Pricing Ethics

[Dan Gray]

Chris - I manage and am part owner in a Construction Company, Landscape Company, and several other concerns. We receive price increases almost daily, and adjust are pricing accordingly. If we sold our product at cost or below are targeted margins, we wouldn't be in business very long. You should not feel any guilt from pricing your product accordingly. Ie: what the market will bear. Too high and you have no customers, too low and you can't keep up with the demand and/or your business succeeds itself right out of business. Concentrate on what your profit goals are, and how much the consumer is willing to pay for your product. There should be no emotion of guilt due to your pricing structure. (Only pride!) A few questions for you, what do you do when your suppliers notify you of a price increase or fuel surcharge. You either keep on buying, or you look for another supplier with an equal quality. Most of the time, I would wager that if the increase is reasonable you will continue to use the same supplier due to your relationship & history. Your customers should react in the same way. If not, then the market is telling you that $195 is all it will bear, and you have some decisions to make. Anyway, my advise, for what it is worth, decide on your pricing structure, now, and then make the calls to your backlog of customers. See what the reaction is to an increase. You don't have to drive them away, but my gut tells me that if someone is willing to wait for 2 years to get a knife, they probably aren't even going to blink an eye at an reasonable increase. Do yourself & your product justice, and do what you need to make yourself successful in your business as well as your product. Think about 20 years from now and these customers of yours are posting your custom knives for 10 times what they paid you for them. Good luck, whatever you decide.

that was well said I like that..
one thing I'd add,, don't get two years behind without a Claus to stipulate adding unforeseen price hikes.

 

[mlovett]

I once made a Damascus fighter for a friend, who is now a will known dealer. I charged 750. for that knife in the late 80's, He later sold that knife for over 2 grand,iIn the early 90's to the Indonisian Diplomat to the U.S. The Knife later sold in Cali. for over 5000.00. My point being, you can price your self out out of the markey, in either direction. I left a lot of money on the table. I stayed poor back then. Raise your prices every year. It will guarentee an increase in value for your customers, and collectors alike. If you can, do not take a deposit, as it locks you into a quote. The after market price, has been going up on My Loveless Connection Knives so fast, that I tell prospective customers, what the current price is, and tell them that the knife will be shipped at the price in effect at time of shipping. They are contacted before work starts on their Knife, and they have the option of taking of turning down the piece. I cannot afford to ship a knife two years from now at todays prices. I have no Idea what the price of doing buisness will be by then, nor what the increase will be by then. I set my prices too low on the New Loveless Connection line. I'm swamped. That's good, but thats bad. Mike

 

[Dan Gray]

Raise your prices every year. It will guarentee an increase in value for your customers

very good point Mike

I try to go up at least 10% a year on the reg stuff that moves well,

no one wants to hear, why would I want to buy that when I can go to the maker himself and get a new one at the same price..10 years later

the slower stuff I want to take off the market.

edited to add
you can't get 10% at the bank

 

[Steven Roos]

Well, as a soon to be maker, I'd say inform potential customers of the price increase.

As a potential customer, I'd prefer you honor the published price. I saw that article in Blade and wanted to order one on the spot!

 

[gobble]

My apologies if this has already been posted. I would like to give you my perspective as a consumer. If I saw an article that listed your price at a given point, assuming it wasn't listed in error, I would expect to be able to buy the item at that price. However, if I were looking at a magazine that's a year old and saw a price listed, I would understand that prices change. I guess the factor ought to be when it was published. If it was published recently, personally, I would honor the cost. However, if the article was from some time ago, you have the right to charge whatever you like.

 

[Keith Montgomery]

Chris, from a purchasers standpoint I have to say that when I see your knives I always wonder how the heck you can do it for such a low price. If that knife was $225.00 right now, I would still consider it to be a heck of a bargain.

Put an announcement on your website letting everyone know that as of the first of January, 2006 that your prices will be going up (you will have to get that on your website really quickly). That way they have been informed of the change and should have no problem with it.

 

[oljoe]

Chris,
It seems to me like you are locked for the next 2 years at this price.

There is a way to keep this from happening again. You could put a limit on the number of orders at this price. Say the first 10 or 20 knives, or whatever you feel comfortable with, at the advertised price and add that the price is subject to change after the quota is met. That puts you in the driver’s seat as far as what you think you can get accomplished in a given period and what the price will be later.

There will be some customers that want order anyway and you won’t be locked in if material prices go up.


Joe