What are your products worth?

With the holiday season drawing to a close, I’m rethinking our pricing model for next year. How do you price?

When I price most things from the wood shop, I have a day rate and include cost of materials. Has anyone used this model on CNC work? I’m thinking about doing a combo of my day rate and calculating a “machine rate” to come up with a good price.

My experience selling on eBay and Etsy has taught me a few things about pricing.

The biggest lesson has been that your potential customers do not care at all how much it costs you to make a “commodity” item like a premade sign. If they can find roughly similar items for $15 from other vendors that is the price they will be willing to pay. So if you really want to make wooden “Welcome” signs be prepared to sell them for $10 to $15. If you try to price at “what your time is worth” you are going to have lots of unsold Welcome signs sitting around your shop.

But, if you can make a custom Welcome sign with a few templates that allow the customer to “make it their own” adding custom text, using different wood, finish quality etc then you can charge $50 to $100. If you give your customer the choice of buying the same custom sign in pine for $30 or Cherry for $80 most will choose to get it in cherry.

So offer may options starting with really low end materials. Once a customer makes the decision to purchase a custom sign they will usually choose to upgrade it to the more expensive woods and finishes. Even though it costs you almost the same to make it in cherry as it does to make it in pine your profit is much greater. Plus on Etsy the lowest priced version is the price the customer will see when searching. So they will be more likely to enter your store.

Before I decide to sell a new “commodity” product I will search Etsy to see what others are selling it for, if there are hundreds of people selling 8 inch x 8 inch wooden Bas Reliefs for $30, then I will decide to make mine 12x12 or larger where there are not may people selling the larger sizes. Then I can price them at $120 since no one else is making that size. Not everyone need the larger size, but those that do are willing to pay a substantial premium.

Just my observations, I am sure others will have different opinions.


Do you sell online?