1 Big Myth About Pricing Your Work | Maker's Money

so the other day we were shopping for shoes so we're walking around the mall my brain's turned off i'm just following jenny around like a zombie staring at my phone i'm just scrolling through instagram or whatever and all of a sudden jenny stops and falls in love with this pair of tennis shoes these ones these ones right here see see see there are these ones these ones right here are these cute so she tries on the shoes i look at the price tag because what else am i gonna look at i picked my chop off the floor what do you know those are the shoes jenny just has to have never mind the other two dozen pair of shoes in the store she has to have these which cost more women right i mean we guys we never make emotional purchases like that do we but on our way to checkout we saw these basketball shoes that were in a glass case behind the counter and some of them were over a thousand dollars for a single pair of basketball shoes the guy behind the register said that the shoes in those glass cases were for display only and that when they get shipments in people are lined up down to the food court just for a chance to get their own pair so then we started thinking to ourselves how does a company charge this much for a pair of tennis shoes and then sell out i'm about to tell jenny to walk away from a pair that only costs 150 so in the world does price work and how can we as business owners set prices like that that's the topic of today's inaugural episode of maker's money [Music] okay i can hear your comments now we're not nike we're not adidas we can't charge those type of pro okay fine sneaker companies are crazy let's take a look at another luxury good peloton bikes you know the exercise bike that's ridiculously expensive that brings a new york city spin class right to your living room those peloton bikes [Music] i bet you didn't know how they started with their pricing structure so here's what the ceo of peloton said in an interview in 2018. in the very very early days we charged 1200 for the peloton bike for the first couple of months and what turned out happening is we heard from customers that the bike must be poorly built if you're charging 1200 for it we charged 2 000 for it and sales increased because people said oh it must be a quality bike they increased the price they increased it and got more sales because they increased it that is so contradictory to what common knowledge says to do now i know some of you are thinking oh well yeah only stupid people buy that exercise bike i would never spend 2 400 on an exercise bike okay fine i'll give you the exercise bike but how much did you spend on your truck how much did you spend on your tennis shoes how much did you spend on that festool domino how much did you spend on your table saw you got a saw stop those are pretty pricey and peloton just raised their price again and saw a sales increase they just changed the price to twenty two hundred dollars a bike [Music] [Music] so i hope you're as confused as we were when we heard all these stories we were literally left scratching our heads going so what do i do about pricing my work what do i do about pricing our cutting boards and charcuterie boards because clearly i'm missing something these companies are making billions of dollars with their pricing structure and i don't understand what's going on i need to learn something new so we went and researched it we read all the books we read up on pricing and what we found is and we're gonna give you the answer here it might sound confusing but what we found is price is fake and made up and arbitrary it's not real and i know that sounds weird i know it makes you feel uncomfortable but that's the truth there is no such thing as set price there's no such thing as overpriced or underpriced if you think something's overpriced it's only overpriced to you there are eight billion people in this world somebody's gonna think that that's a decent price for whatever they're buying whoever selling the item is the one who sets the price and i also know that that answer is completely useless to you so here's some tips don't ask yourself what it's worth you're biased you're a maker you're emotionally invested so you should be the last one determining your prices based off of your own subjective opinion and also your spouse shouldn't be determining the price either they're probably upset that you're spending too much time in the shop and they want you to go out of business quickly they're never going to be in the market for what you're going to sell they're just going to have you make it for them we asked ourselves why are we pricing our work for the people that shop at walmart and target when we could be pricing our work for the people that actually want and appreciate handmade art and whether you believe it or not the work that you're creating is really nice artwork you guys create functional art we see your pictures all the time you share us pictures on instagram on facebook like everywhere will you email you find our email address that we've hidden from you and you send us pictures of your work there you guys have an absolutely amazing capability to build incredible things i don't know where the lack of self-confidence comes from but here i'm telling you you guys make good stuff so do not feel guilty or like you're ripping people off when you raise a high price you're just charging what your free time is worth and plus people care about it more when they spend more money we could go in a whole lesson on that but that's for another show people care about their stuff more when they pay more money for it they're more gentle with it they take care of it better if they treat it more special because they spent a little bit more money on it so if you want people to appreciate and genuinely love your work price it that way so there's a really easy way to solve this and this is exactly what we did with our business you go to the luxury provider of whatever product or service you're in the market for for us for our cutting boards that's boos you see them everywhere on tv every tv chef is using a boost cutting board in the tv show so that was the standard we knew that there was demand at their price point because they like they've gone before us they've tested the market they've been around a lot longer than us they know what the market demands and the market is demanding a solid maple cutting board at about 130 retail and their margins are a lot better than what we can do here in our garage especially when you consider that we spend ten dollars aboard on packaging and another eight dollars on shipping they're making a lot more profit on that 129 than we are on our price of 116. in reality our price is really too we need to address that can you put that on our to-do list yes okay see even we mess up sometimes we can honestly get 200 to 250 for our personalized ship to your front door cutting boards sounds crazy to me i know it's crazy to you i'd never pay that you'd never pay that but there are tons of people i mean jenny i cannot build cutting boards fast enough jenny has outsold all of our inventory and the next two batches of cutting boards i'm about to make we cannot keep these cutting ports in stock right now and it's a wonderful problem to have but it also means our price is too low because we have more demand right now than we can handle in the production facility so we got to be raising our prices or hiring more help [Music] so bottom line i'm sure what you make is far better quality than the imported stuff that you see at walmart or target also the people that shop at those stores are not your customer so if something isn't selling lowering your price isn't the answer because we just discussed several examples where people raised the price and the sales went up there is demand for luxury goods in your corner of the world you just have to put in the work and the time to find it you can't just lob your work out there and hope that people will come to it and like what you do you have to spend time finding the customer who's going to pay what your work is worth so what does that look like for you today take action get rid of your low prices get rid of them on your etsy store get rid of them on your website get rid of them on your facebook page no longer do you charge a lowball price for the work that you do yeah you enjoy it yeah it's a it's a passion project for you but that does not mean you should be losing money on every sale enjoying your work is a bonus not a form of payment go look up the luxury goods in your corner if you're if you work with leather and you make purses go look at louis vuitton's website if you build dog houses go look up dog mansions i know that's definitely a thing i don't even know anything about that world but i know that's a thing find the luxury version of yourself and start pricing that way and start to reverse engineer where they're getting their clients from and find them in your own local area once you do that then you're ready to go out and find the best customers in the world it's the people that are willing to pay anything to have your product that will be our next topic on maker's money so subscribe to get more content like this if you like this video it's our first one in this series let us know down in the comments give us a thumbs up we look forward to doing a lot more of these in the future and we hope you guys liked it [Applause] [Music] you

Channel: Jennie and Davis

Views: 195,389

Keywords: woodworking, wood, carpentry, tools, maker, make howto, how, to, how to, build, building, DIY, furniture, furniture business, woodworking business, money woodworking, business, entrepreneur, millennial, milennial, moeny, make moeny, making money

Id: 5xyCr70aw2U

Length: 9min 42sec (582 seconds)

Published: Mon May 24 2021