make a healthy profit.

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#13

That’s where the Cost does not necessarily equal Value comes in. We have to understand that sometimes we can’t produce something at a price the buyer is willing to pay (value). That’s what Foxcon is for.

Will you really feel better charging less so you can make the sale and figuring out you’d make more money at McDonald’s with a lot less effort?

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#14

Do at least 3x your costs of materials & labor (4x would be better). This should allow you to make enough to make it worth your while, but your mileage may vary, especially when it comes to the labor part.

If you are doing this for a living, then work out that labor rate what you think you’d like to get paid. If you are doing this as a side item, then you could be more liberal with what you pay yourself.

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#15

Man, can I identify with that!
I have a lot of talents in life, making money has never been one of them.

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#16

That actually worked out pretty well, I think. So with those calculations I get:

  • Labor at $15/hr, cut 8 pieces/hr = 1.88 for labor
  • Material cost of $12/15 per sheet = 0.80 for material
  • Design time at $25/hr* 0.3 (20 minutes) = $7.50
  • (Labor Cost + Material Cost)*4 (+Design time) == (1.88+0.80)*4(+7.50)= $18.22 for a one-off, Retail

With that formula, one retail piece would be $18.50, and 100 wholesale pieces of the same design would be $543.50, or $5.44 each, spreading the design time cost over 100 pieces. Wholesale being (1.88+0.80)2) 100)+7.50)/100 = 5.44 also no, I don’t want to try and remember PEMDAS :joy:

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#17

Couple of things here (unrelated to what you think is a fair wage). Cut time isn’t your labor time. While the machine is cutting you can do something else (I usually do design work while the laser is cutting). But you do have non-zero amounts of time to acquire materials, load the machine, wait while it “prepares your file to print”, unload, remove masking, cleanup, place in package, prepare packages for shipment or delivery. Some of those can be rabbit holes.

Also, take a look at the cut time of anything you’re doing (especially in volume). Look at converting engraves to scores or check the direction of your engrave vs the placement of the material - sometimes you can get huge time savings there. Also check the LPI you’re using - is there a visible difference between the level you’re using and the next one down? There is a time savings. And make sure you’re running as fast a speed as possible. If you’re not 100% of speed or power, it’s likely you can speed it up by increasing power and speed.

On the materials side don’t forget packaging. And once you decide on a packaging option & include the costs, see if that impacts your labor - lots of “small” things like affixing “just” a ribbon or something can add up as you do quantity.

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#18

A couple of points that may make a small adjustment:

  1. if you’re making a bunch of essentially the same thing, only personalized, your design time will be much lower (although you should be charging more for it.)
  2. Not sure how you got to $0.75 a minute for laser cost – that might be what it makes sense to charge someone, but the actual costs are more like $3 an hour for the laser (assuming roughly 2000-hour life and ignoring tube replacement) and $25 an hour for attendance plus a little overhead, so no more than 0.50 a minute, and way less if you find you can do other paying work (e.g. design bits) while the machine is running.

A lot also depends on whether you’re doing this as a main job or as part of a job…

And as for pricing, there’s also what auctioneers know as the winner’s curse: you don’t need everybody to want to buy your thing at that price, only somebody.

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#19

Agreed - however, cut time should have some assigned value, shouldn’t it? These machines were not free, and there are/will be associated costs to keep them running (electric bill, replacement tubes). Without an in-house laser I’d have to go to one of the local maker spaces, and they charge $60/hr or more. While their retail rates are not reflective of our operating costs for these machines, surely cut time should have a price tag as well?

Not trying to start an argument, just musing on this point. It’s one that I’ve really been thinking about in regards to my own work and market.

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#20

Like I mentioned above - we charge $1.75 a minute and that’s below the industry standard ($3.30 a min). The difference is using it as a tool to make a product and selling laser time.

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