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In lugnet.market.brickshops, Mike Walsh wrote:
>
> "Lee Meyer" <leemeyer1@compuserve.com> wrote in message
> news:Hu1H7G.xBD@lugnet.com...
>
> [ ... snipped ... ]
>
> >
> > thanks for the posting. I appreciate your comments about setting pricing at a
> > balanced rate. As I mentioned to Douglas, setting prices has been an ongoing
> > process for me. I think that your suggestion of .20 per piece could work on
> > some of my models. Other ones I know wouldn't work because it cost me more to
> > make them than what that rule would have me sell them for. For some of the
> > models, it's all about the part makeup (i.e. which parts) are used in the model.
> > Some are just real expensive, and they've come from different sources, which
> > increases my costs. (You can see that I have been kicking this stuff around in
> > my head!) Compounding it is that some of the other custom sellers' sites I've
> > browsed sell sets with less specialty pieces (more bricks than slopes and
> > wedges, which cost more - and I use a lot) and charge a lot more than I do. I
> > don't get how people are buying theirs. It appears that they sell them. Of
> > course most are trains and there are a lot of fans out there for lego trains,
> > that may be the critical factor.
> >
> > Anyways, I appreciate the feedback, and I will look around the market area and
> > see what I can find about setting custom set prices.
> >
> > Lee :)
>
> I have been selling kits for a number of years although it has been a while
> since I introduced a new one. I have one in the queue but it has been there
> for a while, I need to get back on that project and get it complete! I have
> all of the parts, finishing the instructions has been a big hurdle for me on
> this project.
>
> Setting prices for custom kits is a non-trivial process and depends on a
> number of factors. The biggest intangible is probably time. How much do
> you value your own time at? $10 per hour? $20 per hour? $50 per hour?
> $100 per hour? More? Only you can make that judgement and it will be very
> different for each individual. Do you even factor your time into how you
> price your kit? One thing is for sure though, it is virtually impossible to
> sell kits at priices which are in line with similar products produced by
> LEGO.
>
> These are some of factors which come to mind when setting prices, I am sure
> there are more.
>
> - Is the seller trying to make a profit or simply cover costs?
>
> In my case I typically do production runs of between 5 and 10 units. I try
> to set my prices so I don't lose money so I am essentially trying to cover
> my costs. I am not trying to make money on my kits although if I did it
> would be nice. My goal is to sell the kits without losing money - I don't
> like sitting on the inventory. So while one or two people might buy a kit
> priced at $X, maybe four or five will buy it at when it is priced 80% of $X.
> Determining how big of a market you can or want to serve is a big factor in
> setting your price point. I usually set my prices to cover my costs if I
> can sell about 80% of my production run.
>
> - Were the majority of the parts sourced from the secondary market or the
> seller's own parting out efforts?
>
> If you have to purchase all or a good portion of the parts for your kit from
> the secondary market then it will be hard to be price competitive. This is
> particularly true if you have to source a particularly rare or expensive
> part. I generally try to avoid having to source rare or expensive parts if
> at all possible.
>
> If you are sourcing your own parts from your own clearance bargains then you
> tend to be able to price your set a bit lower. Your actual parts costs are
> a bit harder to determine becuase you have to account for all of the parts
> from your parting out efforts which you didn't use. If you can sell them on
> BrickLink or eBay then the effective cost of the parts you did use is
> actually less.
>
> - Instructions?
>
> This is probably the biggest wild card when it comes to pricing.
> Instruction quality and presentation are all over the map. From high
> quality full color printed instructions to images dumped on to a CD-ROM, kit
> sellers distribute instructions in various forms.
>
> Full color printed instructions are ideal but can be expensive. If you have
> to take your instructions to Kinko's to have them printed in color, you are
> probably looking at upwards of $1 per page. Yikes! That can add
> significantly to the cost of a model. If you have a large model you may
> want your instructions bound instead of stapled. Do you have binder? If
> not, it costs close to $5 to have a set of instructions spiral bound at
> Kinko's or OfficeMax.
>
> Steve Barile's Freight Train Instruction Book (see www.bricworx.com) is the
> best example of a set of instructions I have seen personally.[1] Steve and
> I have had several long conversations on the theory of creating
> instructions. While we have some differences of opinion, we both agree the
> quality and presentation of the instructions set the tone for the custom kit
> experience.
>
> IMHO instructions are one area where kit sellers should not take short cuts.
>
> Providing instructions on CD can certainly keep the costs down. If you
> choose to go the CD route you then have to decide what you want to deliver
> on the CD. Have you created your instructions as an actual document (PDF?)
> which your customer can then print should he or she want to? Have you
> simply provided a set of images which must be viewed with an image viewer in
> the proper order?
>
> Blowing a bunch of screen shots out of ML-CAD and dumping them on to a CD is
> not what I consider instructions but that is simply my opinion. I much
> prefer a paper document to sit down and build with, I personally don't like
> building from images on my computer. I also realize it takes a lot of work
> to prepare a good set of instructions. I probably spend 5x the time working
> on the instructions than I do actually capturing the model in ML-CAD. If
> the model has a lot of sub-models the time can go up from there.
>
> If you are curious as to what the instructions from one of my kits looks
> like, visit these pages:
>
> http://www.carolinatrainbuilders.com/instructions/index.htm
> http://www.carolinatrainbuilders.com/fmotm/index.htm [2]
>
>
> - How many sets in the production run?
>
> Based on my own experience it is as much work to kit up 10 sets as it is to
> kit up one or two. When I first started selling kits I "kit to order"
> meaning I put together a kit when I received an order. I had an inventory
> of parts and empty boxes, etc. but I would kit the whole thing up and print
> the instructions when I received an order. I was concerned about sitting on
> kits which wouldn't sell and wanted to make it easy to fold the inventory of
> bricks back into my "stock room" if I decided I needed the parts for
> something else.
>
> The first few orders were fun as it was a new experience and I was excited
> that someone had purchased one of my kits. After doing the "kit to order"
> process a few times I decided it was really inefficient and it became a
> chore.
>
> Now I usually kit up my production run all at once. I still wait to
> actually put them in boxes and print the instructions but the parts are all
> bagged up and ready to go. When I receive an order it now a pretty straight
> forward process to put the kit together with the long poll in the tent being
> the printing of the instructions and the box cover art.
>
> - Does the set contain any "used" parts?
>
> I have one kit in development which I am doing two color variations of. The
> main offering will be all new parts but I am going to offer a second color
> option which requires the use of a couple of used parts.
>
> I have had to purchase about 3x the number I need of a couple parts in order
> to get what I consider "acceptable" used parts. By "acceptable" I mean
> parts, which are used, which are nice enough that I would be proud to use
> them in a MOC. The condition of used parts is all over the map and you
> really don't know what you'll end up with until you actually have it in your
> hand.
>
> Hope these thoughts help. I'd be curious to see what others have to say on
> the subject.
>
> Mike
>
> 1 - I had the opportunity to look at a proof version of Jake McKee's
> _Getting Started with LEGO Trains_ book. Jake's instructions which appear
> in the book are also very good but I don't consider his book an "instruction
> book" per se even though it has instruction in it.
>
> 2 - For a while I was trying produce a "free" set of instructions of things
> I had decided I would never do as a kit. I was doing them once a month or
> trying to anyway. After doing six models I got knee (neck?) deep in ILTCO
> and this project was one of the victims of my ILTCO involvement.
Hi Mike,
wow, thanks for the post! Lots of great analysis and thought placed here. I
think you have identified a lot of good factors behind trying to set a 'fair'
price. For example, I do get most of my parts from Bricklink rather than
parting out, simply because I am not left to sell parts I don't care about or
are not very hot sellers themselves, and I usually can find a seller with a
relatively low price but I might be able to do well getting a big bulk purchase.
Some parts this works very well for, others not at all. And I do try to avoid
very exotic/expensive parts, because you can make good models from common parts
(Lego would never be able to make a cheap set otherwise!)...
I think it's just going to be a continual adjusting process for me to find what
the market will bear. What gets me is that I see some custom sets that are less
complicated offered, and selling at higher rates than mine, with less specialty
pieces, and people are buying them. My intent was to offer better parts at
lower cost, but even with that in mind, it hasn't done much to date.
Thanks again for your help. If you haven't looked at my sets, I posted the link
in the original message. I'm on my backup PC and I have trouble navigating and
typing on it. Lee
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