Monica and I were recently at a market when this young man (late 20’s maybe?) breezed through our booth and glanced at my pen display. I can’t remember everything he said but on his way his out he said “Nice, but 79 bucks?”.
Prior to that, I was getting questions like “What makes these pens so expensive?” or “Is this price in dollars?”. I spent two entire days like that. It can be very difficult to not take this personally and lash out. But that would be unprofessional and counter productive.
It became very apparent that I had a problem. The possible problems that I identified are:
- My pricing is too high
- The attendees of this festival are not my demographic
- I am failing to show value
Lets walk through these individually determine which of these are valid problem and what I should do about it.
Pricing is too high
Assuming that you have read the blog post “How to Price Your Products“, you understand my basis for pricing my pens. However, lets walk through the process.
My pens consist of basically two parts – the hardware and the turned barrel. The hardware I purchase and the turned barrel I make out of wood or other materials. The true art of making a pen for me is finding the barrel material and matching it to the hardware. I scour suppliers around the world to find some of the most beautiful materials available to make these barrels, but that is beside my point. (Yes, I’m still taking this personally)
Here is my pricing breakdown from my Excel spreadsheet:
Wood Barrel: $1 (on average)
Finish Materials : $.05
Box (packaging): $2.00
Based on the formula in “How to Price Your Products“, my wholesale price for this pen would be $44 and the retail price for this pen would be $96.80. Note that this does not include costs for labor.
If anything, this pen is under-priced for what it is. I have it under-priced for a couple of reasons. First, I typically purchase the hardware in bulk so my cost is probably 20% less than what is stated. Second, I’m not convinced that I can currently sell this pen for $100.
Being priced too high is not one of the problems in this situation.
This is absolutely a problem. This festival had the totally wrong demographic for me and for Monica. While the festival may boast bringing in 60,000 people, these people were here to enjoy the festival instead of shop the vendors. For the vendors that sold $12 trinkets like spinners that light up or toys for kids, they did great.
To solve this problem, Monica and I will be doing better research on the demographics of the market attendees to ensure that it is a good fit. We also vowed never to do another festival where the beer tent opens at 9:00 in the morning or that boasts the world’s largest anything that people line for days up to eat.
Failure to Show Value
People buy things when they see value in it. When you make a purchase, it typically isn’t to just spend money. You buy things that have an equal or greater value to the money that you are spending for the item or service.
In this particular situation, people valued their money over the pens that I had on display. There are times when you can never show the value, but showing value combined with the right customers results in a sale! We all want that.
One of the things that I am struggling with right now is how these pens are displayed. The display itself was created primarily as a means of transport and ease of set up. I do get lots of compliments on the display, but it is just a bunch of pens in boxes to many people.
So yes, failing to show value is a problem. This is almost always a problem because it can usually be improved. This is something that I will be working on in the very near future by staging my pens to tell a story of some type.
A side effect of being able to show value is that I will probably be able to increase my pricing to the point that it should be. Improving the value of a product should always be at the forefront of your mind.
What You Should Do
So you have a bad day at a market or festival. Should you just throw in the towel and give up? Not at all. After you go off and sulk for a while like I did, you should take an objective look at the situation and to determine how to address it. Selling at markets and festivals is always a learning experience to show how you can constantly improve.