Pricing... Again.

[BarryM]

An assumption that if a business wishes not to go into bankruptcy then it'll follow that. Pretty basic, really.

NO - a business will go into receivership or voluntary liquidation (only a person can become bankrupt) if it does not have enough cash to pay its creditors. More businesses fail because of poor cash flow rather than lack of profitability. Being profitable does not mean that EVERY item that is sold is individually profitable,

Not really. You're conflating the price of your car with what you paid - the price of the car stayed the same, you negotiated a discount. And it was your strawman, not mine.

FFS - the price I paid is the the price of the car - irrespective of what a piece of paper on the windscreen said. Your semantic evasion does not progress your argument.

Actually, I think you'll find that it's not my proposal - it's a well established method for pricing that I follow and strongly encourage others to do so. Much as I'd like to take credit for revealing the One True Way of not pricing yourself into insignificance, it's not mine.

Once again semantic evasion - that you didn't invent the method is irrelevant - in this forum it is you who is proposing that it should be adopted. Hence the proposal is yours even if what you are proposing is not your invention.

Again, very shortsighted. If you aren't going to recognise that your work is perceived as much lower value than it is because of your pricing strategy, then that's your problem.

But is isn't a problem, because it works for me.

But if you want to grow as a jeweller then that's going to hinder things - not least of which if you wanted to exhibit alongside full-time jewellers. And - as I think I've already pointed out - this "correct" formula ensures that the costs are covered.

Nobody is arguing that the formula doesn't cover costs - what you are consistently ignoring is that the price that is derived by this formula may make the item unsaleable and that there ARE other, very successful ways, of being profitable that does not require that EVERY single item you sell is individually profitable

Just so we're clear -

Profit: What is left after all costs are accounted for, including (but not limited to) time to manufacture, materials, overheads. The formula I use factors in 20% profit.

NO what you call profit is actually NET PRODUCT MARGIN - profit is the overall company reported retained earnings after taking into account the things you mention and also includes other indirect costs including interest paid, R&D, accountancy fees, depreciation, amortisation etc.

Your other definitions are also not correct but I am not going to get into a willy waving competition of who knows more about accountancy than the other.

All I am asking you to accept is that while your method will ensure that no item is sold that will result in an individual negative net margin there are OTHER equal valid and sustainable ways of being successful and profitable and that your method does not apply to all products at all times.

I am very wary of those who come up with "the one true" answer that every one must follow and not other ideas should be considered or proposed. Business (and life) is too complex to have a single solution to all circumstances.

I will not be posting any further in this thread - I have made my point and will not continue with a discussion that I do not think will get either of us to change our minds.

I appreciate you point of view and understand what you are trying to achieve, I just think there are other ways of achieving the same goal.



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[Gemsetterchris]

Genuine question.
I've just popped my figures into the formula you use Peter.
My wholesale figure for a small gold fingerprint pendant comes out as £450
Problem is that a sterling or argentium silver one comes out at just over £200. .

Good luck with selling them then

[ajda]

I will not be posting any further in this thread - I have made my point and will not continue with a discussion that I do not think will get either of us to change our minds.

I, for one, have been enjoying this debate. I'm closer to your thinking, Barry, than to Peter's, but I respect his opinion and those of others who've contributed (as I'm sure you do too).

In the end, I think James had it in a nutshell:

if you are happy with your profits that's OK

Most of us are not economists or accountants and manage to work out pricing solutions that fit our market and our needs, some with a strict formula, others on a more ad hoc basis. I've spent a while getting to a lifestyle that is all about freedom - including the freedom to sell the fruits of my labour to whoever I want for as much or as little as I want.

Alan

[pearlescence]

When it comes to it..you can ask any price you like but until an item sells 'price' is meaningless.
And, I'd argue that rate for a job (ie commissions or jobbing work) is a different kettle of silver to having a shop where your wares are displayed. In one you are working as a freelance at a set rate, you are employed as it were...while for the other you are attempting to lure people into parting with their money

[enigma]

I kind of agree with Barry in that not all items necessarily need to meet the same profit margin for a business to be making a decent profit margin overall.
I still think that the X 2 mark up is pretty steep and many folk would cover marketing etc with far less than that.
I appreciate that many probably *dont* put enough of a mark up to cover time spent emailing/website maintenance/advertising/sourcing supplies etc etc but to give an exact amount is never going to be the same for everybody.
At the end of the day its no good whatever price something is set at if its not selling :/

[Gemsetterchris]

I, for one, have been enjoying this debate.

Alan

Haven't we all, it's great when the moderater is missing....oh wait

[ps_bond]

I kind of agree with Barry in that not all items necessarily need to meet the same profit margin for a business to be making a decent profit margin overall.
I still think that the X 2 mark up is pretty steep and many folk would cover marketing etc with far less than that.

If you sell through a gallery that's probably what they'll do - and you can't afford to undercut them either.

I appreciate that many probably *dont* put enough of a mark up to cover time spent emailing/website maintenance/advertising/sourcing supplies etc etc but to give an exact amount is never going to be the same for everybody.
At the end of the day its no good whatever price something is set at if its not selling :/

Yup. But don't leap on price immediately as the thing that's causing the problem.

There's a book that I'd suggest everyone reads - Setting up a successful jewellery business
UK specific, jewellery specific and accessible. Covers rather a lot on pricing (along with all the rest of the things that need to be done).

[ps_bond]

Haven't we all, it's great when the moderater is missing....oh wait

Pthbt!
Cheeky bugger

[enigma]

Yes but not all of us do sell through galleries Peter.

[caroleallen]

I can see both sides of the argument. We would all love to be able to sell our jewellery for more profit if we could. Not everyone is lucky enough to live in an affluent area where people will pay top dollar, or have the cash to be able to do the best shows. We all have to find our level but aspire for more. I would never agree with hobbyists just charging for materials though as that just makes the work of people who are trying to make a living look too expensive.