[MR] In Regards to Pricing Linen Shirts

[Neil Brady]

Pardon me while I mark some of the more significant parts of this message.
And I apologize if I may seem like I'm picking on Auntie M, I'm not, I'm
simply using her excellent message as a diving off point to this subject.

Part 1:
>Many years ago I was fortunate enough to have the chance to sit down with
>someone in the manufacturing business and ask him how I could make my new
>business a success.  He shared this one bit of advice with me about pricing
>your products.  His company spent many hundreds of thousands of dollars
>researching a simple formula for pricing their products.  

I really want to point out to every one who is on the fence about how
important it is for a business to know exactly what they are spending so
they know how to price their products (and that may include keeping track
of your toilet paper expenditure, yes.)  It's so important that many
companies (not just the one in the example above) are willing to spend huge
amounts researching it, because they know that once they have the
information, they will recoup their investment.

It's _that_ important.  You can believe me or not, that is always your
choice, but I do speak from some experience here.  My wife owns the third
largest aluminum cook/bakeware manufacturing plant in the United States.
I've done the college work.  I've worked for, and observed at close hand,
companies ranging from small 3-man operations to multibillion dollar banks.
 I'm not trying to represent myself here as the only one who knows the
answer.  However, I might have a couple of valid ideas worth exploring if
you are willing to give it a shot.  Hell, one or two of them might even
help you.

Part 2:
>They discovered
>that the simplest way to account for cost of supplies, wear and tear on
>equipment, advertising, labor, etc.  was to take the cost of materials to
>make one item (if you were only going to make one item, not by bulk pricing
>of materials) and multiply that by 5 for your wholesale price, and if you
>were going to sell direct to the consumer, multiply that wholesale price by
>2.
>
>Guess what?  That system works!

Just because it works for them (or Auntie M), doesn't mean it will work for
you.  The research that the company did was directed solely at themselves,
and their conclusions are solely right for them as well.  The rule of thumb
might or might not work for your business, but it's much more likely to
work if you are in the same field as that business, doing the exact same
thing as them.

Let me point out a brief example to demonstrate my point.  I patterned a
padded coif several years ago off of a 16th century German example (what
can I say, I'm in the SCA, therefore I sew.)  It's a 3 peice pattern that
works quite well.  I can make a coif, start to finish, in 3 hours.  If I
make it out of cotton ($3 dollars a yard) I would be grossly cheating
myself if I chose to sell it for only $15 dollars.  If I make it out of a
one of the higher quality brocades (like the lovely blue and silver silk
one I have in my closet: $100 a yard) I would be grossly overpricing my
product at $500 for the coif.  If however I actually spend thirty seconds
doing some math, I show that my linen padded coifs are just about right at
$75 dollars.  A cotton would would drop the price to $60.  A silk brocade
would be $160, also about right, considering the material.  (These prices
are not exactly correct, but rough estimates based off of generalizations.
The real prices would require a more exact breakdown of materials to be
fully correct, but I figure that you see the point I'm trying to make, so I
won't beat a dead horse any longer.)

There are many things a person can do to make their business a more
profitable and efficient machine.  If 'profit', 'math', or 'itemizing
expenditures' are dirty words to you, however, perhaps the stuff I'm
talking about isn't for you.  Many people are perfectly happy never knowing
exactly why their business failed.  I guess I'm just not one of them.


In Service to the Society,

Frederich Von Teufel