Question for pen turners

[Craig Zettle]

My wife is taking a marketing course at the community college, and she asked me to ask for your expert opinions on a marketing project involving the sale of up-scale pens. They are made of lyptus, and the external hardware is 10 carrat gold. Here is the kicker: the pens are supposed to cost twice as much to produce because not only are the materials first rate, but they never run out of ink. I asked here how this was to be accomplished, and you have to understand, this is just on paper, they aren't actually producing these things.

Anyway, she needs an estimate of pricing for these upscale pens. Care to take a crack at it?

(I can't help her because my brand new lathe is broke.)

[Nancy Laird]

Craig, first you can tell that this is a "dream" project, because I have NEVER heard of any pen that "never" runs out of ink. If ink isn't used up, it will dry up; ergo, the pen would be out of ink.

For pricing, take the cost of the blank, plus the cost of the kit, plus an X factor for the time it takes to produce the pen, add the three together and multiply by 3 to set the price for the pen. The X factor would be the charge per hour you set for your shop time.

Using some hypothetical numbers, say $5.00 for the blank (have no clue what the lyptus would go for), plus $15.00 for the kit (guesstimate), plus $50 an hour for shop time (and assume that you can produce a pen in one hour), that's $70.00, so the pen would retail for $210.00.

I'm sure that others will chime in with a different pricing structure, but this is just an quick off-the-cuff place to start.

Nancy

[Craig Zettle]

Thanks Nancy, I'm sure she will appreciate the breakdown because those details look good on research papers. Yes, the "never run out of ink" thing is just a detail the professor put in to make the pricing structure more interesting.

[Ron Raymond]

Nancy's answer is an excellent example of how "fair-minded" turners are at pricing their work...(cost of materials+time+profit). But I can't help but think the professor is looking for some weird pricing structure based on the "never runs out of ink" detail. How much more than (cost of materials+time+profit) COULD you charge considering the "fact" that you would never have to replace the pen?

[Craig Zettle]

How true, Ron. I am sure the professor had that in mind. I can't wait to hear his thoughts on the pricing of the pen once all the assignments are in.

[Dario Octaviano]

I bet you will have to factor the cost of savings on ink (to justify the cost and make it appear cheap in the long run).

Question...how many pens or refills do you think you will use in a lifetime?
How much is each?
How long (in average) before you loose the pen? etc. Of course in marketing you only look at the positive side

[John Terefenko]

First that is misleading never run out of ink come-on. Now if you say free replacements for life that would be more legit. Second thing who said that the gold fitup was first rate??? There are better platings than the gold unless they are solid gold and if that is the case then $1000 is a good price. The blank is cheap and there are way better and more expensive and better looking blanks than that. But if you are making up some fanthom pen then good luck and charge whatever you feel like because it does not matter.

[Gary Herrmann]

How about each pen having a cold fusion cartridge in it that has a tiny wormhole to a planet where the oceans are ink? A bargain at $9995.00 each.

Yes, I've been reading scifi this evening.

[Rich Souchek]

Craig,
Figment of imagination/up-scale pens don't come cheap.///

The pens have been produced for a year now, with much market research and advertising. Our maketing model is a mid 30s to mid 50s professionals who apprecaite and can pay for a finely made pen that can write forever.
The cheap line of our "Forever Pen" has failed in our expectations. The research indicates that the cheap pens were lost, stolen, or misplaced and thus the perceived value was not achieved. However, the upscale version which was accidently promoted on the last moon trip by the Chinese astronauts, are wildly popular and the small volume/ high cost produced have kept the pens's value high.
Thus, our company intends to continue producing 500 of these hand crafted pens each year, with a retail price of $4599 US available only thru our campany website.

According to the figures my accountant cooks up, i.e. keeps:
1. The pen cartridge itself, is a proprieter design that while costly to produce, is guartenteed to never run out of ink. The gnenetically modified cells inside the cartridge synthesis (sp?) a fine blue-black, water-proof, fast drying ink by using the dust mineral, water vapor, and inert gases the normal air is made of. Thus, short of physical destruction, the cartridge will never run our of the synethetic ink.
The cost to develop the bionic cartridge is high, and a large part of the development cost in included in the pens produced now. The current cost of each stainless steel cartridge is $147.84 US.

2.The cost of the rare and valuable materials crafted by the ....64.00 each pen.
3. Factory and machinery cost of $18.00 per pen.
4. Artist cost to develope new pen designs is broken down to $9.00 per pen.
5. .......


Rich S.

[Stu Ablett in Tokyo Japan]

Interesting.

I always loved to get this kind of assignment from a Prof who never actually ran a business, never had to deal with governments, regulations, OSHA, the IRS, leases, insurance, real marketing, as in really trying to sell something in a real market place etc.

Might work on paper, too bad the real world is not made from paper

Add in some sundry costs, CA glue costs money, sandpaper, the micro mesh stuff, too, it all costs. If you are running a real business, then you have to have good DC, and inspections, you have to have training seminars for your employees, so they know how to use hand soap in the washroom, etc etc.

The Never runs out of Ink could be accomplished by having the pens required to be sent in for yearly maintenance at an approved facility, all shipping paid for (but only for the original buyer), this way, you would just replace the ink cartridge and maybe buff it up and clean it?

Have a case that the pen comes in, a shipping box of sorts, that gets used every year. Have a maintenance contract that if they do not ship the pen to you for regular maintenance, the guarantee of the "Never Run Out of Ink" would be void.

Figure out the average pen owner is going to do this X number of times, figure out the cost of shipping (FEDEX ground is cheap?) the the time to fix up pens, add it all up, and come up with your price, I'd suggest that the pens would all have to be numbered and engraved with the owners name etc. I'd go all out and have the pens studded with diamonds etc if they so choose, there are lots of super rich in the US and other countries

Just an additional thought, instead of having the person save the shipping box each time, have one sent to them on the maintenance schedule date, this way, the box shows up, they send the pen and the box back to you, better service

On paper........

[Doug M Jones]

Don't forget to factor in warantee expense for those pens that do run dry... and you know they will. I went through a similar excercise too many years ago to remember and some of the things students forgot (that I can remember ) were insurance, benefits for employees, payroll taxes, interest on captital expenditures, depreciation of equipment. As an accountant all those things are very important to me. If you ask our marketing/sales guys, they price by what the market will bear and what our competition will allow.

[Joe Melton]

Lyptus is an interesting wood (google on it and see). Adding to the exoticness of the pen is the inexhaustible ink supply. Obviously, refills are cheap, and the time to replace one every six months is meaningless, so the marketing should stress the uniqueness of the pen rather than the financial aspects. An owner would rather talk about the unique qualities of the pen than its cost, leaving it to his audience to imagine how very expensive it must have been.
Joe