Pricing Confusion

It was a great week at Indy Upcycle! We met some new people who were excited about what we are doing, we took in a few wonderful donations, and we sent a number of eagar crafters home with everything they needed to create some super cute projects!

However, the week ended with two disappointed customers and MJ feeling like she needed to do something to help people understand, better, how Indy Upcycle works to prevent that kind of disappointment in the future.

Indy Upcycle, as well as every other Upcycle Exchange, was created as a response to needs in the community and ideals about consumerism.

The Needs:
1. Reduce the frequency that people are forced to buy more than they need
2. Find a way to waste less materials, space, and money
3. Create a place where materials can be donated and used again by other crafters
4. Create a place that people can buy materials they need and not spend a fortune

The Ideals:
1. People will seek out and share solutions that accommodate their needs
2. People would rather give their unwanted goods to someone who could use them than throw them away
3. People know what things cost and what things are worth (two very different things)
4. People will buy only what they need

When the ideals aren’t realized or embraced, it creates a problem meeting the needs.
1. People need to seek out and share Indy Upcycle in order for it to thrive and exist. Happily, this is happening and Indy Upcycle is growing daily. Most customers become loyal customers who look to us when they want to get or give their supplies. More often than not, our wonderful customers also turn their friends on to Indy Upcycle and create excitement about what we do.
2. Throwing away or otherwise wasting materials makes us sad. It wastes valuable supplies that still have potential, and it cuts off the opportunity for other crafters to get their hands on your awesome goods.
Indy Upcycle loves to see people share their materials with friends and family. We love to see people give to their schools, churches, and other organizations that can use the materials. We love to see our artists and crafters sell their unwanted materials to recoup their costs. But when other methods of getting rid of stuff don’t work out, we appreciate people relying on us to help their stuff find worthy homes.
3. Knowing what things cost and what they are worth is the hardest and most misunderstood ideal that we embrace. When this ideal is not met, it creates problems for customers finding items they need, it creates a sustainability problem for Indy Upcycle, and it creates a problem for buyers spending too much (wasting money) or too little (feeling guilty).
We know that this ideal is the one our customers have expressed they would like to have a better understanding of, that is why we will go over this topic in just a moment.
4. When people buy just what they need, they save material, space, and money. Why buy 30 black and orange eyelets for your Halloween scrapbook page when you only needed 6?
We encourage our customers to buy only what they need even if that means pouring out just 2oz of mod podge instead of buying the whole bottle, cutting off a quarter yard of fabric instead of buying all six yards, or opening the package of orange and black eyelets and buying just six instead of all 30.
When this ideal is met, money is saved, materials aren’t wasted, and supplies aren’t depleted for other customers who also need, say, 6 orange and black eyelets.

It is not uncommon for the 4th ideal to be overlooked when the 3rd ideal is overlooked, so let’s explain the 3rd ideal, “People know what things cost and what things are worth.”

Our general philosophy is that our customers know what the items they want are worth. We feel that the price (cost) they give us is, usually, within 10% of what we would tell them, if we did that. In general, this works out very well, with a few Rare exceptions we will go into later.

The difference between cost and worth – Cost is about the item’s price tag, where Worth is what the price SHOULD be. Cost is a predetermined number based on materials, production, shipping, packaging, overhead, and mark-up. Worth is a number that takes into account condition, need, rarity, and desirability.
Indy Upcycle allows it’s customers to choose the price they will pay for the items they want because #1 it is impossible to price everything in the store and #2 it is impossible to know each item’s worth to each customer.
When customers are at a complete loss for what price to assign the items they want, we suggest they think of our pricing more like a used book store and not a garage sale and go from there.
Here is the rationale:
A used book store carries inventory, has rent, pays employees, educates it’s staff and consumers, is specialized in what they sell, and is in no rush to get rid of any particular thing they sell. They exist to serve a specific audience with specific needs. The prices here are, generally, half the price of the same item brand new.
A garage sale is held by people who want to clean out their house and get rid of their overstock. They are not specialized, they do not have overhead, they are looking for a quick sale, and their goal is to get rid of their unwanted goods quickly. The prices here are, generally, token amounts – a small fraction of what the item would cost brand new.

So how do you decide what to pay? First you think of the item’s original cost. This might be a number you know because you buy this item frequently, it might be written on the package (keep in mind, the 50cent tag on those engraved mother-of-pearl buttons is probably out of date…), you might look it up if the item looks particularly expensive, or you might just make a good educated guess.
Now, cut that number in half. The item, as it is in Indy Upcycle, did not incur any packaging, shipping, production fees, but it does carry the weight of overhead, material value, and mark-up. Overhead pays for everything needed to run Indy Upcycle – rent, utilities, employee pay, etc. Material value determines the price difference between, say, plastic beads (cheap) and glass beads (more costly). Mark-up is the tricky component. This is where you need to consider the factors associated with worth (condition, need, rarity, and desirability.)
Mark-up is what creates potential to make that “half price” become more or less than half price. For instance, if the item is average in condition, need, rarity, and desirability, a customer would stick to the half price. But if the item was rare, the price might increase, or if the item was half used and, therefore, not in average condition, the price would decrease.

On 4 occasions, we have asked a customer to reconsider their price because the Worth of the item(s) was not appropriately accounted for. (Not bad for 10 months of business!)
The first example that comes to mind was a little boy who offered $12, all he had, for a ring that, likely, originated from a children’s jewelry boutique in the mall. This price was wrong for two reasons. #1 His price should not have been based on the amount of money in his pocket. #2 The item probably cost just $5 originally, and considering that one of the ring’s three “gemstones” was gone, the ring carried a lower worth based on condition. I suggested that he consider a much lower price, like $1. He was excited and very happy with his purchase.
The other three examples had very similar themes as to why they didn’t work. All three of them involved the customer buying ALL of a particular type of item and offering a price that equaled a fraction of the items’ original cost.
One of these cases was a woman who offered me $30 for ALL of my jewelry making supplies (beads, wire, findings, charms, etc) and the storage bins I used to contain them.
The two biggest problems with her offer were, #1 the original cost for the items was not considered. Each storage bin (and there were 7 of them) would cost $5 brand new with nothing in them. A package of findings costs around $3 and a string of glass beads can cost upwards of $5. The collection she wanted had, easily, 50 times that much. So her offer was, at best, 10% of the original cost.
#2 She had not considered the factor of worth, Desirability. If she wants an item so badly that she wanted ALL of that item, the desirability is high, and therefore, the price offered should also be high.
When she assigned a negative worth despite her, apparent, high desirability, it not only created a problem with ideal #3 – knowing what something is worth, but her misinterpretation of the items’ worth encouraged her to go against ideal #4 – only buy what you need.
In fairness to my other customers, who also need jewelry making supplies, I could not accept her offer.

I hope this article helped. I don’t like when visitors to Indy Upcycle are bewildered or even offended by how we do things, but it’s a new concept so it will take some getting used to. But it’s worth it, because it’s NEEDED and it WORKS!