Pricing can be a confusing part of the woodworking equation, if we are trying to sell our pieces at profit. We are used to being told what to do – cut it this length, assemble in this order, etc. We get that. Pricing is like black magic.
I’m still trying to figure it out.
There’s an interesting phenomenon called “perceived value”, which is a nebulous value, yet should be taken into account when pricing.
Let me tried to explain what perceived value is, at least as I understand it. Perceived value is what the consumer feels a product is worth. Obviously, if you NEED something, like a new water heater, it’s perceived value is high; if you’re a guy, and you see a Coach purse on sale, your perceived value is probably very low.
However, in the woodworking world, it’s a different story. Let’s say John builds a trestle table, and Mike builds the same table; both use the same materials, plans, finishes and building techniques. John puts a price on it of $500; Mike puts a price of $1,500 on his. If you were just an average consumer (not a woodworker), which one would you buy? The $500 one? Maybe not.
I think most people will look at this proposition this way: A) “If they look the same, I want the cheaper one,” or B) “Hmmmm, I think I want the more expensive one. This is obviously a great piece, and the guy that did the cheaper one must have cut corners, used cheaper materials or something. I want to spend the extra money for the better one.”
I was watching a pricing video on Etsy , and they were doing a case study on a shop – I think the lady made knit goods. Her top seller? An item on the less expensive side. Not surprising. What is surprising is what her second-best selling piece was: a piece that was ten times more expensive. This lady was straddling the market – catering to the people who only wanted to spend a little, and the crowd that wanted to spend a lot for the very best.
Desire is a big component of perceived value; it’s an emotional response, and as such, irrational, usually. If people really want something, they’ll pay a lot to get it. Think of a Coach handbag. These are high-end, expensive, very well made ladies’ handbags. Many women lust after them. They run $300 plus. Now, as a guy, I don’t get paying that kind of money to tote stuff around. Maybe $50, but $300? But for a woman, it’s a status symbol, beautiful and functional – an item with a high perceived value. It’s very subjective. You’ll also see this phenomenon in play with the “must-have” toys at Christmas. If the product is in pretty short supply, you’ll see people buying them up at the store, and marking them up several hundred percent on eBay – and they get their price! Those moms buying at those big markups find perceived value in not having to camp out at stores all night to get the toy, not disappointing their kids, etc – and they are willing to pay a lot for that perceived value.
There’s another gentlemen on the internet that sells a very similar clock to mine; I think most people would be split pretty evenly between preferring his and mine. He sells a lot of them, from what I understand. Granted, he advertises more, goes to trade shows, and so on. I don’t.
However, he sells them at about 3X what I do! I’ve lowered my prices from $495 to $295 – only to find I sold more at the higher price. He sells in the $850 range…which, I would have a hard time charging, feeling it’s too much. I would feel like I’m gouging people. That’s not to say he is gouging people – he’s not. He put a price on something that’s not an essential item, and people buy it – good for him! Maybe I have a problem with not pricing high enough.
As woodworkers, we need to realize that when a transaction is made, when someone buys your piece, that they are NOT just begrudgingly giving up money to buy your piece – like they would feel if they had to replace a water heater. No, they are feeling GOOD buying your piece, or, at the very least, they want to feel that way. They are not just getting a product, but a good feeling as well. I think we need to build relationships with customers. What I mean is, don’t just put a piece out there, slap a price on it, and ship it. Instead, put a feeling onto the piece, let people feel good about buying from YOU, a real person, and not some factory in China. Here’s what I mean – don’t just put up a website like “Dan’s Woodworking”, with a bunch of pieces with bland descriptions about materials and dimensions, and a “buy it or don’t” feel. Instead, create a good feeling about the product: “I designed and built this table myself after I was inspired while I was hiking in the Adirondacks, and came across a natural rock formation…”, or, “I made this table out of recycled wood – actually from shipping pallets – because I am concerned about the environment, and wanted to challenge myself to make something awesome from a product that would have just ended up in a dumpster.” Does that interest you more than just “Made of solid oak, with a poly top”? I would hope so. Also, let people know who you are. “We are a family run business in Wisconsin; Mike and his son Tim, build the pieces. Jan, the mother, takes care of customers and other business matters. They’ve been making great oak products for over 10 years.” something warm and fuzzy like that. Isn’t that better than “I’ve been doing woodworking since 1980?” The point is, give the product a story, and let people know who you are, a real person they can understand that crafted this piece, as opposed to a bunch of guys in a factory in India.
Think about it; have you ordered something, and when it came, you were hoping (and expecting) to be wowed, either because of the price or it’s reputation? How did you feel when it met that expectation? Capitalize on that.
-- Have a blessed day!