You do not determine value. The customer does. Here’s an example (paraphrased):
My daughter used the utility item I made for her at a class. The other moms and daughters liked it and I took orders for 35 more. I had planned on manufacturing another new product first but thought I would do this to learn more about this business. My problem is finding a cute print suitable for ages 5-16. Given the cost investment, the fabric should not be so cutesy that by the time the girl is 12, she doesn’t want to use the product anymore.
This DE is determining value. She’s thinking like a frugal mom, not the end user or dare I say, a manufacturer.
A 12 yr old is going to be bored silly or embarrassed by whatever she had when she was five.
If you walk out of a classroom with 35 orders, your product represents a tremendous value. A customer may think its value is such that it’s worth getting a new one as their tastes change.
Only the customer can determine a product’s value -not its maker. Don’t raise barriers or increase costs and complexities to what your customer has determined to be of value versus what you do. Looking for a forever cute print means never getting off the ground.
How many of you have made similar errors in determining a product’s value to the customer?
As usual, you makes some great points. This falls in line with something I read recently in a marketing resource. Here are the notes I took:
-Focus on your buyer not your product.
-Put buyers first not: product, place price and promotion
-Build buyer personas (there may be several) write a biography for each
– What are your buyers goals and aspirations?
-What solutions do your buyers need for their problems?
This has got the wheels turning for sure. Thanks!
Oh, really. Grownups over 50 may be having qualms about hoarding. But NOT 5-year-olds!
I’d think what you’d need is a -variety- of prints. So that the 35 kids in the class don’t get branded as all having the same thing..
My daughter and I make chain mail for a hobby. I’ve sold a couple of pieces, but she makes a nice bit of “pin money” selling items to her high school friends.
I do have a problem getting her to charge enough, though. “But Mom, the materials only cost about a dollar … I can’t charge $35!” But she can, and easily get it, for handcrafted artisan jewelry.
Such a classic scenario! We come across this with some of our DE’s who are so focussed on what they think ‘it’ should be (whether it be fabric, trims, label, etc) vs. keeping their focus on what the customer will buy and how much would they pay for it. We have had a couple DE’s give up the project after months of product development because they couldn’t find that one ‘feel’ of a fabric they bought in Europe 10 years ago and that’s the only thing they feel would justify their collection or product in the marketplace. C’mon, people!! We are in the BUSINESS of Fashion not chasing Tornadoes ;-)
LizPf, try explaining to her in terms of the time it takes her to make a piece. Is she getting at least as much as her skill is worth? Probably not; time to raise the product price.
OOOH! This is a good one. The hardest part for me, was when to GIVE UP, on a design, because the value determined by the customer didn’t match my time and labor. If you have an ego, it’s a blow (how dare they?!).
I think many DE’s (especially young ones), fantasize about a customer who’s not based in reality. In NYC, everybody’s been on a “High End” and “Mass Affluent” trip–and now the Lower East Side is littered with the remains of closed shops (and not because the rent went up, either). It’s like everyone wants to sell to about 200 bold faced names. And folks who come to my studio now, with a “Concept” of what IT is, or WHO their imaginary customer is–I tell them you have 2 weeks of my development time for research. If you tell me you still want the “Housewives of New York” after that? You gotta’ go.
All the time I get “Your booties are so amazing! You should be selling them for much, much more!” Well, I’ve tried selling them for more, and the price they’re at now is the price at which they sell and maximize profit. If I raised the price to the levels that my friends suggest, I wouldn’t sell any at all. I know that some of my wholesale customers can sell them at that suggested price, but not very many, and it takes a lot of work to sell booties at that price, work that I can’t put in because I’m already putting in the work to make them and I don’t have any employees to do the selling for me.
My dad always says “The price of anything is precisely what the market will bear,” and he’s right.
A related entry that should be linked to from here but was not is The difference between crap and quality.