Another way of looking at pricing

[stitcher_guy]

Hey Rich. SCORE on getting the author in here, man. Cool. And Rafi, thank you for taking the time to make some comments.

I've always been a proponent of the smaller jobs. Along with shoring up the slow times (which -- knock wood -- doesn't happen often) I have another philosophy: Then Joe Blow brings in his grass bagger to have a zipper put in, or Mrs. Blow has a purse strap that needs some attention, that is indicating they are interested in keeping their items in proper working order. And, if they have that desire, then they also want t heir cars to be that way, so there is additional work if I prove myself willing to help with the small jobs. AND, the biggie, if Mrs. Blow is happy that I helped sew up her purse, or did a little oddball item for her, she will tell her husband how  nice that man at the upholstery shop was, and then Mr. Blow will realize that the 69 Camaro he's been wiping with a diaper and parking on carpet pads for the last 30 years could stand a new headliner and maybe some carpet and some new seat covers. It's surprising who has what hiding in their garages.

Now, t here is always a flipside to that. The above is the ideal and what keeps me doing the small jobs. But, more often than not, people come in and bug you with the small stuff with no intention of ever doing anything more. So when that points comes up, I refer to the reading my customer way of doing business. If they come in and are good-natured and seem willing to work with me on getting their work done, then I accept it (in fact, I usually try to sew patches on motorcycle jackets and the like right as they stand there waiting).

But what I have to really be aware of is letting the little jobs eating me alive. I sometimes will have 10 or 12 boat covers with holes or seats with little holes, etc. sitting around and waiting. Those are a job that only take an hour or so to do, so the customers begin to think that it should be done in a day or so. What they don't realize is that the work is filler, and it's done when I have time, which might be a couple weeks away, or more.

Any more, I always tell them that  yes, I'll do the work, but I will not guarantee how long it will take. If they push it, I tell them within four or five weeks of dropoff. Sometimes that causes them to take their job, but usually they don't care because they have nowhere else to go.

"A key pricing principle is to allow customers to pay you the value they place on your product." - Rafi M.

Now, this I will not do. People do not place any value on upholstery, at least in the automobile industry, or with the little "nothing" jobs. They will sink thousands into engine and mechanical, put the best paints over hundreds of hours in body work, and then gripe if the interior is going to be more than a couple thousand. Even though interiors are going for $10K, $20K, even $30k. I agree with the ideal that upholstery work on an automobile should be approximately one third of the overall build cost for a project. 

[Rich]

Thank you Rafi, for taking the time to post some comments here. As you will see, there are some common pricing problems in this business, which, I am sure, are shared by others in other businesses.
Stitcherguy, it may be your experience that no one wants to pay for interior work, (it had been mine as well when I was doing custom auto interior work) but the fact that they are willing to put thousands into the paint and mechanical components means that the money is available IF they want to spend it. I think their are ways of getting these customers to part with more money for interior work. Our job is to find what it is that motivates them to spend, or better yet, WHO it is that will spend.
As mentioned before, not everyone is a candidate to spend the big bucks. For the rest of the crowd, lower priced alternatives have to be developed (remember the ATRN editorial) so that those customers can get what they want at THEIR price without the shop owner having to lose money on the deal. If they don't want to spend as much as what is normally charged for high level custom work, maybe a more off-the shelf version could be developed that will fit this level of pricing.
Rich

[Gregg @ Keystone Sewing]

Hello, I'm the author of  and Rich invited me to participate in this conversation.

, I believe in setting your price based on the value of your product - not cost. For example, street vendors shrewdly increase their umbrella prices the moment it looks like it is going to rain. This simple story illustrates a key pricing principle: pricing is about value, not cost.

I don't know who this Rafi M is, but he doesn't know the 1st thing about the book "The Art of Pricing"  :P

I've always wanted to do that!@#  LOL.  Don't mind me, I'll be on my way, nothing to see here. Move along now.

"The art of Pricing" can be purchased at Amazon.com, see it here; http://www.amazon.com/Art-Pricing-Hidden-Profits-Business/dp/1400080932

I have this book on order; if this guy is going to come on here and help me, I'm going to support him and his book.

[alge]

Does anyone open (or at least get in early) the conversation with their customer by asking what their budget is? Its perhaps counter intuitive but I'm finding it works. If they have £2000 to do the job i come up with a schedule that meets that budget, if they have £3000 they will get a different product so on and so on. Custom/bespoke means just that -tailored to their needs and budget,

[Mike8560]

I believe in setting your price based on the value of your product - not cost. For example, street vendors shrewdly increase their umbrella prices the moment it looks like it is going to rain. This simple story illustrates a key pricing principle: pricing is about value, not cost.

kinda reminds me of my bait shop up north.
My shop was right next tithe boat ramp. If a customer forgot somthing at walmart inhad what they needed as a concience I'd didn't gaff them but walmarts cost was about mt wholeale.  I heard a few times " walmart has it for -----"
now. Just figure time and materials  and if I can do I quicker the. The ti e alloyed good for me
todayi had a guy stop by with a sime fix just about 1' of zipper comming loose so I sewed all 3 zippers.  Maybe a minute.  And had a nice chat and told him. No charge.   The guy will probly call  me with a big job. .

[vinyldoctorlv]

market is also a factor. I do vinyl and leather repair.
and I charge from 65.00 a hour on up.

[kodydog]

My best jobs are repairs. If I lived in an area where all I did was repairs I would be a lot better off. And people are so grateful when you can fix their sofa or chair for a fraction of the cost of a full reupholster or buying new. I think in part this goes with what Rafi M says about Value Added

One thing I found interesting about the book "The Art of Pricing" was that it made me look at lower profit jobs in a different way. I'd always felt that since my time is all I have, I should be getting the highest return on every hour I spend working on a job. That is a good goal to pursue, however, if it means that I've turned a way a sufficient amount of jobs (by having a higher price than they were willing to pay) that it leaves me with periods of no work, then overall, I'm losing money. The lower margin work, if used to fill in where no high margin work exists, will boost the bottom line in the long run.

This makes sense but what if you could make every job the higher price jobs and stay busy all the time. And this you can certainly do. Another good book, written nearly 90 years ago, The Science Of Getting Rich by Wallace D Wattles explains this. Also on audio book. I'll bet Mr. Mohammed has already read this book.

[Gregg @ Keystone Sewing]

Just got done reading this book, and will continue to use as a resource.  Excellent, excellent book.  Easy read, very understandable, and he presents a lot of examples so that at least something will stick in my thick head! 

Shows to to present value to your customerssomethingng not easy to convey. 

And anybody who thinks my prices are going up after reading, they don't understand the basis of the book.

[sania6852]

dansko kids jamie toddleryouth black patent sku 7726997 venettini kids 54 divine su11 toddleryouth pink leather sku 7777248 dvs shoe company kids inmate toddleryouth black canvassizeselect a size sku 7699323 marc jacobs m2845 c00 black sku 7724205 stride rite austin lace toddler blacksizeselect a size sku 7495790 new balance mw1755 black sku 7729843 shoes womens camper kids 80003 toddler chocolate brown sku 7319432 pazitos swd bf toddleryouth gunmetalsizeselect a size sku 7680622 hush puppies kids pencil youth blacksizeselect a size sku 7670104

[fp2161]

Hey all,

Besides my obsession for my chesterfield sofa, I am a Sales professional and used to research marketing, including in a US business school.
My pick on this topic is that if, in theory, value pricing is certainly worthwhile, in practice you will save time and earn more money with a simpler set of rules:

(1)price your work based on the work, not the client
(2) ask consistently for the same price for similar jobs, whether it is for the same or différent clients
(3)price it on your cost+ the minimum margin you actually want or need.
(4)refuse politely any price bargain if it is not an exchange with your customer (I.e. more work for lesser margins, etc)
(5)ALWAYS deliver exactly what you said you would deliver, and when you sais you would deliver (for a repair, estimate, product, etc.)

These five rules do not have the lure/high profit expectations of value pricing, but they will give your customers the impression that you are honest and ethical, and that they can trust you, which will ensure the long-term growth of your business.

[Rich]

(1)price your work based on the work, not the client
(2) ask consistently for the same price for similar jobs, whether it is for the same or différent clients
(3)price it on your cost+ the minimum margin you actually want or need.
(4)refuse politely any price bargain if it is not an exchange with your customer (I.e. more work for lesser margins, etc)
(5)ALWAYS deliver exactly what you said you would deliver, and when you sais you would deliver (for a repair, estimate, product, etc.)

These five rules do not have the lure/high profit expectations of value pricing, but they will give your customers the impression that you are honest and ethical, and that they can trust you, which will ensure the long-term growth of your business.

I agree with most of the above with the exception of #1 and #3. I see cost and minimum margin as mandatory starting points (you can't go below them or you will find yourself gradually going out of business. I think that a major point of the book is that people have inate senses of value and either will be uncomfortable paying your calculated minimum, or will think of them as too low. Each business owner has to have his or her finger on the pulse of this sense that customers have and set final prices by that, not the calculations.
Also, I'm all for consistency in pricing, but if you are able to accommodate a customer who is in a big rush for a job, should they pay the same price as someone who is willing to fit into your schedule?
Rich

[kodydog]

Hi fp2161. All good points. The only one I'm having a little trouble understanding is # (4) Refuse politely any price bargain if it is not an exchange with your customer. Im not trying to be smart here but who else would I be dealing with but my customer. And I can easily upholster 40 conference chairs faster, if I pick them all up at the same time. Rather than doing them one piece at a time. Wouldn't I give the larger order a break in the price?
Please explain.  :)

[fp2161]

Hey Rich:

imho if you are asked to do a job in emergency, this hints at a justification for a higher price, provided this is always applied for emergency jobs and provided you have it in your price list (ie surcharge for urgent work: +20%). Another decent answer would be: "I can't do it, why don't you go and see ...". Both of these can be seen as transparent, honest behaviour.

price and value are representing the biggest point of endless argument making between economics, and marketing thinkers, it has been so for centuries... I say cost+minimum margin that you WANT, ie easy way of saying: decide depending on how much you are willing to work for. Value is, boy, a complicated thing: among other ideas it is not objective (people value things differently with their own perspective) and yet it is not completely subjective (no one would exchange a bar of chocolat against a Ferrari... Or very few people!!!) My point is: do not get into this, you have everything to loose and very little to gain, leave it to large corporations, you have something they do not usually enjoy: a reputation for honesty and hardwork, and you could loose it all by starting to charge people based on your evaluation of how they value their work (you should maybe read Malcolm gladwell's blink, it addresses in part this issue)

[fp2161]

Hi fp2161. All good points. The only one I'm having a little trouble understanding is # (4) Refuse politely any price bargain if it is not an exchange with your customer. Im not trying to be smart here but who else would I be dealing with but my customer. And I can easily upholster 40 conference chairs faster, if I pick them all up at the same time. Rather than doing them one piece at a time. Wouldn't I give the larger order a break in the price?
Please explain.  :)

Ok: 'customer: why don't you give me a better price?
you: No, I can't, sorry' (no exchange)

'customer: would you give me a better price per chair if I order 4 instead of one?
you: sure, I'd reduce the price per chair by XXX' (exchange)

see what I mean???

[Rich]

Did you read the book?
Rich