Percieved Value

[teachnlearn]

I'm posting a new topic in reply to 'Puzzle Pieces' question on pricing. The topic drifted to reply's on a departed member, Condolences.

This is a post on the topic of pricing and competing with other business pricing.

With sales now being done on the internet price comparison becomes faster and easier for any shopper. If your posted on Etsy with a puzzle and the EXACT same puzzle is posted for ten dollars less, who would pay ten dollars MORE for the exact same puzzle? How does some one Set a Price?

When I started a business everything was brick and mortar and internet didn't exist. I dug through books, studies big business practice and went to seminars. For the top businesses, sales is a science and the psychology of people is accounted for from the store design, to the shelf arrangement to the movement of people. They have even taken this high tech to having cameras follow eye movements to see what they scan and what they stop on. There are even shopping carts that monitor the speed of movement, how long its stopped in one section of the store. Every psychology aspect, even color is studied and used. Lets go down the rabbit hole of business psychology and cover one aspect.

PERCEIVED VALUE.

i'm going to guess the price of apples to be selling at two dollars a pound. Might vary store to store by a few pennies. So everyone picks some delicious apples, takes them to the cashier and pays. Along with the apples are the rest of the groceries you have bought at a good value. But apples sold on the street in the Great Depression for a PENNY! Toss them back! Refuse to be ripped off like that!

When we buy we are constantly being manipulated to recognize the price or 'value' of something from the perception that the product or service is a good value. We each judge the value of the product or service by comparing that product with a internal set of factors. Business do studies on culture, gender, education, vocation. Its why there are so many surveys and contests out there. The factors tend to change, but some 'old standbys' are used.

Price Comparison; to the area. This has worked for the local stores, but also works for farmers markets. If food, drinks, 'other stuff' is around ten dollars, when people move from one booth to the next, they expect items to be around ten dollars.

Price Comparison IN the AREA: This is a excellent one for internet stores. Lets shop for JAM and we find Strawberry with three brands. One going for a dollar, another for two dollars and the third going for three dollars. We pick the dollar one, GOOD DEAL! They were all made for 50 cents and which ever you buy the store sells, they make profit or even more profit if you buy the others.

Now there is the strategy of selling garbage at the lower price and change the label every so often. This works for low income folks that can only afford the cheapest, though it can have people decide not to shop there. That's about quality of products and other posts have covered that.

This Price in the Area: can be a valuable tool. Post similar puzzles at 20, 30, and 40 dollars. Each category is awful close to the others. Maybe a different wood, maybe a little larger, maybe a very popular car. The pricing is setup so any they buy you have made a profit. Since they are ON YOUR STORE or WEBSITE, they have the natural tendency to look at the products on the site and evaluate VALUE from what is there! There is a natural tendency to compare with the information on hand. CHOICE is a big factor here.  IF YOUR PUZZLE AND ANOTHER PUZZLE from a competitor is on the front of ETSY Yours is higher priced and they are exact, the comparison is in front of them, they will usually choose the competitor. These are used all the time in all the stores, and we have all looked at products and compared their value on the same shelf.

 

Decision time on exact competition. Drop the project, not worth it. Drive people to your specific store or website with novel projects so they compare prices ON YOUR SITE. OR ADDED VALUE: Yours is made out of a hardwood, or thicker, or more puzzle pieces, or the puzzle can be done by kids cause the puzzle pieces are too large to swallow, or the coating and stain is kid friendly. OR a item is added to the sale is close and its not worth looking so they buy. Offer the same item, but the item itself has added value, or a added value item is offered with it.

Motivation; If someone is collecting puzzles and sees a puzzle booth, they are motivated to pay the going price or higher to get a new puzzle. OK I took six years of college courses and have book cases still full of books. Lets stop there before this becomes a book. RJF

Edited March 20, 2021 by teachnlearn

[teachnlearn]

I don't know why but a paragraph on added value was dropped.

ADDED VALUE: Add another product to it. The shopper now doesn't have a direct comparison of apples to apples. Add a set of stickers, or key chain, or scrape wood novelty heart, or hand painted, or the puzzle has more pieces, or the puzzle has large pieces that can't be swallowed. The idea is to change the item or add an item. Stores use this for the holidays with gift box sets for Dad or Mom with different things.

Always put your self out there as better quality, different, added value. Its a strategy walmart and target use daily. Even coupons adding a product or discounting is a added value. Ebay has this with free shipping, which is a ADDED VALUE. Its become so common that its almost expected. and the ADDED VALUE has been lost on free shipping. RJF

Something that also got dropped: Add a project that just won't sell on its own and price the set. Make, print, scroll small cheap novelties. By having little extras, 1, 2, 3 you have changed the comparison of the same to 'Gee, I get these other things too for a little more'.

I laugh at TV ads that use this idea and stretch it to the max. 'CALL NOW and we will send you A FREE BOOKLET, No their sending the sales literature on the product. AND IF YOU CALL RIGHT NOW WE WILL CONNECT YOU WITH A FREE PRIVATE ADVISOR. Ohhh, they will waste my time with a sales call for FREE. Think creatively and you will find other added FREE things to put in, Like that FREE BOX your sending it in. RJF

Edited March 20, 2021 by teachnlearn
added content

[kmmcrafts]

4 hours ago, teachnlearn said:

I'm posting a new topic in reply to 'Puzzle Pieces' question on pricing. The topic drifted to reply's on a departed member, Condolences.

This is a post on the topic of pricing and competing with other business pricing.

With sales now being done on the internet price comparison becomes faster and easier for any shopper. If your posted on Etsy with a puzzle and the EXACT same puzzle is posted for ten dollars less, who would pay ten dollars MORE for the exact same puzzle? How does some one Set a Price?

 

Online selling goes a lot deeper, you could have the same item side by side on the front page of etsy.. one shows a crappy blury photo or a lot of background clutter.. the other is a nice professional photo..  a nice flashy eye grabber photo will almost always get a page view over a photo that you barely can see what it is in the small icon photo.. 

Also the way the online store is set up for traffic.. consider a brand new shop on etsy that has no product reviews.. 0 sold items.. and no returns policy.. etc etc.. verses a shop on etsy that has 3000 sales and 100% positive feedback rating.. Any and every website out there has SEO.. and the more popular a site is and the more traffic going to the site whether it's a buyer or just someone browsing the site.. it ranks higher in searches.. You can have a large website with all puzzles for free with free shipping.. but if it's not set up correctly to be seen in searches you won't even be able to give them away if nobody is seeing it..

The issue with etsy and a majority of it's sellers is.. most rely on etsy to bring them traffic and do little to no self promotion to bring in sales.. build backlinks etc.. I've put in the work for the past 11 years.. I have over 15,000 subscribers to my various social sites and email newsletters etc etc etc... Most hobbyist sellers just list it on etsy and hope someone sees it. Which in my mind is like having a brick and mortar store on a popular street corner but no signs or ads saying what's even in the building.. LOL

Naturally I charge a higher price point than 98% of other scroll saw items on etsy because naturally I spend more time and effort to take well lit photos.. create a SEO friendly product title and description and add hashtags that would get picked up by searchbots etc.. many other competitors barely make a one sentence description and add zero tags.. poor photos etc etc.. and building customer confidence by having a professional / clean looking online store with no hassle returns etc..  IF the other shops was doing all that I do.. they'd definitely be charging more money.. it's work and time ( effort ) and yes.. I do loose " some " sales to competitors.. Another thing is.. I work hard to gain a customer by " trying " to create that one of a kind personalized piece.. which is something many other sellers don't want to mess with.. they want to make and sell what they want to... not what the customer wants them to make.. I get a lot of customers that say they used to deal with XXXXX shop but they don't do custom work and I do.. so they become a returning future customer..  

I still feel like a in person craft show a seller should be able to sell at a higher price than I sell at because.. a shopper can pick it up and look / feel at the quality and take it home right then and there.... AND, also have to pay shipping cost.. possibility of a damaged in shipping item that is more of a pain in the back side to deal with than just going to the craft show and making a return the following week provided it's a farmers market type thing.. A lot of folks will say it's location and that is everything.. sometimes I look up what that location is.. and I see that I have sold over 100 items last year to that very same town.. you sure it's just not selling because you have made your products value  not very high because you have a cheap price posted on it? I mean people claim it's a poor community however I sell at more than double those prices to the same community.. This is things I don't understand about peoples theories of their low prices.. As I said in the other topic.. most of the prices people put on their crafts are the very same prices my father used to sell his crafts for back in the 1980's.. Shouldn't you get more value out of your work than that? I mean lumber cost and everything else is way more than it was back then..   

Ever wonder why a street corner can have 4 gas stations one on each of the corners.. one station have $0.20 cheaper gas yet all 4 stations are busy.. Sometimes it just the customer service or the cute girl behind the counter of the higher priced one,  .. some might just have some rewards points cards etc etc.. who knows but why would someone pay $0.20 more per gallon.. I know what you mean about placement of products within a store and various other sales tricks.. 

[teachnlearn]

1 hour ago, kmmcrafts said:

Online selling goes a lot deeper, you could have the same item side by side on the front page of etsy.. one shows a crappy blury photo or a lot of background clutter.. the other is a nice professional photo..  a nice flashy eye grabber photo will almost always get a page view over a photo that you barely can see what it is in the small icon photo.. 

Also the way the online store is set up for traffic.. consider a brand new shop on etsy that has no product reviews.. 0 sold items.. and no returns policy.. etc etc.. verses a shop on etsy that has 3000 sales and 100% positive feedback rating.. Any and every website out there has SEO.. and the more popular a site is and the more traffic going to the site whether it's a buyer or just someone browsing the site.. it ranks higher in searches.. You can have a large website with all puzzles for free with free shipping.. but if it's not set up correctly to be seen in searches you won't even be able to give them away if nobody is seeing it..

The issue with etsy and a majority of it's sellers is.. most rely on etsy to bring them traffic and do little to no self promotion to bring in sales.. build backlinks etc.. I've put in the work for the past 11 years.. I have over 15,000 subscribers to my various social sites and email newsletters etc etc etc... Most hobbyist sellers just list it on etsy and hope someone sees it. Which in my mind is like having a brick and mortar store on a popular street corner but no signs or ads saying what's even in the building.. LOL

Naturally I charge a higher price point than 98% of other scroll saw items on etsy because naturally I spend more time and effort to take well lit photos.. create a SEO friendly product title and description and add hashtags that would get picked up by searchbots etc.. many other competitors barely make a one sentence description and add zero tags.. poor photos etc etc.. and building customer confidence by having a professional / clean looking online store with no hassle returns etc..  IF the other shops was doing all that I do.. they'd definitely be charging more money.. it's work and time ( effort ) and yes.. I do loose " some " sales to competitors.. Another thing is.. I work hard to gain a customer by " trying " to create that one of a kind personalized piece.. which is something many other sellers don't want to mess with.. they want to make and sell what they want to... not what the customer wants them to make.. I get a lot of customers that say they used to deal with XXXXX shop but they don't do custom work and I do.. so they become a returning future customer..  

I still feel like a in person craft show a seller should be able to sell at a higher price than I sell at because.. a shopper can pick it up and look / feel at the quality and take it home right then and there.... AND, also have to pay shipping cost.. possibility of a damaged in shipping item that is more of a pain in the back side to deal with than just going to the craft show and making a return the following week provided it's a farmers market type thing.. A lot of folks will say it's location and that is everything.. sometimes I look up what that location is.. and I see that I have sold over 100 items last year to that very same town.. you sure it's just not selling because you have made your products value  not very high because you have a cheap price posted on it? I mean people claim it's a poor community however I sell at more than double those prices to the same community.. This is things I don't understand about peoples theories of their low prices.. As I said in the other topic.. most of the prices people put on their crafts are the very same prices my father used to sell his crafts for back in the 1980's.. Shouldn't you get more value out of your work than that? I mean lumber cost and everything else is way more than it was back then..   

Ever wonder why a street corner can have 4 gas stations one on each of the corners.. one station have $0.20 cheaper gas yet all 4 stations are busy.. Sometimes it just the customer service or the cute girl behind the counter of the higher priced one,  .. some might just have some rewards points cards etc etc.. who knows but why would someone pay $0.20 more per gallon.. I know what you mean about placement of products within a store and various other sales tricks.. 

You have added more valid points to internet sales. I know there are many patterns sold that people cut then would like to sell. If someone doesn't design and cut their own and is looking to pick up a little money, the temptation is to look at the common price on the internet and sell it at that price. Then wonder why their first posting doesn't sell. Marketing, sales, website design, SEOs, what will sell, where to sell, all become a continual read in books, internet and advise forums.

I will stand by my post on perceived pricing. The weather changed and its colder, heating oil price goes up. Its hot out, electricity goes up. Some is pure rarity, other times its pure greed. TX got ripped off on utilities cause they could. The pricing went over the top and people screamed.

You have posted on pricing calculations, which will work for a 'business'. Many hobbyist may not want to figure profit and would like a little money back for the overloaded garage and house full of scroll work. There will be the hobbyist asking for a few dollars for hours of work right along with the professional figuring their hourly rate. The professional  is selling along side the person using Etsy as a yard sale. The person making money is in direct competition with the hobbyist or yard sale. OR the person that has no  idea how much they paid for the wood, or how much time they cut, sanded, finished and is selling to get some money in their pocket to help on the next project. No website has rules that says someone must make a profit from their sales.

My examples of PERCEIVED PRICING and ADDED VALUE fit directly with your gas station examples. One place has 20 cents less. But the other place has a cute girl. Added value? Another place has reward cards, Bingo ADDED VALUE!

Your writings on your own business doesn't deviate from my advise of COMPARISON PRICING IN THE AREA. I wrote driving business to your own shop or website will have a person comparing prices on your site. I also noted people will compare prices when they have those prices in front of themselves, thus the JAM example.  You have been in business for years and have developed clients for your products. I've given industry proven sales tricks. Just a snapshot. Business is a complex field of specialist many college degrees. The sales/ marketing field is continually researched and even when tried and true techniques are used it doesn't guarantee a sales, it just IMPROVES THE ODDS OF SALES.

I posted an answer based on psychology studies, buyer habits, statistics and a realm of business based sciences.

All of your points are valid and add to this vast field of small businesses or individuals trying to compete to make a sale. This posting and past ones could be printed and probably make a very large book. RJF

Edited March 21, 2021 by teachnlearn
ADDED CORRECTIONS

[kmmcrafts]

1 hour ago, teachnlearn said:

You have added more valid points to internet sales. I know there are many patterns sold that people cut then would like to sell. If someone doesn't design and cut their own and is looking to pick up a little money, the temptation is to look at the common price on the internet and sell it at that price. Then wonder why their first posting doesn't sell. Marketing, sales, website design, SEOs, what will sell, where to sell, all become a continual read in books, internet and advise forums.

I will stand by my post on perceived pricing. The weather changed and its colder, heating oil price goes up. Its hot out, electricity goes up. Some is pure rarity, other times its pure greed. TX got ripped off on utilities cause they could. The pricing went over the top and people screamed.

You have posted on pricing calculations, which will work for a 'business'. Many hobbyist may not want to figure profit and would like a little money back for the overloaded garage and house full of scroll work. There will be the hobbyist asking for a few dollars for hours of work right along with the professional figuring their hourly rate. The professional  is selling along side the person using Etsy as a yard sale. The person making money is in direct competition with the hobbyist or yard sale. OR the person that has no  idea how much they paid for the wood, or how much time they cut, sanded, finished and is selling to get some money in their pocket to help on the next project. No website has rules that says someone must make a profit from their sales.

My examples of PERCEIVED PRICING and ADDED VALUE fit directly with your gas station examples. One place has 20 cents less. But the other place has a cute girl. Added value? Another place has reward cards, Bingo ADDED VALUE!

Your writings on your own business doesn't deviate from my advise of COMPARISON PRICING IN THE AREA. I wrote driving business to your own shop or website will have a person comparing prices on your site. I also noted people will compare prices when they have those prices in front of themselves, thus the JAM example.  You have been in business for years and have developed clients for your products. I've given industry proven sales tricks. Just a snapshot. Business is a complex field of specialist many college degrees. The sales/ marketing field is continually researched and even when tried and true techniques are used it doesn't guarantee a sales, it just IMPROVES THE ODDS OF SALES.

I posted an answer based on psychology studies, buyer habits, statistics and a realm of business based sciences.

All of your points are valid and add to this vast field of small businesses or individuals trying to compete to make a sale. This posting and past ones could be printed and probably make a very large book. RJF

Yeah, I play a lot of marketing tricks and I don't normally tell those on here.. one I have shared in the past is.. sometimes during the holidays I'll raise my prices 25% in September.. gearing up for my 20% off sale I run in November / December.. or buy a clock and get a free ornament etc etc.. So yeah.. I've said it many times you cannot just list it and do no marketing and expect to make money.. you may get lucky and get a sale here or there.. if you want to make $800 a week you better be working for it.. You can sort through the etsy and like sites and see who is real business and who is hobbyist by looking at the content of prices.. at the end of the day I may charge double what someone else does but still only putting their price in my pocket because I do have real business expenses and I have to to actually put some money in my pocket.

How to get higher ranks in searches beside SEO? Like I said before.. the more people go to your site and click around looking through your items helps boost your pages..in searches.. Do a scavenger hunt.. put a picture of a coupon within one of your listings.. go to my TikTok page where I have 12,000 followers and do a live video ( interact with customers) tell them about the random picture somewhere on the site.. they have to go click through pages to find the code.. that brings traffic to the site and google ranks you higher.. Leave the coupon code up until X amount of coupons have been used up. The code can be set up that the first 10 people get 30% off next 10 get 20% etc etc.. really helps.. But you see... most price their items at their bottom dollar already without considering promotions / sales which bring in customers.. and traffic.. at first you may not really get any buyers for these games etc.. but you definitely get some click through traffic etc.. may not seem to help because nobody bought anything.. that traffic helping rank in searches helps you more for long term instead of that immediate buyers.

Play your cards right and you promote your website on social sites like tiktok and get enough following.. I can make $100 a month on there while just posting videos promoting my website.. instead of paying for ads.. I get paid to advertise, LOL   

Yes you are in direct competition with other sellers on those sites... and nobody including the big box stores are really ever guaranteed sales until they are well known established companies. How do they get started? Lots promotional sales.. as I said.. you could have a brick and mortar full of free goods but if you have no signs / fliers or sales promos who's going to know about it? I have my own site with no competition from others.. that said without etsy, amazon and the others to get my items out there without very heavy advertising I'd never get any business.. I can put a business card with a promo code for them to shop my website instead of etsy.. That said.. only 12 -15% ever do it.. they come back to me on the site they found me on.. Over time.. and lots of work.. between all the sites I sell on.. I'm as busy as I want to be really..  

[new2woodwrk]

We're not doing online sales as of yet - the website is up but eCommerce is not turned on yet. Not sure if it ever will be actually.

However, we did raise our prices this past Saturday as a test. We went up $5.00 per category per item

Also, the price of wood went up and we attributed the pricing to that - worked really well as a selling point!

The variables however make judging the success/failure of the change difficult..

Variables:

• Weather - it was cloudy all day so many did not go to the beach so we had quite a bit more traiffic
• Stock -  we added quite a bit more stock on hand than we normally have so there was more to sell

Results

• We sold a few more units than an average day. Not a lot but enough for it to be noticeable on restocking this week.
• Our total gross sales however was significantly higher - about %20

Responses

• By blaming the price increase (returning customers) on cost of goods (wood pricing) and other recent national changes (we're a very RED area) many customers were very receptive to the new pricing
• People admire the fact that our products are hand made not done by laser or CNC - it;s amazing how many people know about CNC actually.
• They also are impressed that we are local and only sell locally at the fair although some do want to be able to purchase/order online.

So those are our continuing selling points - we have others in our spiel which really is not a variable to pricing or sales since it doesn't change

Summary

Overall, the new prices did make a significant enough impact on our sales and bottom line that we've changed the entire catalog to the new pricing!

Thanks as always for reading...

 

Edited March 21, 2021 by new2woodwrk

[kmmcrafts]

I'm glad to hear your selling went well after the raised prices.. As I said in my other posting, It's none of my business what people sell at.. I just read a lot of comments around the web with the scrolling and CNC / Laser community about pricing.. Most will say they can't sell at this or that price.. they could never make money at it and blah blah.. 

One guy on the CNC site claims he selling flags for $150.. he was the only guy selling at over $100.. most said they sell theirs for $75 -100.. He replied back that he has been very busy making them.. and that half the amount of sales for the same money still = profit. in fact more profit because less wear of machines etc.. more time for other things..

I do understand the thought of a hobbyist just trying to clean all the built up inventory out of the garage etc too..  

I just like to bring up the pricing topic every now and then as many folks have no idea where to start or what someone is willing to pay for certain items.. Those puzzles at the $25 price points have been being sold at that price since the 1980's.. Some folks don't care.. some do.. Iggy struggles with trying to make 1600 puzzles a year.. because selling that many.. raise the price 40-50% and sell 800- 1000 puzzles and make the same or more money.. instead of wearing out a saw every 15 month maybe every 24-30 months, provided the folks in the area will buy enough of them, if not.. keep the price points and offer them as on sale for the $25 price point..