4 ms·

You’ve hit on something I’ve been thinking about a lot lately in price sensitive markets (which is basically anything in the consumer space). You’re better off

by tmm 5y ago

You’ve hit on something I’ve been thinking about a lot lately in price sensitive markets (which is basically anything in the consumer space). You’re better off being very expensive ($10k tattoo artist) than broadly appealing. I’ve seen it mentioned here a lot w.r.t. freelance web developers, but my friends in the trades are aware of it too. Be expensive. It filters out the terrible customers and gets you people who are willing to pay (and wait) for quality work. The difficult part, I think, is knowing your market well enough to know what that threshold is. There is a lot of hysteresis in pricing - you can easily be too expensive for the cheap customers, but not expensive enough to make up for the reduction in paying jobs. The hard part is you have to know your market really, really well. And you may not be able to apply that model to every job. No matter how rich your customer is, they’re probably not going to pay $1000 for you to change a lightbulb. On the other hand, there are plenty who will pay you $20k for work that your competition is quoting $5k for. And the closer your chosen field is to art, the greater that gap can be. If you want to be a baker, you can’t compete with grocery stores for the $30 birthday cake market, but you can make $6k wedding cakes and corporate event cakes. You might only make one cake a week, but isn’t that better than having to crank out 200 sheet cakes with terrible baby pictures printed on them?

nautilius 5y ago
I read an interview with a watchmaker once. He used to make watches in the $2000 range, before moving on to watches much more expense (I forgot the number, $50,000?). The reason was simple: someone buying a $2000 is often there for a once-in-a-lifetime purchase - graduation, marriage, etc. Someone able to spend $50,000 on a watch typically will have no issues to start collecting them and buying many more.
- mooreds 5y ago
  Interesting! I have questions. * Did he have to start off in the 2k range before he had the skills/brand to make the 50k watches? * Did he take any steps to avoid getting trapped in the 2k market (too busy making 2k watches to make a 50k watch) * Were there any intermediate steps up to 50k or was it 2k->50k directly? * Are the inputs for a 50k watch significantly more expensive? I imagine you won't have the answers (unless you can dig up the interview), but what a fascinating story with lessons for software. I've read plenty about avoiding the $9/month SaaS customer in favor of the $500/month or $10k/month customer, but it is interesting to see it play out in a different, consumer focused space.
  - milesvp 5y ago
    If you’re interested in this topic of leveling up as a freelance creative, I recently came across Chris Do who has a lot of youtube content on this topic. There’s a lot of good stuff, and his delivery is much better than most other of the similar content youtube associates with him.
  - nautilius 5y ago
    Unfortunately, I don't remember the details, but from what I recall it was 'simply' a conscious decision on his part to switch his customer base, so it seemed that tooling/parts/skills/money were not the problem. I assume, as always, that luck has to be involved for someone to discover you and think you're worthy of their money. Then again, just the price tag alone may signify that you're worthy (remember that iPhone app 'I am rich', that did nothing but cost a couple thousand dollars?). Especially if your target audience really doesn't care about the price at all and can just afford to buy it as a novelty, to be the first to have watches from that new unknown brand, before it was cool. But the story had an immediate impact on how I thought about many products and marketing.
    - nanomonkey 5y ago
      As a previous goldsmith, I'd say it's the materials used (gold/platinum over silver) and the time one puts into a piece. Gold is easier to work with than silver as you don't have to worry about fire-scale and it's more malleable, so if you're able to produce a piece in silver, or stainless steel for that matter, then making the same piece in gold just comes down to investing more in your materials (~$1,8000 vs $30 an oz for gold vs. silver) for each piece. After that the time, embellishments are just more time invested with the piece.
- vmception 5y ago
  I've been thinking about that regarding tourbillons. This is the now-unnecessary but aesthetically pleasing component that has made some watches not mass produceable for 200 years. Over the last several years some enterprisers mostly in China have finally refined robotic processes to make them. The watches styles that are 5 and 6 figures in price are now around $1000. But, for now, I am still thinking I wouldn't be caught dead wearing one of those. But because of the scam-like (or at least "rip off") nature of liking a brand that is using an inferior manufacturing process at 10x the price, I now have a quagmire where I wouldn't want to be seen owning the more expensive ones either! But fortunately there is good news: almost nobody knows the more prestigious brands if it doesn't say "Rolex". So you get to blend in. Even thieves will go after the Rolex over the more expensive Breguet, I doubt aesthetics are a factor, only because of the name brand recognition in consumptive pop culture.
paulcole 5y ago
>You’re better off being very expensive ($10k tattoo artist) than broadly appealing. This is like saying you’re better off playing in the NBA than shooting hoops in the park. Yes, anyone can shoot hoops in the park and make $0 but wouldn’t it be so much better to play in the NBA and get paid millions? It sounds great in theory but you better hope you have the talent, drive, and luck to make it happen. Baking a $30 cake and baking a $6,000 cake are totally different ballgames and the actual baking is quite different and the business part of it requires totally different skills/network/etc.
- makeitdouble 5y ago
  You are right, but I think it applies in smaller increments. To get back to bread, selling fancy cakes for 10$ and not 4$ might not seem a big deal, but it can be enough to upgrade all the ingredients while staying in your comfort zone skill wise. The competition gets smaller, and while you’re now priced the same as some superstar shops, you clients will still be happy if it’s clearly better than the 4$ cakes next door. In a way NBA is a regulated market, most markets don’t behave that way.
- onion2k 5y ago
  Baking a $30 cake and baking a $6,000 cake are totally different ballgames and the actual baking is quite different and the business part of it requires totally different skills/network/etc. I don't think that's true. The difference between two cakes is down to who baked them, not the price. There are amazing bakers making fantastic $30 cakes, and great bakers making brilliant $6000 cakes, and there are terrible bakers making awful $30 cakes and others making awful $6000 cakes. You can't tell whether a baker's cake is any good by what they charge. No doubt the technique for baking a $30 cake and a $6000 cake is different (the sizes are probably different for a start) but any good baker could work at either end of the scale. It is absolutely not like basketball where things like genetics (height, lung capacity, heart size, etc) enter into it. No one is a naturally good baker.
  - 1123581321 5y ago
    This isn’t true at all! You can’t have ordered many cakes for weddings and large parties. There are plenty doing a good job who would not be able to move on to richer clients. There is significant variation in design skill, baking skill and equipment out there among professionals. Visual taste, food taste, steady hands, and stamina are three natural traits I’ve noticed and there are probably others in great bakers and chefs.
zippergz 5y ago
I’ve seen this play out in other (mostly creative) fields as well. But it is not without its challenges. Namely, the people who will pay the very high prices tend to come in via reputation and referrals. You can’t generally just throw up a website and some AdWords as a brand new baker and start pulling in five-figure clients. They either want to hear from other people who trust that you’re the person to go to, or at least you need a portfolio of similar work. And of course therein lies a bit of a catch-22. You can’t get high end clients without having other high end clients. No number of $30 birthday cake clients are going to give you credibility with $6k wedding cake clients. Cake baking is one example where you might be able to work around this somewhat by just baking high end cakes for no client, posting them on social media, and hope to pull in a few brave first customers. But for trades like tattoos where there’s really no way to do it without a client, it’s tough. I have no experience with tattoos, but I’m guessing that in that world the high end customers want to see that you have tattooed beautiful things on other beautiful people. If your current client base is average looking people who mostly get boring or trashy tattoos, you can’t just quadruple your prices and expect it to work.
- EveYoung 5y ago
  Having worked in the luxury industry before, my experience is that it really comes down to personal connections and branding. The problem is that positioning yourself as a true luxury player takes years (even in local markets) and until then you're still have to pay rent for high-end locations, PR, and equipment. There is a reason why most successful founders have strong industry connections and/or excellent references.
- brudgers 5y ago
  There’s no Catch-22 if you know the potential clients socially…or your parents and grandparents do. It’s not that that advantage means a person doesn’t have to work hard. It means that hard work is more likely to produce success. Even more important the social connections make hard work more likely to produce success. Prior familiarity with $6000 cakes creates intuition regarding where to prioritize efforts and where efforts don’t produce returns. For example, what is the optimum resource commitment to the cake box. About how good does it need to be? Not enough is bad. Too much is money left on the table.
brudgers 5y ago
With high end goods and services It’s not enough to know the market. Cultural fit is critical. To be in the metaphorical $6000 cake segment of the cake market, you have to hit all the social notes on cue that customers in the metaphorical $6000 cake market want their $6000 cake makers to hit. What I mean is that the architect who designs golf course clubhouses has to be fun to play golf with to establish and maintain relationships with potential and current clients. Delivering a $6000 cake cake experience to the sort of event that pays for a $6000 cake runs on the razor edge of servant and served without questioning the absurdities around $6000 cakes. And if a person likes making cakes, bringing the joy of cake to 200 clients may be more satisfying than catering to people who suppose themselves intrinsically entitled to being catered to. Obviously I know where I fall on that equation. From personal experience for whatever that’s worth.
- wrycoder 5y ago
  > on the razor edge of servant and served An incisive comment for the times. It brings ‘farm to table’ to mind.

by tmm 5y ago

nautilius 5y ago

I read an interview with a watchmaker once. He used to make watches in the $2000 range, before moving on to watches much more expense (I forgot the number, $50,000?). The reason was simple: someone buying a $2000 is often there for a once-in-a-lifetime purchase - graduation, marriage, etc. Someone able to spend $50,000 on a watch typically will have no issues to start collecting them and buying many more.

mooreds 5y ago
Interesting! I have questions. * Did he have to start off in the 2k range before he had the skills/brand to make the 50k watches? * Did he take any steps to avoid getting trapped in the 2k market (too busy making 2k watches to make a 50k watch) * Were there any intermediate steps up to 50k or was it 2k->50k directly? * Are the inputs for a 50k watch significantly more expensive? I imagine you won't have the answers (unless you can dig up the interview), but what a fascinating story with lessons for software. I've read plenty about avoiding the $9/month SaaS customer in favor of the $500/month or $10k/month customer, but it is interesting to see it play out in a different, consumer focused space.
- milesvp 5y ago
  If you’re interested in this topic of leveling up as a freelance creative, I recently came across Chris Do who has a lot of youtube content on this topic. There’s a lot of good stuff, and his delivery is much better than most other of the similar content youtube associates with him.
- nautilius 5y ago
  Unfortunately, I don't remember the details, but from what I recall it was 'simply' a conscious decision on his part to switch his customer base, so it seemed that tooling/parts/skills/money were not the problem. I assume, as always, that luck has to be involved for someone to discover you and think you're worthy of their money. Then again, just the price tag alone may signify that you're worthy (remember that iPhone app 'I am rich', that did nothing but cost a couple thousand dollars?). Especially if your target audience really doesn't care about the price at all and can just afford to buy it as a novelty, to be the first to have watches from that new unknown brand, before it was cool. But the story had an immediate impact on how I thought about many products and marketing.
  - nanomonkey 5y ago
    As a previous goldsmith, I'd say it's the materials used (gold/platinum over silver) and the time one puts into a piece. Gold is easier to work with than silver as you don't have to worry about fire-scale and it's more malleable, so if you're able to produce a piece in silver, or stainless steel for that matter, then making the same piece in gold just comes down to investing more in your materials (~$1,8000 vs $30 an oz for gold vs. silver) for each piece. After that the time, embellishments are just more time invested with the piece.
vmception 5y ago
I've been thinking about that regarding tourbillons. This is the now-unnecessary but aesthetically pleasing component that has made some watches not mass produceable for 200 years. Over the last several years some enterprisers mostly in China have finally refined robotic processes to make them. The watches styles that are 5 and 6 figures in price are now around $1000. But, for now, I am still thinking I wouldn't be caught dead wearing one of those. But because of the scam-like (or at least "rip off") nature of liking a brand that is using an inferior manufacturing process at 10x the price, I now have a quagmire where I wouldn't want to be seen owning the more expensive ones either! But fortunately there is good news: almost nobody knows the more prestigious brands if it doesn't say "Rolex". So you get to blend in. Even thieves will go after the Rolex over the more expensive Breguet, I doubt aesthetics are a factor, only because of the name brand recognition in consumptive pop culture.

paulcole 5y ago

>You’re better off being very expensive ($10k tattoo artist) than broadly appealing. This is like saying you’re better off playing in the NBA than shooting hoops in the park. Yes, anyone can shoot hoops in the park and make $0 but wouldn’t it be so much better to play in the NBA and get paid millions? It sounds great in theory but you better hope you have the talent, drive, and luck to make it happen. Baking a $30 cake and baking a $6,000 cake are totally different ballgames and the actual baking is quite different and the business part of it requires totally different skills/network/etc.

makeitdouble 5y ago
You are right, but I think it applies in smaller increments. To get back to bread, selling fancy cakes for 10$ and not 4$ might not seem a big deal, but it can be enough to upgrade all the ingredients while staying in your comfort zone skill wise. The competition gets smaller, and while you’re now priced the same as some superstar shops, you clients will still be happy if it’s clearly better than the 4$ cakes next door. In a way NBA is a regulated market, most markets don’t behave that way.
onion2k 5y ago
Baking a $30 cake and baking a $6,000 cake are totally different ballgames and the actual baking is quite different and the business part of it requires totally different skills/network/etc. I don't think that's true. The difference between two cakes is down to who baked them, not the price. There are amazing bakers making fantastic $30 cakes, and great bakers making brilliant $6000 cakes, and there are terrible bakers making awful $30 cakes and others making awful $6000 cakes. You can't tell whether a baker's cake is any good by what they charge. No doubt the technique for baking a $30 cake and a $6000 cake is different (the sizes are probably different for a start) but any good baker could work at either end of the scale. It is absolutely not like basketball where things like genetics (height, lung capacity, heart size, etc) enter into it. No one is a naturally good baker.
- 1123581321 5y ago
  This isn’t true at all! You can’t have ordered many cakes for weddings and large parties. There are plenty doing a good job who would not be able to move on to richer clients. There is significant variation in design skill, baking skill and equipment out there among professionals. Visual taste, food taste, steady hands, and stamina are three natural traits I’ve noticed and there are probably others in great bakers and chefs.

zippergz 5y ago

I’ve seen this play out in other (mostly creative) fields as well. But it is not without its challenges. Namely, the people who will pay the very high prices tend to come in via reputation and referrals. You can’t generally just throw up a website and some AdWords as a brand new baker and start pulling in five-figure clients. They either want to hear from other people who trust that you’re the person to go to, or at least you need a portfolio of similar work. And of course therein lies a bit of a catch-22. You can’t get high end clients without having other high end clients. No number of $30 birthday cake clients are going to give you credibility with $6k wedding cake clients. Cake baking is one example where you might be able to work around this somewhat by just baking high end cakes for no client, posting them on social media, and hope to pull in a few brave first customers. But for trades like tattoos where there’s really no way to do it without a client, it’s tough. I have no experience with tattoos, but I’m guessing that in that world the high end customers want to see that you have tattooed beautiful things on other beautiful people. If your current client base is average looking people who mostly get boring or trashy tattoos, you can’t just quadruple your prices and expect it to work.

EveYoung 5y ago
Having worked in the luxury industry before, my experience is that it really comes down to personal connections and branding. The problem is that positioning yourself as a true luxury player takes years (even in local markets) and until then you're still have to pay rent for high-end locations, PR, and equipment. There is a reason why most successful founders have strong industry connections and/or excellent references.
brudgers 5y ago
There’s no Catch-22 if you know the potential clients socially…or your parents and grandparents do. It’s not that that advantage means a person doesn’t have to work hard. It means that hard work is more likely to produce success. Even more important the social connections make hard work more likely to produce success. Prior familiarity with $6000 cakes creates intuition regarding where to prioritize efforts and where efforts don’t produce returns. For example, what is the optimum resource commitment to the cake box. About how good does it need to be? Not enough is bad. Too much is money left on the table.

brudgers 5y ago

With high end goods and services It’s not enough to know the market. Cultural fit is critical. To be in the metaphorical $6000 cake segment of the cake market, you have to hit all the social notes on cue that customers in the metaphorical $6000 cake market want their $6000 cake makers to hit. What I mean is that the architect who designs golf course clubhouses has to be fun to play golf with to establish and maintain relationships with potential and current clients. Delivering a $6000 cake cake experience to the sort of event that pays for a $6000 cake runs on the razor edge of servant and served without questioning the absurdities around $6000 cakes. And if a person likes making cakes, bringing the joy of cake to 200 clients may be more satisfying than catering to people who suppose themselves intrinsically entitled to being catered to. Obviously I know where I fall on that equation. From personal experience for whatever that’s worth.

wrycoder 5y ago
> on the razor edge of servant and served An incisive comment for the times. It brings ‘farm to table’ to mind.