Thursday, July 14, 2011

What I've learned/questions about pricing

The other day we took a trip to visit a local furniture store. We might be furniture nerds. We love looking around, testing couches (and chairs), analyzing their staging. Does anyone else do this? This was our first visit to such an establishment since we jumped into this little furniture business of ours, so I was really excited to look at everything with a new perspective.

And I was kind of shocked. 

I was shocked at the prices they were charging...even for sale items. Most were at least double, closer to triple what I list pieces at. 

I understand completely that this store is so very different from what so many of us do. It is part of a chain, it has investors, a reputation and loyal customers. But I still had a hard time keeping my jaw from dropping as we perused each item and vignette.

When we got home we talked about our pricing "strategy". OK we really don't have one. We really just go with our gut instinct. And I'm wondering if we are going about this all wrong. So I was wondering if any of you had some advice. 

This is what I've learned so far. 
  • I want to create beautiful furniture that people can afford. Everyone deserves a beautiful home
  • What you can charge depends on the venue you are selling it in. 
  • I don't like to pay more that $30ish dollars for a piece to work on. 
  • Sometimes a piece will produce a large profit and sometimes it won't. 

OK now I need advice. 
These are some of my questions and if you have any answers, experiences, advice, anything I would really appreciate it. 

  • How do you price your labor/time invested in a piece?
  • If someone asks you to lower the price...what do you do? 
  • What venues do you use to sell finished pieces?
  • How long do you leave a piece up for sale before you lower the price?
  • How do you price your finished pieces? Do you have a "formula"? 
Thank you so much for your advice! I really, truly appreciate it. 
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11 comments:

  1. I read a really great blog post about this. I'm going to go dig it up for you! When I read something on here earlier about you only charging $8-10/hr for labor I was kind of surprised. I mean, $8 isn't even minimum wage in Oregon. I'll be back with the article. :)

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  2. http://www.freshlypickedblog.com/2011/04/why-you-should-raise-your-prices.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+FreshlyPicked+%28Freshly+Picked%29

    Check out the two links at the end of her post as well!
    good luck!

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  3. This is a great post. I just started my business about a month ago and pricing has been one of my biggest question. I completely agree that what you can charge largely depends on yor market. Answers to your questions would greatly help me out too!

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  4. So much depends on your market and your audience - perceived value vs. actual cost. There's lots of formulas - here's a common one: cost of piece + cost of materials (X 2) + time ($15-20/hr.) = listing price. Example, for a $30 dresser with $20 worth of new knobs and paint, and 3 hours to sand and paint (not including drying time) would look like this: 2($30 + $20) + 3($20) = $160 retail price

    You may need to adjust this depending on whether you're selling the item or a consignment shop is taking a percentage (20-50%). Obviously, you can sell items at a lower price if they can buy directly from you. Some people add in gas cost/driving time if a piece you're picking up is far away.
    Again, perceived value vs. actual cost is a huge factor in the adjustments you can make to your formula. You may be able to charge more an hour for a large piece of furniture or something very labor intensive than something very simple and easily transformed.
    Lowering the price is totally a personal choice. If you're already at your price point and really can't afford to lose profit, then just explain it's already priced as low as you're comfortable with. If your formula allows for a little give, then your can offer special discounts. When selling my items, I always work with repeat customers or those buying more than one piece to give them a good deal.
    I typically lower a price if it doesn't move for 3-4 months. This may be a different story if the piece is taking up valuable real estate vs. something small and easily stored. Sometimes it just takes advertising/listing the piece a few more times so the right person sees it. Sometimes the price just doesn't make sense for the piece. And sometimes the piece just doesn't appeal to a broad enough audience. At that point, it may be time to evaluate the piece and consider repurposing or refinishing.
    *whew* I hope this helps. Good luck with everything!

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  5. I have no idea the formula I'm going to use to price my pieces, but I have to tell you that I stalked your furniture for sell before I emailed you and I totally thought you were under-priced for the quality of work you put in. Your furniture is gorgeous and I think you deserve more for them than you're charging.

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  6. I wish I could come up with a magic formula, but no luck with that here. Unfortunately a small piece may take nearly the same labor as a large, but I just accept that my 'mark up' will probably be significantly less. Since I do all my selling through the classifieds, I use other ads to judge my prices. And after a week, I will probably lower the price, or bargain. That's a juggling act for getting my money out of a piece, and getting it OUT of my house so I have room for something new! I am seriously considering joining up with a local consignment store, so I have a place for those items that don't sell quickly.

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  7. You are not alone in this at all my friend! I wrestle with this all the time and usually go with my gut. But sometimes my gut is way low b/c I (I) am a cheapskate, but I know others out there are not. Thanks for stopping by DavisDomestications.blogspot.com
    Following you now...would ♥ it if you followed me too. ☺

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  8. We have this question too... there aren't any other people doing furniture refurbishing in our area so we'd have a monopoly but no one wants to belly flop and have no one want your stuff :(

    ReplyDelete
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