Co-founder and CEO Ken Tomita explores our adventures in running a small business and the journey to understand the meaning of it all.
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Launching a new product is an exciting time here in our shop. It’s the moment where an idea transforms into an actual, physical object. One of the least exciting things about launching a new product, however, is getting the price right. It’s one of the most critical decisions, and can mean life or death for the product. Here are a few of the factors we consider:
How long will it take to make? Since Grovemade works in small batch manufacturing, we often launch products after only making a few dozen. This doesn’t give us enough concrete data to know how long it will take to make hundreds or thousands. We have to use a combination of estimation and our gut.
How much do the raw materials cost? Because the natural materials we work with are inherently variable, there’s quite a bit of guesswork in predicting waste, a big factor in the overall cost of the product.
How does it fit in the market? Design, functionality, aesthetic, and quality of materials all need to be taken into consideration before settling in on a price. Where best do we balance value for our customers and making sure we have enough margin to sustain a financially healthy business?
Typically, we go in with optimism at how efficiently we can make a new product. Sometimes (okay, oftentimes) things don’t go as planned. Making things is hard, surprises pop up, and that’s part of the fun. But, when costs end up higher than expected, we have to reconsider the viability of the product.
For example, we’re about to raise the prices on our catch-all and wall hooks. After making over a hundred of each, we’ve realized the cost of labor to craft these meticulous designs is too much for the prices we charge. Having exhausted our efforts to make them more efficiently, we have to choose between discontinuing them or raising the price to make them financially viable. We choose keeping them!