Advice please

[ajmw89]

Greetings all!

Been a bit quiet recently, too busy with work, cricket and moving into my new home to really post!

Anyway, I wanted to pick peoples brains. I was at an awards evening for a local college last night, and they asked me to make them a few pens that they can use as prizes for students/staff etc.

After talking to them, and anticipating an order of maybe 20 or 30 slimlines, I had to take a seat when I was asked for 100!

Now they didn't want a figure right away, and there's no deadline for them just in batches of 10-20 over the next year.

So I'm left with working out how much to charge them and also working out mass production.

Any ideas from anyone to make that many on a mass level? Normally I just make up half a dozen or so at a time and my normal method is: Cut, Drill and Glue tubes in all, then turn and finish each one individually.

Cheers,

Adam

 

[Neil]

Good opportunity to use a really nice wood to impress them because you can buy a piece especially for the job, pay a premium for it but knowing your wasteage is going to be really low as you can cut them all from one bit.

Decide what wood you want to make them from and suggest that wood with good reason, ie it is a beautiful wood, not because its easy to work! If you end up making 100 slimlines out of purpleheart itll be your own bloody fault!

As you say cut them all, drill them all, etc. Mark them all across the cut and number them so you retain the grain direction and match the parts, order 5% more than you need and cost that in to the equation. You'll need a decent box to put them in, I am frequently reminded of what GAry Rance told me, "A pen is a pen, put it in a box and its a gift!" Too true and its made many a sale.

If you havent got a pillar drill, get one! And my advice would be to steer them to a streamline rather than a slimline, the cb on the slimline is such crap it devalues the kit, there is more wood to take off and they are less tolerant of a minor cock up, the interface of the nib and the blank is much better on a streamline.

HAve fun, you should be able to charge about £12.50 for that lot with no other overheads such as stall fees and make a good profit.

 

[ajmw89]

They want a mixture of woods, so I'm not sure if that makes life easier or not!

A pillar drill is now on my shopping list once I get money from them

I did have a few streamlines, but they weren't really interested in those surprisingly. They liked the slimlines with fancy fittings more.

I normally charge about £12 for a slimline, so I'm thinking around £9/9.50 each for 100

 

[Woody]

Well said Neil that is good sound advise

 

[Phil Dart]

Don't really see why an order for 100 should entitle them to a 25% discount. Its very generous of you, but if you were making pens for a living, whilst you are producing their 100 you are not producing anyone else's. I realise that such a quantity commands a healthy discount, but there is a tendency amongst many craftsfolk to give money away needlessly. I think I would be tempted to pitch at 15% discount, which if they grumble gives you room to move to say 17.5%.

Having said that, your £12 non-discounted price is pretty cheap in the first place in my view. I would be asking more even with a discount. In batch production, akin to Neils working practice above, I assume that a simple two barrelled pen takes half an hour in total to make - from the time you pick up the wood in its raw, unblanked state, to the time you finish assembling it. Plus the parts, plus the consumables, plus the overheads. How much is your time worth an hour?

 

[ajmw89]

I probably am undercharging with £12. However, as it's not my main job and only a hobby, I don't feel the need to charge more. That and having done some local market research, around my turning club, friends family and random people on the street/market, the general consensus seems to be around £10 for a slimline, but they would stretch to £12 as they value the work that goes into making it.

Phil, yes, each one takes about half hour. I value my time at around £10 an hour, which is worked into my expenses for each kit.

 

[Penpal]

Pounds confuse me so on price I would say judging by the timber prices I have read and the plentiful supply through Lignattorre sorry about the spelling he could fill the bill with terrific stuff, then buying the kits in excess of your need in one bite. Now cutting for this number means two hundred individual blanks marked and numbered ( I then use new rubber bands to keep them together ) Drilling as one batch easy breezy I often have done more in one run leaving the drill running. For Slimlines using the 7mm DeWalt extreme 2 drill will easily drill these and more. Glueing up choose your own glue use sliced potatoe and press one end of each brass in and clean that up before glueing. I always get a drill punch or some such use gloves and ruff up the brasses prior to this. Glueing have a pack of table napkins handy work as clean as and be generous with the glue. Broken down to a few proceedures and having prepared them all beforehand the task is simplified indeed twenty at a time is a piece of cake. With the slimlines choose the style with the best clip and stay with that clip for all trying to eliminate variables if they want boxes let them purchase these themselves, buy them all in advance dont try to be treasurer or overcommit. Do your sums the labourer is worthy of his hire.

Have fun mate Peter.

 

[Neil]

This will frighten you - It costs me, based on my annual accounts for the last two years £5 to make and sell a pen, then.... plus the kit, the wood, and the profit. The £5 includes all the costs including running back and forth to suppliers, postage, bank charges, additional power for the machines, etc etc etc. It being your hobby doesnt mean its a pleasure to lose money, nor, inversely, does it mean that you should be prepared to do it for anything less. Nor does it mean that it is lesser quality because it is your hobby. No business is better than bad business!

Recipe for disaster, and how not to negotiate... I would normally charge so and so for this pen. This means.. I am open to haggling and will compromise my profit because I am desperate to secure your order.

Talking discounts when their is no advertised "retail" price puts the seller at a disadvantage because the levels haggled over are frankly arbitrary. Oh, I'll give you 15%. Why, whats the mathematically logic behind that? Volume discounts are supposed to reflect a saving for both the manufacturer and the buyer due to mass manufacturing and the saving of overheads, but there are none, so you are passing your money to them with no benefit. When asked how much, you should reply along the lines of,

Bearing in mind, Sir, that you need 100 of these, they will be coated in a gold plating with a fine layer of wear resistant epoxy coating which means that your purchase lasts many years, it will be finished in a durable coating to match the longevity of the metal work and is supplied with a high quality Swiss made refill which means that it will provide a smooth writing experience and will last a long time. This pen will cost you £14 each, supplied in batches of 20, based on a quantity of 100.

If he doesnt want to pay £14 or whatever the price is, he will find it difficult to haggle with the price, after all, which part of your sales spiel is he prepared to compromise if he doesnt want to pay full price?

Next point in haggling. Never ever pitch your price first. Never, never ever ever. Never!!!!! He can then only pull you down. He pitches first and you can then pull him up, and the degree of your skill will determine the amount of profit you secure.

Have fun!

 

[Phil Dart]

I hear what you are saying Neil, but in my experience, buyers of such volumes expect to feel they are paying less than the normal price. Therefore the word discount is a handy one, even though as you say, it is based on an arbitrary figure in the first place. I would also argue that there are savings from the makers point of view, both in time and in kit purchasing power. You and I both know that to make 100 of the same pen takes less time that to make 5 each of 20 different pens, not least of all in the blank preparation process, and we also both know that to buy 100 kits is cheaper than buying a handful. (the same goes for refills by the way Neil)

 

[Grump]

You won't want my advise but I'll give it anyway and I'll give it as though it was me doing it.

All this customer wants, is bollocks, it's my hobby customer gets what I want or don't get it at all.

The moment you let the customer dictate is the moment you get complaints and start warranting your goods and getting comebacks.

Tell them what they will get but not when they will get it, don't be rushed or put yourself to deadlines, if they want them they will wait.

System? Do what you have always done or what you want to do, why change for 100 pens or 1 pen, the moment you change anything is the moment they no longer like what you're doing.

Materials? Have a look around the college are they chucking out furniture? Is there any building work going on? Is there a log pile or rotten tree, barn door, school gate, lose rafter.

All good sources of free material with a meaning to the customer and insurance against non payment at least it's cost little to nothing.

Charge the same price for each pen with no discounts and don't do it cheaply for anybody, if they want a 25% discount you now have to arrange discount from all your suppliers or lose out, why should you?

Explain what you are working with and what they buy is a natural product and subject to changes, colours will fade and may not match, it will split crack dent dull with use, the better they care for it the more chance they have of keeping it but due to these factors you cannot and will not guarantee any of this work, if it breaks buy another one.

Customers are nothing but a pain, working is a PITA and a customer is your boss for that contract.

Told you wouldn't want my advise didn't I?

 

[bellringer]

Right I have just finished 110 the way I priced it was to add the cost of everything I bought in the and 5% ish then and time and machine wear the 20% on to the price came to 21.95 each that include the box but could have gone down to £15

The way I produced them was to cut all 110 blanks the drill and glue all in one go and trim the ends the turned them as and when time allowed

 

[Neil]

I hear what you are saying Neil, but in my experience, buyers of such volumes expect to feel they are paying less than the normal price. Therefore the word discount is a handy one, even though as you say, it is based on an arbitrary figure in the first place. I would also argue that there are savings from the makers point of view, both in time and in kit purchasing power. You and I both know that to make 100 of the same pen takes less time that to make 5 each of 20 different pens, not least of all in the blank preparation process, and we also both know that to buy 100 kits is cheaper than buying a handful. (the same goes for refills by the way Neil)

You missed my point Phil, if they dont know the normal price dont tell them, expound the benefits of the highly crafted item and this is the price. Are they driven by price or by quality? To talk discount is to be driven by price, which unless you have to, dont! If you have to reveal the norm then a reduction is appropriate be it quantified in pounds and pence or by percentage although I prefer the first, discount levels are negotiated in lumps such as your post indicates, 15% or 17.5%, and give the impression of being totally arbitrary. Scribble a few figures and announce that you can give them another 13p off if they have all the same wood puts the seller in a position of authority rather than just upping the percentage.

 

[bellringer]

I also ask for a deposit up front

 

[Neil]

Right I have just finished 110 the way I priced it was to add the cost of everything I bought in the and 5% ish then and time and machine wear the 20% on to the price came to 21.95 each that include the box but could have gone down to £15

The way I produced them was to cut all 110 blanks the drill and glue all in one go and trim the ends the turned them as and when time allowed

Alex,

Madness! You had a formula for making the pens, dont know what type they were by the way, but you had the formula and then were prepared to wipe £7 off the price because you could "have gone down to..."? Why? What was the justification in the reduction if you had just made that calculation? Really rather devalued your reason for doing the maths in the first place

 

[bellringer]

Well thats the rough canculation I did In my head but that's the movement I had if the customer want to bargin a bit which he did not there also was the possibility of the order going up which were the £15 came from

 

[Grump]

They can supply the wood, that's the only discount they get, then double the price cos they got sub standard materials.
The moment you work to them you are no longer a hobbyist, you are now an employee.
You want them to insure you while you work, you want holiday pay, pension scheme and all other benefits that go with their terms and conditions.
Risk assessment PPE and god knows what else you may encounter on your contract of 100 pens.
Much easier to make 100 pens for your own amusement, if they like them and wanna buy them then set a price according to what you feel they are worth.

I know that is all extreme but believe me, boot on other foot that school want them all for nothing.
Any monies from your pens will go in their coffers not yours.

 

[Phil Dart]

You missed my point Phil, if they dont know the normal price dont tell them, expound the benefits of the highly crafted item and this is the price. Are they driven by price or by quality? To talk discount is to be driven by price, which unless you have to, dont! If you have to reveal the norm then a reduction is appropriate be it quantified in pounds and pence or by percentage although I prefer the first, discount levels are negotiated in lumps such as your post indicates, 15% or 17.5%, and give the impression of being totally arbitrary. Scribble a few figures and announce that you can give them another 13p off if they have all the same wood puts the seller in a position of authority rather than just upping the percentage.

No, I got the point, which I accept. It's just a different route to the same end. I agree, talking pounds or pennies is better than percentages, but I was just illustrating my own point, which is that 25% off the normal selling price is probably un-necessary. Scribbling some figures to arrive at a reduction in price (13p in your illustration) is one way to go, but at the end of the day, it still represents a percentage of the starting price you initially have in your mind's eye.

The thing is Neil, we both agree about this. It's just semantics.The point that you have missed though I think, is that people buying in volume like to know that they are getting a better price than Joe Blow. Therefore, as I have already said, you have to talk about it. The way you go about it is a matter of personal approach.

"I understand your product is top quality, that's why I'm buying your product and not his, but I'm buying a lot of them so I want some money off" Fine. The idea is to have a customer who wants to buy, and is happy to do so at the price you agree, even though the price may be the one you had in mind all the time. You don't want a customer who begrudges the price because he doesn't appear to be being rewarded for his custom.

That is human nature I'm afraid. If I'm wrong let me know and I'll remove the quantity discounts for my refills and I'm sure Dan will for his kits too. After all, your argument is that quality transcends all.

 

[Neil]

No, I got the point, which I accept. It's just a different route to the same end. I agree, talking pounds or pennies is better than percentages, but I was just illustrating my own point, which is that 25% off the normal selling price is probably un-necessary. Scribbling some figures to arrive at a reduction in price (13p in your illustration) is one way to go, but at the end of the day, it still represents a percentage of the starting price you initially have in your mind's eye.

The thing is Neil, we both agree about this. It's just semantics.The point that you have missed though I think, is that people buying in volume like to know that they are getting a better price than Joe Blow. Therefore, as I have already said, you have to talk about it. The way you go about it is a matter of personal approach.

"I understand your product is top quality, that's why I'm buying your product and not his, but I'm buying a lot of them so I want some money off" Fine. The idea is to have a customer who wants to buy, and is happy to do so at the price you agree, even though the price may be the one you had in mind all the time. You don't want a customer who begrudges the price because he doesn't appear to be being rewarded for his custom.

That is human nature I'm afraid. If I'm wrong let me know and I'll remove the quantity discounts for my refills and I'm sure Dan will for his kits too. After all, your argument is that quality transcends all.

If the customer does begrudge the price the salesman hasnt done his job properly, but this is another debate for another day about the psychology of selling as to the semantics of negotiation, but I hate to admit this that I agree in principle with you, but as you say we are debating the semantics. I still hate the concept of (complex) negotiation by the use of percentages. I was always taught that negotiation is not around price alone, and in exchange for a lower price then the seller should be able to get something in return to make his life more profitable or simpler, for instance substituting a box for a velvet bag, asking for a higher deposit, or the money up front, or in this case, all the pens to be of the same wood.

Poor pricing is often the result of poor selling, not understanding the difference between features and benefits and not fully understanding what the customer is trying to achieve with his purchase.

 

[wm460]

Congrats on you order Adam.

 

[Bill Mooney]

Hope you enjoy making them Adam.