I just had some quick quistions about the whole idea of marketing anything. CBG's, pickups, t-shirts, shoes.....you name it.......
Let's say that there is a product that you can purchase. This product has 4 different price points.
$30.00
$22.00
$8.00
$3.00
Now, you find out that you can make this product for next to nothing yourself, by hand. You can order the material that you need (wire, cloth, magnets etc) and make them. You can churn out 3 of these products yourself, by hand in about an hour. So, you have yourself this little side hobby /skill that you may be able to make a couple of bucks on. You don't want to charge people an arm and a leg, but you don't want to break yourself either....just a nice little side craft you can do to make a few bucks.....no biggie.
You see this product and look at the price points and think "Man, 30 bucks is insane, who would pay for something like that for that amount of money."
You look at the 22 dollar price point and think "Well, this is a bit better, but still high as a cat's back."
Then the 8 and 3 dollar price point you think " Okay, now that is way more resaonable, but I can make 12 of that same product for 7 dollars myself."
You do the math and think "Well, I can buy the material for 7 and sell each one of these products for at least a dollar, (making 12 items each) and still come out ahead. But, since you are making this product, by hand, you need to at least come up with a price point for your time and talent. So, you charge a $1.25 for your product......1 for the product and since you can make one of these things in about 10 mins, you treat yourself to 25cents.
But here is a bit of a catch. You still have these other price points running around from other company's that are making the same product. But, you are selling your items for way less, so you know that the consumer will see that your item is the exact same thing and think "Man, I am coming out ahead and I am saving money because I want this product, but I don't want to pay 30 bucks for it, when I can get it this cheap."
Where are the rules drawn out in the sand? Who says that you can make the same exact thing that Joe Blow down the street is making, for less? Is it all just fair in love and war? Would someone get in trouble if they found out a way to make something, that someone all ready sells, but just for less? A 2 liter of pepsi is a $1.50, but a RC cola is 50 cents.....they both are pretty much the same thing, a bit different taste, but in all reality, who cares if you can save that extra buck.
Is this what they call the american dream? Is this where the rules don't really tend to apply? I can make a single coil pick up, so can that guy, but mine is cheaper, they both sound the same way, his just has a different brand name....but you save money buying my product. The you have thos other guys that say..."Well, his has this going for it, or that, or I like him better, or his comes with this..." It all boils down to a choice that a customer makes. Back in the day, on the farms, if you could not make it with your hands, you really did not need it. This is where guys like the old blues men were born, they saw a need, or a want ( I want a guitar to sound like Son House) So they use what they had.....but then over time, improved upon it, improved upon it, and then Bam, flash forward till now, and look at all of the six strings we have.....but throw guys like us in the mix, and then people get a bit taken out of their norm, get interested and then start making CBG's for themselves.....that is a bit off the subject, but you get the point.
What I am saying is, it boggles my mind that I can make a product, just as good, if now better than the next guy, but how can I get a peice of the action so to speak...Where can I get my foot in and say "Hey, don't pay that crazy amount of money for that product, when I can sell you one for way cheaper than his, that is just as good."
I am not greedy.....really.....I have always just wanted to have a samll buisness on the side, just to do and gain a bit of a cash flow. Is there anything really wrong with that? If you enjoy doing it.....then you should be fine right?
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One thing i would say is there is a big differance between a hobby and a business
and these 2 factors also determine your pricing .
I am also in a bit of a quandry as to price point. My goals/aims are multiple - I enjoy making cbgs as a hobby, would like to get people involved in music and could use some extra cash flow as well.
My typical build is 3 string, fretless, poplar neck w/CB's economy tuners and a piezo pickup and of average quality. My build time is 2 & 1/2 - 3 hrs. and cost to build is about $13.00 per unit. My primary venue will be grassroots music festivals. I will have 15-20 CBG's and assorted canjos, diddly bows and lever basses.I will also be selling handmade soap. Booth cost is $200.
I would rather move all or most my CBG's than get absolute top dollar for them. Given these parameters - what is a good price point? I was thinking $65 but my wife and a friend think closer to $50. Opinions please??? Thanks, Roy A
I'm a small business owner, but not in the musical world. I'd say you have to give yourself a healthy accounting of your present overhead and decide how big you want this venture to be. If it is a time filler and something you enjoy, then you don't need to make so much. But consider what happens if you get 100 customers with orders for multiple items. Then you have to sort out how to keep these people happy with your output. Remember, working fast usually means degrading quality. And then factor in you are under the weather this week and still have to put out 30 items. Now, maybe it isn't wort the couple bucks of gross profit and you wish you were making more. Then you have to hire a buddy or maybe an enterprising youngster to help out. Oh, and you wanted to take a vacation next week. It is more difficult to increase prices than discount. My suggestion is to start with a respectable price below the competition (like 30%) and offer every blessed customer a generous discount when you can find a reason to do so.
Roy Alderman said:I am also in a bit of a quandry as to price point. My goals/aims are multiple - I enjoy making cbgs as a hobby, would like to get people involved in music and could use some extra cash flow as well.
My typical build is 3 string, fretless, poplar neck w/CB's economy tuners and a piezo pickup and of average quality. My build time is 2 & 1/2 - 3 hrs. and cost to build is about $13.00 per unit. My primary venue will be grassroots music festivals. I will have 15-20 CBG's and assorted canjos, diddly bows and lever basses.I will also be selling handmade soap. Booth cost is $200.
I would rather move all or most my CBG's than get absolute top dollar for them. Given these parameters - what is a good price point? I was thinking $65 but my wife and a friend think closer to $50. Opinions please??? Thanks, Roy A
To this post, I would say you have to consider how much pocket money the festival attendees have and what they will let loose of in a single transaction (assuming you will only take cash). That's more important than anything else, probably. If you figure the average person is walking around with $20 and maybe 10% have $100 (as an example only) then you see your customer base shrinking without factoring in the appeal of your product. I would think you could clear the shelves at $45 faster than $50 and a lot faster than $65. The only way to tell is trial and error.
BTW, my rule of thumb for pricing has been ~3X material cost. Fast and easy (and successful). That leaves you with 1/3 materials, 1/3 labor and overhead and 1/3 gross profit. From the profit come your expenses (fuel, booth cost, taxes, etc) so you may end up around 10% to 15% net depending on how you control the expense and tax side. Too many small business owners use 1.5X to 2X material cost and wonder why they haven't made any money at the end of the day.
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