There are several strategies, factors, formulas & guides to create pricing. However...
If we ask people to pay too much for an item or service they will stop buying/go elsewhere.
If we ask too little our profit decrease & or customers assume our item(s) are poor quality.
And remember the longer an item sits, the more money it is costing us.
But we cannot & should not undervalue ourselves, our talent, our hard work!
MARKET AREA PRICING helps optimum price, it factors in your costs and maximizes your margins while remaining attractive to customers!
So... In my opinion... not everyone can price the same! Aside from techniques & talent we should also consider Market Area when Pricing our items.
Things to think about within a Market Area;
-Customer Base (Learn about buyers in your area.)
-Population (# of people within your city & county)
-Classification (Upper, Middle or Low.)
-Area (Urban, Suburban, Rural)
-Competitors (of equal or similar product & value)
You can expand your Market Area & offer shipping. But there are additional cost & time factors to consider when doing so.
There are plenty of businesses who take Market Area into consideration for pricing, payroll, etc.
- When I was a mail carrier in Upstate NY, I was paid $6hr less than another who started the same day as I in NYC.
(Cost of living differential pay.)
- When I was an active insurance agent for a large corporation I was paid thousands less per year than another in Washington State.
(Note: I had 3yr tenure as well as college, she was a HS graduate. The factor was cost of living differential pay.)
-A new elementary school teacher salary starts between $42,000 and $65,000 in the US.
-A gallon of milk cost between $1.85 and $6 in the US.
-A gallon of gas cost between $2 and $3.29 in the US.
-A one bedroom apartment cost between $500 and $2500 in the US.
-A house cost between $15,000 and millions in the US.
FPBT is a group to discuss business tips and also has Sub-Chapters AKA FPCs (Furniture Painting Collectives) with a primary focus for local area furniture painters interacting to build a better business. One of the goals within each FPC is AREA PRICING. Members collaborate and then offer a pricing guide that will encourage members to value their work. With a guideline to follow we are creating a better market by offering consistent pricing throughout the local area(s).
NOTE: The guides are to assist members with pricing, they are by no means a rule. It is up to each individual to determine what price is best for their item(s) & what profit their business needs to succeed!
Regardless of how we determine or set our prices, we are in business to make a profit!
We need to do what works for us & our business!!
Personally I have a quick guide that I use, it works well for me in my Market Area.
If I'm purchasing a piece to paint/refinish then I know I need to increase my sale by at least 5x. If I cannot then it is not worth the initial purchase price to me.
I look at it like this;
1x for cost of item
1x for gas, search & advertising time
1x for product/supplies
2x for my labor
-Buffet purchase price $50, I'd want to sell for at least $300.
-End Tables purchase price $20. I'd want to sell for at least $100.
Don't get me wrong, there are times that I price higher, I use my FPC guideline which includes 3 different class Market Areas. Again, my personal guide is just a quick guide to multiply when purchasing. So if I get more it's a BONUS!
What works for me, may not work for you & vice versa. So again, not everyone can sell for the same price due to Market Area!