In my blog post Weekly recap week#26 I was pondering about the difficulty of setting the correct price for my Etana products. My father considered it a bad idea to speak about it in public, but I consider it as one of the most difficult decisions one has to make when starting a business like mine. After all, one of the points of this blog is to write about the experiences I run into when starting a business and this topic is deffinitely one that fits into the category.
Sure, setting the price is easy if You are selling daily goods that are “made in china” and everybody knows what the price is. Or if You are selling a service, such as giving a haircut or dentist appointment. When You make the product from the scratch – design it, choose the materials and find out where to get them, get the tools You need and then do the actual work until the product is finished, and last but not least, sell the products yourself – it is not at all so simple. There are several dimensions to consider when setting the price. I’ve seen alot of great products with a way too cheap price tag compared to the quality. I’ve also seen crazy high prices on ridiculous pieces of junk, so obviously this isn’t just my little personal problem.
The dimensions of setting the price
During the Kolmas Tie -project there were some lectures where the topic of setting the price was considered. The obvious way of setting the price is, that it includes all the costs of producing the product; the materials and the time that was cosumed by whoever made the product. It also has to cover all the other costs of running the business such as marketing costs and insurances. All this sounds very simple and clear…
Then there is that little thing that I consider the most abstract and difficult dimension of setting the price: The value of the product. And this does not mean the straightforward value in money, but the personal value that the product holds in the mind and life of the person who is (potentially) buying it. I actually found a book about the topic from our bookshelf. (Burenius J., Lindstedt P., 2003. The Value Model; How to Master Product Development and Create Unrivalled Customer Value. Nimba Ab, Sweden. ) Unfortunately there is no “ultimate value book” that could give me the exact answer about what is the price of the true value that my Etana products hold in them. I’ll have to find it out myself, in some discreet manner.
There is a man who makes guitars living in the same building as I am. He was telling my husband the other day about how many layers of lacquer a guitar needs to look as perfect and shiny as it should, and how he sometimes starts over the whole process when he makes some silly mistake on the seventh layer of lacquer out of eight. When listening to him, I realised that I still need to work on the quality of my products. I need to set my standars in the highest level in order to really be able to produce the kind of value experience I am looking for. I have to master my products. Almost is not enough. The quality of my products has to be at least as good as the high quality brands.
Here is a little inspiring video by Hermes, the magnifique Parisian company. A lady in the video gives a perfect definition for why it is so exciting to do what I do. This is what creativity is all about to me.
“You just have to look around you, ideas are everywhere. Anything and everything can be used, it’s Brilliant!”