search  current discussion  categories  business - pricing 

market-based pricing

updated fri 29 sep 00


Dave Finkelnburg on mon 25 sep 00

Cindy, Gayle and all,
From time to time I see comments on ClayArt such as Cindy's excellent
and detailed listing of all the costs which go into making pottery. This is
good information to have.
An alternative approach to pricing pottery exists, and I think it's one
which makes good sense. That is, base the price on what the market will
Cindy has outlined cost-based pricing. Set the price somewhat above the
cost of production. It tends to work best with commodity goods where the
buyer can't really tell one product from another, or at least isn't too
concerned about the differences. Be the low-cost producer and you'll always
be in business. Coffee mugs might be one such "commodity" product. Do
Gayle's teapots sound like a commodity item? I don't think so.
If your pots are unique, you can do well by pricing them just as high as
the market will bear. If people will buy your work as fast as you can make
it, why price at anything less? Well, there may be a lot of good reasons,
but if you want to maximize your income, don't price below the market.
Dave Finkelnburg, savoring fall in Idaho

Cindy Strnad wrote:
>Figuring out an appropriate price is really a lot of work. First, and
>easiest, you need to know the cost of the clay and glaze, and electricity
>fire it. Second, you need to know how much time you spent on the pot.
>what wage do you want to receive. This is only the beginning.
>What is your annual production? What is the cost of your kiln, wheel, and
>other equipment, and if they're financed, the interest you're spending on
>that loan? If they're not financed, how much profit could you be making on
>the money you spent to purchase them? How much space do you use for
>production, and what is the cost of that space and of maintaining it? How
>much time and money do you spend marketing your work to the non-potting
>Finally, when you've figured all this up, does the teapot merit an
>additional price increase for the intangible value of your artistic touch?
>In other words, does this teapot "sing"? If it does, you deserve a premium
>for the song.
>After you've done all the figures (if you do--I must admit I'm still
>it off), I very much doubt you'll hesitate to mark a price in excess of
>on a piece that merits it. If you can't get that price, and you want your
>business to be profitable, you'll have to stick to making teapots for
>yourself and other forms for the business, or find another marketing
>Don't be too surprised, though, if those teapots sell anyhow. I've found
>that people don't pay as much attention to the prices of my wares as I do.
>I've marked up and marked up, and it hasn't made a difference. I'm not out
>of line, or unrealistic, I don't think, but I deserve a fair wage for my
>work. So do you.

Cindy Strnad on tue 26 sep 00

Hi, Dave.

I agree with setting your price as high as the market will bear. With some
high-labor items such as tea pots, however, I think many potters who set the
price at as high as they feel the market will bear end up working for, as
Gayle put it, less than 3rd world wages. I actually make a lot more money
per hour on a mug, all things considered, than I make on a very highly
priced sculptural pot. That's why it's important to have an idea of the cost
of making the item.

$65 retail for a teapot you spent several hours on isn't very good money
once you consider *all* the costs. Especially so if you're selling that
teapot wholesale. You get $32.50. So let's figure you spent a total of 3
hours on the pot--a little over $10/hr for you, before you deduct your
overhead. Pretty soon, you're working for less than minimum wage. Still
better than 3rd world wages, absolutely, but probably not enough to care for
your family the way you'd like to.

If you're selling retail, you come out at about the same, unless you have
friends standing around the kiln waiting to buy as you unload it (which
happens occasionally, but certainly not always--at least not here). There's
a lot of time and work involved in marketing your work--especially if you're
marketing it retail.

Actually, Dave, I believe you and I agree even though we're talking about
different pricing strategies. You say, "Set your price as high as the market
will bear.", and I would add, "Yes, but be sure you're not still setting
that price so low that you're not paying yourself well enough."

Cindy Strnad
Earthen Vessels Pottery
RR 1, Box 51
Custer, SD 57730

iandol on wed 27 sep 00


Re your remark

I was always under the impression that this was the basis of Capitalism. =
That these are the figures on which projections or profit forecasts are =
made and that any shortfall on estimates is accounted as a loss for the =
purpose of calculating payments redeemable to the IRS.

Perhaps anyone who is making pottery for a living that has not completed =
a Business Plan with three year projections needs to think about getting =
some training in management and accounting.

Best regards,