Does Price Vary by Location?
Updated: Oct 16, 2020
So, “Does Price Vary by Location?”
It’s the first comment on our videos where we do a price breakdown:
“I could never sell for that price in my area… people just don’t want to spend that much”
We get comments and DMs asking this underlying question a lot: Does price vary based on your location? So here it is!!
I mean, yeah. Price does vary based on location, but there are two main factors: Median income and demand for certain items in different areas.
Median income varies. A quick google search will show whether your city or county is above or below the national average (which is about $56,500 a year). So what does median mean? If you were to line up everyone in the U.S. richest to poorest and then eliminate one person on each side one by one as you head toward the middle, the last person standing’s income would be considered the median. Lots of economists use this sort of method as a proxy to determine a city’s median income.
Now, part two to this answer: certain items have different demand in different places. For example, corn hole boards can sell for much more in a college town than in Manhattan where the yards aren’t even big enough to fit corn hole boards. You will sell many more winter coat racks in Minneapolis than you will in Hawaii (I don’t know what they’d even use that for in Hawaii….a beach towel rack…?? Hmm…)
BUT, bottom line, these two factors shouldn’t really matter if you’re running a side-hustle! You don’t have the shop space to mass-produce to thousands of people in the “average.” You should focus on selling to high-income clients or niche consumers who value custom work. Why would you spend your valuable time building things for 100 people who can’t afford them and can’t provide you with any profit when you could sell to 5 people who understand the value of your time and work and will pay you what it’s worth every time??
Here’s a silly example…(Bear with me)
Let’s say you want to build really nice end-grain cutting boards. A pretty typical product for an intermediate woodworker trying to turn a profit.
You walk downtown and grab 10 people off the street.
This is a wonderful, not-at-all confusing picture describing our little example of how to find the best people to sell your work to. Check out our video below to see it all play out.
The first 3 don’t ever cook. Like at all. They eat out every meal and wouldn’t know what to do with a cutting board, much less pay for a really nice end-grain board.
This is college Jennie and Davis.
Jennie didn’t cook, she had an expensive meal plan and had no money for groceries.
Davis was in his first apartment and lived right behind a Taco Bell (that’s where our sign in our garage came from)… I think you can figure out where most of his meals came from…
The next 5 are most likely middle-class who would LOVE an end-grain cutting board. They want nice things, but don’t want to (or can’t) spend the money for them. They would love high value but can’t quite justify the price to themselves.
These first two groups of people (about 80% of people in North America is our guess) can’t afford to buy an end-grain cutting board. If you’re pricing your boards correctly (materials, labor, and a little markup) they won’t buy. They’ll complain about your prices and laugh in your face because THEY can’t afford the value.
These people want Walmart and Target prices and quality. You’re not going to beat these multi-billion dollar businesses in the quality-for-the-money arena. Don’t even try.
These are also the people on Facebook Marketplace. The average North American on FB Marketplace can’t afford your items. This is where many Makers lower their prices just to make a sale to these people who don’t understand what they’re buying.
On the other hand… you have 2 people left from our silly example.
One of them knows you personally and would buy ANYTHING from you at full-price just because you made it. This is your mom, your friend, your favorite coworker, or that 60-year-old receptionist that always tries to flirt with you.
The other one LOVES to cook at home. They’ve considered going to culinary school, maybe even opening a restaurant. They always invite friends over for dinner and no one leaves hungry. They understand what an end-grain cutting board offers to their knives (another significant investment in the hobby) and are willing to pay for it.
This is your white whale. This is the person you should spend time hunting for – it takes just as much time and effort as posting a decent FB Marketplace ad! And they’ll pay full price without haggling and probably want a few custom features which will make the project fun and satisfying for you.
2 weeks after delivery, their friend calls you asking for one just like the one you made their friend. Now your Ferris Wheel is filling up and a line is forming. Oh. And you’re making ~30% profit margins to reinvest in new tools, advertising, employees, etc.
Focus on selling to the last two people. You can’t make a profit if you’re competing with Walmart and Target products. You have to find a different demographic of people to sell to. Raise your prices, spend 5-10 hours educating yourself on basic sales and marketing skills, and start making a profit!
If you want to know how we find these people and close the deal for a profitable build, check out our programs. They’ll get you on the fast-track to making a profit. We’re quitting our stable jobs to pursue a woodworking business based on our successful methods – we trust they’ll work for you, too.
To see the video we did on this entire topic, check out the link below!!
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This post may contain affiliate links for products we used to create this project! If you’d like to check them out, we do get a small percentage of the sale and they are of no extra cost to you! It all goes towards supporting the content creation of Jennie and Davis. BUT – we do not take tool sponsorships and there were no tool endorsements. Just our honest opinions!