Know-How Exchange : Strategy

Dear sella,

To increase your profits, reduce your distribution costs, and lower your price per unit manufacturing costs you probably need to look at mass production.

If you're concerned about anyone stealing your idea, get it patented (which you ought to do anyway), come up with a name and get the name and logo accredited as registered trade mark. Thus equipped (patent, registered trade mark) you can go into the marketplace with a little more safety to find a manufacturer.

But BEFORE you do all this, ask yourself if there's a NEED for your thingy? Does it solve a problem? Meet a need? Create a need?

Just because it might be a great idea to you does not mean it will change people's lives for the better to such an extent that they'll be willing to pay you stacks of cash for it.

Not trying to rain on your parade here. I just want you to be sure you have a market. More products fail because they were developed and THEN marketed than fail by dint of the developer finding a real need and then coming up with a solution to that need.

It's better to think: "Mr. Problem, meet Ms. Solution" than it is to think "Mr. Product, where is Mrs. Distributor?"

I hope this helps.

Gary Bloomer
Wilmington, DE, USA

Here is some thoughts I wrote a while back related to pricing a new product:
https://expandabroad.blogspot.com/2005/08/how-to-price-new-product.html

Much the best approach is to take a look at similar thingies in the market and see how much they are sold for.

Pricing is a function of a buyers ability and desire to pay and has nothing to do with manufacturing costs.

A athletic shoe manufacturer sells shoes at $300 but their manufacturing cost is less than $1 per pair.

JC Penney sell shirts at $40 or $50 but their cost is $2.25

Remember that for now, you have a garage operation but s things go forward and you get successful, your costs will increase.

Bigger manufacturing facility, more labour, MARKETING, R&D (v2) and on and on and on.

So whilst selliing it at $40 now might seem reasonable compared to a cost of $15. Later, when cost exceed revenues, you will be crying.

Firstly, define who your target market is.
Are they hoobyists? professional persons whi need your things for work> etc.

Then figure out, how much value your invention brings to their lives.

Go out and sell a few pieces one on one directly to the end users. Handle all the objections, listen to the questions that they ask and get feedback on how they have enjoyed using it etc.

Try selling them at different prices to test the pricing barrier - (at what price does it get too hard to sell the item).

Once you have established your ball park for a recommended Retail price, then you can figure out a distributor price backwards from there. (less 30% or less 40% depending on who spends for the promotion).

Good luck and let us know when you've registered your thingy so we can all see it.

Matthew