How to price pedals?

[jkokura]

I searched, and nothing came up in 10 minutes. I have two questions

So I've built pedals for myself that I now would like to sell so I can buy parts for more pedals. So my first question is how to price these pedals? I'd offer them here, or maybe ebay, though without a name on them it's hard to imagine them selling on ebay... How do you go about pricing the pedals you've built?

I've also built some pedals that are commercial projects. There are a couple local guitar shops that have expressed some interest in carrying them for me, and there's also the potential for selling them online, and some local guitarists who have expressed some interest. Again I want to know how much to price them at - both for how much I want the Guitar shops to sell them at, and how much I should charge them at?

Is there any method for proper pricing? I don't want to pick a random price, but would rather be able to justify it.

Jacob

[Mark Hammer]

I don't sell to make a profit or as a "revenue stream".  Basically, I'll sell off the first build of stuff that I've built for myself a 2nd or 3rd time.  At that point, it's sold simply because I don't need it anymore.

I obviously want to recoup my investment in parts, but as for the rest of my overhead, that's already taken care of by my job.  So what's my time worth?  Personally, I figure minimum wage, but since I build for fun, I figure half that wage is what I earn, and half is what I'd typically spend to have that much fun.  At the end, I'm dinging people $60 a pedal.

As much as that's a bargain, if one was selling something over e-bay, I think a lot of potential buyers would be somewhat suspicious, as if low price meant low build quality.

Personally, I'd rather just sell locally.  It's nice to meet the people you sell to.  It's nice not to have to worry about shipping...or shipping back.  And it's nice to see the smile on the person's face when they plug in.  I understand that folks trying to make rent may bump that down a notch or two in terms of priorities, but for those of us who don't have to worry, all that pleasure and reduced nuisance is worth it.

The best is when I put up a pedal for auction to raise money for the United Way every fall, and somebody buys it.  I sold a chorus pedal that raised $100 last November.  That's when I like to charge more.

[Skruffyhound]

As far as shops go there's an index for most countries that indicates how much a shop needs to sell products for in order to make things turn around. 1.8 for Germany 2.5 for Denmark etc. (what it used to be at least) If memory serves this shows that for example for Denmark a shop has to sell the product for cost price + (2.5 x cost price). So one way to look at it is - what can the shop sell it for, can I cover my costs (including my time) and make a small profit for 30% of that figure (if we use the Danish example).
        I would suggest you look more closely at direct sales, as the margins through shops are a killer for anything as handmade as this.
        As far as pricing goes, just add up your hours + materials (including electric and everything else you can possibly think of) and add 12 to 20% profit or thereabouts because you are not working in a factory you are the boss (and the boss normally creams off about 12%ish of each employees worth in capitalist enterprise).
        If you are doing this with tax involved, calculate the tax in, but remember to add 10% of your time for paperwork and the price of an accountant.
        If you add it all up and it still makes sense, well off you go, get building.
        You'll get faster the more units you produce (and more bored) and you'll get some economies of scale when buying components, but not much.
        I can't imagine how it's possible to make money out of this hobby where I live but you may well be better placed.
        This is just a general idea, check out the numbers for yourself, it's ten years since I was actively working with this and I am in Denmark. Good Luck  

[Paul Marossy]

for example for Denmark a shop has to sell the product for cost price + (2.5 x cost price). 

A couple of years ago, when I still had my HVAC design job at a consulting engineering firm, I had to generate 2.5 times (or more) of my pay to even have a job, to get a cost of living raise, bonuses, etc. I was making right at six figures before I found myself without a job, and believe me, I busted my butt for it. We made money off of volume of production, not individual projects. There were some exceptions, but that was pretty much the rule. I don't think retail sales is all that different when it comes to pedals.

I currently work for two different boutique pedal companies. It has been proven to me about what has been said here in the past about this subject, you have to sell A LOT of pedals to really make any money with it. Even enough to just barely scrape by, like I am right now. I suppose it would be better if I had my own business and pedals, but I am not there and I am not sure that I really want to go that direction having built pedals for the last 18 months or so for income.

As far as selling stuff on ebay, I used to for curiousity look for "homemade" or "DIY" pedals to see how they sell. They generally don't, even if the price is very low. And the "no name" companies that no one has ever heard of don't seem to do much better. It seems that in this business, your reputation or if famous so and so uses one of your pedals and it is mentioned in Guitar Player magazine is what sells pedals. You can have a fantastic product, but if no one has ever heard of you, you'll have a very hard time selling anything. This has been my observation over the last five years or so, and from personal experience with building for these other people. I guess this is where marketing can make a big difference.

I know, too much information, but I thought I'd offer my perspective on it.

[kungpow79]

I've also been contemplating this lately.  I'm no businessman, but...

I'd say look at the market.  Look at other products similar to yours?  What do others charge?  To be successful, you'll need to position yourself competitively to whats already out there.  2 things go directly into your product: parts and labor.  Parts is easy.  How much is your, or whoever builds for you, labor worth?  Minimum wage?  $12/hr?  Add it up.  Outside of that, there's also marketing, perhaps shipping, and incidentals.   If you designed the circuit yourself, spent $$$ on R&D, you may have to figure that into the final cost to recoup your losses there.  It may simply come down to trial and error; you may have to sell a few, and then figure out how much in the red or green you end up.  Good luck!  Let us know what you come with 

[jkokura]

I'm not in it for money. I'm in it for the practice and the fun. I enjoy building pedals, and as my wife put it so eloquently I'll use her words: "How many can you get on your pedalboard anyway?"

I'm not trying to earn a living - I have a good job. This is my hobby, and the next logical step from making pedals for myself is to make pedals for others - friends or sales. I've gotten a few bites through friends, but I do have a couple local shops that are interested in selling pedals I make. I thought that was cool, but have no idea how to approach them and talk about money.

My costs per pedal on parts (shipping and taxes included) and finishing are somewhere between 50 and 60 bucks each. In labour I imagine I'm spending between 2 and 4 hours on soldering the parts on perf and stuffing the enclosure. So depending on where you live, half of minimum wage would put that at about 25 bucks in time, and on top of parts, finishing the enclosure, and building the pedal, we're looking at a finished price of about 75-85 bucks. So is it wise to go to the Guitar shops and say, "I need to walk away with $100 a pedal, and then they can mark it up to what they want to? I mean, these are all analog, hand built, true bypass pedals. I can't make money of my name, but I don't want to 'give' them away.

As for stuff I've built that I don't need and want to sell to get more parts - is it better to sell those just for my cost and leave out the labour, or include the labour costs?

Great thoughts guys, I'm glad other guys have/are thinking about this stuff. I'm really, really not trying to 'make money,' more just trying to stay active in a hobby that has logical limits on my own needs.

Jacob

[Paul Marossy]

I'm not in it for money. I'm in it for the practice and the fun. I enjoy building pedals, and as my wife put it so eloquently I'll use her words: "How many can you get on your pedalboard anyway?"

I'm not trying to earn a living - I have a good job. This is my hobby, and the next logical step from making pedals for myself is to make pedals for others - friends or sales. I've gotten a few bites through friends, but I do have a couple local shops that are interested in selling pedals I make. I thought that was cool, but have no idea how to approach them and talk about money.

Quite a lot of boutique pedals appear to wholesale at around $100, which get a $199 or more retail price tag.

My costs per pedal on parts (shipping and taxes included) and finishing are somewhere between 50 and 60 bucks each. In labour I imagine I'm spending between 2 and 4 hours on soldering the parts on perf and stuffing the enclosure. So depending on where you live, half of minimum wage would put that at about 25 bucks in time, and on top of parts, finishing the enclosure, and building the pedal, we're looking at a finished price of about 75-85 bucks. So is it wise to go to the Guitar shops and say, "I need to walk away with $100 a pedal, and then they can mark it up to what they want to? I mean, these are all analog, hand built, true bypass pedals. I can't make money of my name, but I don't want to 'give' them away.

If you look at that on a wages per hour worked, you are hardly making anything. What's that? Like $5 per hour? I don't spend more than one hour building any pedals that I build for other people. Getting some PCBs made up would help a lot with that time spent building each pedal, and it would allow you to build many units in the least amount of time. You will begin to hate your hobby if there is a demand for your pedals and it takes that kind of time to build each one.

Also, I have to order stuff from four or five different places to get the best prices possible. I try to get the best quality parts for the absolute lowest price. I know exactly how much I make per pedal because I have everything accounted for down to the penny. For the one company that I have to buy all of the parts for, the maximum in parts is about $35. I wouldn't even think about doing this if I couldn't make about $30-35 an hour, for the hours that I actually work. It's all piecework for me, so I try to get stuff done as quickly as possible because I like to look at it as an hourly wage kind of thing, and have built various jigs to make things go as quickly as possible. If that number gets below a certain point, it doesn't feel like it's worth it. It especially won't feel like it's worth it if it takes you four hours to build each pedal. There's only so many hours in a day.

I'm just looking at from a future growth standpoint. I've also done the pedal building gig for one builder while I still had a job, the first time that my hours were cut back in Sept of 2008. So I've done it as a part time thing and as a "professional" builder, in addition to the other three part times jobs I am doing as well (stuff generated thru my own website, repairwork for Guitar Center, working for two different boutique pedal companies and occassional side jobs from my former employer). It sucks that I have to do all this and still not make even close to what I used to. I don't know how much longer I can do it.

[petemoore]

  Do you think it depends on why you're selling it ?

[Philippe]

If you look at that on a wages per hour worked, you are hardly making anything. What's that? Like $5 per hour?

Marketing & selling homemade fxs is probably similar to those who make jewelry on the side...there's a lot of labor involved, much of which cannot/will not be recovered in your final selling price.

Personally, I'd rather just sell locally.  It's nice to meet the people you sell to.  It's nice not to have to worry about shipping...or shipping back.  And it's nice to see the smile on the person's face when they plug in.

Using Mark's insight here, maybe consider building/selling/promoting your fxs for & to a 'local' band. That way there's minimal stress involved, you get backstage passes + should they become successful, your gateway to the boutique world of pedals will already be established as followers & afficionados will now begin seeking you out for access to the legenday & ethereal tone of your now famous fxs.

[Philippe]

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[Philippe]

*edit* Geez, speaking of clones...these posts are reproducing themselves like a weedpatch.

[Philippe]

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[Philippe]

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[Philippe]

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[Brymus]

I think another thing to consider is the DIY community is quite small.
If your selling your own designs then I wish you well,if your selling someone elses then you might get some backlash from others.
I have seen all too many hateful "I cant believe this guy is selling these" threads.
Of course there are plenty of popular designs that are cloned by every builder and manufacturer alike which you cant really get too much slack for selling,but then again you can buy them from GC for less than you can sell them and make any money in wages.
SO unless you have something new to offer or really great cosmetics you probably wont sell that many with any profit in it for you.
I like to give my stuff to friends as gifts or charge what the materials cost,as it has always come back to me in one form or another in gifts recieved or favors ect.
If you sell your pedal to a store they have to charge twice what they paid you for it.
So your 100$ pedal will cost the end buyer 200$ or more.
If you sell it on Ebay the fees will kill any profit you might make,as most people on Ebay ar looking for bargains not boutique.
But hey Devi Ever gave his stuff away on Ebay for a year until word of mouth got some retailers and stars interested in them.
I think I read in an interview a pedal a day for an average price of 60$ until things took off,so you never know 

[Electron Tornado]

I've sold a few on ebay for fun. Ebay and PayPal take their cuts which eat up a lot of profit. If I only consider parts, I'm averaging about 8-9% per pedal. If I figured labor costs in that I would be awash in red ink.

Personally, I'd rather just sell locally.  It's nice to meet the people you sell to.  It's nice not to have to worry about shipping...or shipping back.  And it's nice to see the smile on the person's face when they plug in.

Using Mark's insight here, maybe consider building/selling/promoting your fxs for & to a 'local' band. That way there's minimal stress involved, you get backstage passes + should they become successful, your gateway to the boutique world of pedals will already be established as followers & afficionados will now begin seeking you out for access to the legenday & ethereal tone of your now famous fxs.

This is really good advice, and probably the best way to go to "break in" to pedals as any kind of business. Build, mod, or repair a couple of pedals for local musicians and they'll tell two friends, and they'll tell two friends, and so on and so on...

[jkokura]

Thanks for all the insight guys. Brilliant.

I'm really just looking for more advice about pricing, not about the ethics or economics. I do appreciate the ideas, and I will approach some local musicians to see if there's any product I can make them that will be better for them than the commercially available stuff around. Great idea there.

I'm really hoping that someone who works in or knows about how to approach commercial enterprises with product knows how the markup system works. If I do go to a local guitar shop, do I go in and talk to the owner and say, "try to sell these" and then wait to see if he sells any and then take a % of whatever he sells them for, or do I walk in and say, "buy X amount of these for X dollars, and then you can mark them up for X%?"

I don't know much about sales, or about how to deal in commerce. I work with teenagers and families, and do this on the side.

I am trying to learn more about Layouts and PCB manufacture also. Mark, you raise a good point about speeding up. If it takes me 3 hours to build a pedal, leaving out the finishing the enclosure time, it's really not economical. Most of the slowness in the building is because I'm building on perf, and having to do the layout as I go sometimes. But again, I'm doing a trial run of 6 pedals really, and if they sell easily I'll do more. It hasn't cost me more than 50 a pedal so far, so if worse comes to worse I'll be able to sell them here or on evilbay or something.

And I don't know what kind of places and bands you guys have access to, but I live in Fort St. John, British Columbia. I'm waaaay up in Northern Canada, and there's a great local music scene here, but little in the way of real access to potential great bands, let alone major guitar store chains. It's an oil town, and most of the guys who buy stuff will dig the cool little box with top jacks, and knowing it's handmade by a local builder. They won't care about the price, but it's a one-off thing they can say is kinda cool.

I chose to go with a buffered booster, a compressor, and a simple Overdrive, building 2 of each. I'm going to see if a local shop will take 3 of them, and try to sell the other three personally. Country's real big up here, so I figured with that kind of crowd, these pedals will sell. I just want to know how to talk about Price with people, the ethics and issues I'll leave for another day.

Thanks again, and keep the comments coming.

Jacob

[Boogdish]

If you trust your local music store, ask them for advice on what price to shoot for or if you should try and do consignment instead of selling to the store, etc.  They're the experts on the local market.

[Paul Marossy]

I'm really just looking for more advice about pricing, not about the ethics or economics. I do appreciate the ideas, and I will approach some local musicians to see if there's any product I can make them that will be better for them than the commercially available stuff around. Great idea there.

I'm really hoping that someone who works in or knows about how to approach commercial enterprises with product knows how the markup system works. If I do go to a local guitar shop, do I go in and talk to the owner and say, "try to sell these" and then wait to see if he sells any and then take a % of whatever he sells them for, or do I walk in and say, "buy X amount of these for X dollars, and then you can mark them up for X%?"

Set your wholesale price, and sell it for that. Set your retail price for direct sales, and sell it for that. Choose how you want to do it, either sell them to a dealer up front, or try to do it on a commission basis. If you sell them up front, you get your money now, and they take a risk of not selling them. If you try to sell them on commission, then you have to trust them with your product that you have not been paid for yet. Choose your poison. Some companies send out samples to dealers for evaluation before they commit to buy anything.

Like I said earlier, I work for two different boutique pedal companies and while I don't work in the business end of things, I ain't no dummy. I have good powers of observation and have some idea of what they wholesale a pedal for that retails for $199. Wholesale is what the dealer buys it for and retail is what the dude who buys it from the music store for. The markup is at least twice what they got it for when it comes to boutique pedals. Your profit is what you have left over after you build and sell it. And you have to factor in overhead, having capital to get more parts, etc. The profit margin is not very big in this line of work, so to make any kind of decent money, you have to build A LOT of them. And I certainly DO know what it takes to build 20-25 or more pedals in one week. PCBs are a must if you build in quantity, like I said early on in this thread. They will easily pay for themselves in labor saved. One day you may find yourself at a crossroads and have to decide if you want to make it a full time thing or if you are going to pay people to help you build your product, and have to work two jobs - your day job and your guitar pedal gig. I'm just living in the real world when it comes to this stuff, so all I am trying to do is help you "count the cost" of such an endeavor.

What makes it complicated to price things is the elaborate shell game that the music industry plays with the "MSRP" of products. I believe there was a thread here about that once. I have given the very simplified version of it all.

EDIT: This thread might be worth a read - http://www.diystompboxes.com/smfforum/index.php?topic=63891.0
Also, you can buy nice powdercoated enclosures for a very reasonable price from www.pedalpartsplus.com - that also will save you a lot of time.

[modsquad]

I was in marketing for about 10 years.   The most valuable lesson I learned came from a book called "The Immutable Laws of Marketing".   There was one that really boils it down to its simplest terms:

"Value is what someone is willing to pay for it.  Not what you think its worth."

So, IMO unless its got gold parts or some rare unattainable sound or component then price it comparable to its function (Overdrives, Fuzzes, etc.) with other manufacturers.  I get so tired of seeing $199 TS, Fuzz, BSIAB, etc.  knockoffs.   That is unless you can find a sucker or someone who has money to burn.