Sunday, September 22, 2013

COGs and Caeteris Paribus

COGS - learned all about them in B-school - Cost-of-Goods-Sold. I was thinking about them the other day in regard to realigning some of my pricing. 

Aside from all of the variable details that go into pricing a pot, there is an underlying cost per pound of clay formula. Variables drive the bulk of our pricing.

  • workmanship on the piece - difficulty to make, handles, cut outs, slip trailing, stencils, scrafitto, trimming, no trimming - all of those very time consuming things that we enjoy making our mark with. 
  • Glazing that requires multiple steps , dip vs. waxing, painting, dipping, spraying and so forth
  • How and where it gets sold, getting it there, time to pack it and more. Market Demand , uniqueness, market threshold $

These are just some of the variables.  But what's the baseline we start at ? I wondered.

caeteris paribus - all other things being equal or held constant 

______________

I sell 3 sizes of a particular bowl, basically the same bowl just variable size.  The bowl begins it's journey as a ball of clay - each size a pound more than the smaller. Weights are based on ball of clay weight when I start making it.

Size A 3lbs   = X
Size B  4lbs = X+33%
Size C  5lbs = X+66%

Size A= $40
Size B =$53.20 ($40 +33%)
Size C =$66.40 ($40 + 66%)

Lets look at another vessel.

Mug A is 600 grams holds 10-12 oz Sells for $28
Mug B is 700 grams holds 12-14 oz Sells for $32

16% more clay and it sells for 16% more
______________
So within a product type this formula was a good way to check to see if I was sizing up and pricing accordingly given   I was actually underprising the largest of the 3 bowls, as I was charging $60 vs. the newly aligned $66.



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