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I Forge Iron

$xx.99 or the real cost?


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Stores will sell at $19.99 rather than $20.00 because most people see the 19 as smaller than 20 rather than the actual penny difference.

How do you price your goods?
Do you include taxes with the posted price?
Do you adjust the price to use only 5, 10, and 20 dollar bills or make change?

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I had in mind price of the finished goods ready for sale. Is the widget you make priced at $19.99 or at $20.00?

If you have say 5% taxes do you then sell for $19.99 plus $1.00 taxes for $20.99 and make change?
Do you sell the item for $20.00 plus $1.00 taxes for $21.00 and make change?
Or do you adjust your price to $19.05 plus $0.95 taxes for an even $20.00 and no change?

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One state that I lived in, specifically stated that a merchant can not include sales tax in the offered/advertised price.

I round to the nearest 50 cents, and more often to the nearest dollar, as that is the limit of my ability to make calculations in my head, and easier to make change.

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The "odd" pricing scheme came about from SS Kresge (later Kmart), because he wanted to make it harder for clerks to steal from the till, by having odd amounts, they would have to pilfer "odd" amounts making discrepancies in there cash drawers easier to catch.

Also he was a pioneer of the price diversion that you point out. 99 cents is a whole lot cheaper than a buck.

One other thing to note as of late you only see the "rebate" amount, or the "discount" amount when you see car ads on TV. Why? Because they would rather have you associate the $3500 number than the true price of the vehicle, which in most cases makes your jaw drop.

I do as Unicorn does, easier pricing, easier change, take it or leave it.

(semi rant over, we will now continue with our regularly scheduled programming)

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The marked price would be $19.05 with $0.95 tax making the total sale equal to an even $20 bill.

Some mark goods up and then run sales that, with the discount, equals the normal price. Once the sale is over they keep the high price for a while then reprice the item a bit more than the old normal price, calling this "lowering" the price to save you money. I have also seen 14 ounces in the same box that used to be sold by the pound (16 ounces) for a price increase of 14.3%, or 10 items in the same box that used to be sold by the dozen (12 items) for a price increase of 20%, although the price stays the same.

But the question is how do you price your items to make them attractive to the buyer, and easy for you to make change.

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When I see prices of $19.95 or $9.95 the red flags in my head "go up". I tend to wonder what other surprises, short-cuts in manufacturing, or other creative activities the manufacturer or seller has come up with that I should be on the look-out for.

I have read articles, years ago, that if you have to play games with pricing, then price the item at numbers such as $19.65 or $9.36 as those prices imply that you made a very careful study of the cost of the item. $.99 or $.95 just plain gives the wrong message, in my opinion.

Blacksmithing has a tradition of:
- making things to last by over-engineering our products, and often providing life-time guarantees.
- providing value for the dollar
- being straight forward in business practices

Edited by UnicornForge
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In Virginia, sales tax "must be separately stated and added to the sales price or charge." I think that's the general rule in most states -- certainly many of them, in any case -- so if you're not certain of what your state's laws are it may be worth checking. (And BTW, I'm not a law enforcement officer and I personally don't have a dog in the fight. I just want to mention this for the benefit of those who might not know, and who would care if they did know. So don't shoot the messenger.)

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Good thread Glenn, this ones a bit o' sore point for me so I'll keep the soap-box short . . . :rolleyes:

I roll up to the nearest $10.00 - $20.00 increment depending on where my price point for the piece is.

I won't play around with clever pricing hoping to make my work more attractive to a potential buyer - if they can see the value in a well made hand crafted item, they're buying it for reasons other than price. If not, a penny or a nickel or two isn't worth my time to try and motivate them.
I add tax to the displayed price of the item.

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The State sales tax number I received allows me to "collect" state sales tax from the buyer of an item I sell. The actual tax has to be paid one way or another, but that tax # allows me to collect it from the client.

In practice I just mark my price for a finished item at a set dollar amount - and then I pay the sales tax out of that. So the tax is not added in. If I sell a flint striker for $15, the person pays just that $15. I then calculate out the 7% state sales tax on that whole amount, and send that in. If anybody asks about sales tax, I tell them that I will cover that, and that they are then getting a 7% discount on the final price.

So calculations are simple. Just total up whatever I sell for that day, multiply by 7%, and that is the sales tax I need to turn over to the State. So I mark my items to the whole dollar amount I want to sell them for. And I always tell the client/customer that I will cover the sales tax - giving them that small discount. It does cut my "profit" a bit, but the savings in headache and paperwork are worth it.

Large items and commission pieces are a different matter - sort of. There you have to do all that time/labor/materials/profit calculations to come up with the base pricing, and then figure out how you might want to handle the sales tax.

When I worked with Jay Hisel at the retail portion of his Big River Forge, we did all the normal calculations of sales tax, and added it onto the final retail price. That was the way he wanted to keep his bookwork. And the receipt then reflected it on each sale for the bookkeeper.

Now a sales tax HORROR story! The State of Iowa changed its rules a few years ago. If you do retail in the State, you must collect and report sales tax based upon where the customer/client lives! If I sell in Winneshiek County, and the client/customer lives in Black Hawk County, I have to know and charge them sales tax as if he were buying it in Black Hawk County! And the quarterly/yearly tax report must break down the sales by the County the item was sold into! What a nightmare! It is supposed to even out the differences between catalog/internet sales and brick/mortar store fronts by geographical location. The County governments got behind this scheme because they were losing out on sales tax to other counties when people didn't "buy local". In "theory" this sales tax scheme even applies to in-person sales, but nobody pays attention to that and doesn't bother to ask people where they live.

Just what works for me.

Mikey - that grumpy ol' German blacksmith out in the Hinterlands

p.s. And, of course, cross-state selling via mail/internet have their own complications.

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Always even dollars here and I take care of the tax, unless it's one of the stores I sell in and then they take care of the tax. So basically if they buy direct from me they save about 5% and I save 12.5% commission to store.

Edited by jwmotley
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