Setting your prices at just the right level can be tricky in a trade where no two things are exactly the same. Ideally you'll already have some knowledge and experience of the industry - if not you'll have to learn by trial and error, picking up clues from your competitors.
Correct pricing starts at the buying stage. When you make someone an offer for a salvage item they're selling, or for the salvage rights to a whole building, you'll need to be thinking about how much you can sell it on for. You'll also have to take into account any cleaning or restoration that will need to be done before you can sell it on. If you're buying overseas, be careful to factor in costs like currency exchange and overseas money transfers.
If you decide to buy an item of stock, you'll aim to offer the seller the lowest price that they'll happily accept for it (remember - you want them to come back to you if they've got anything else to sell) - too low and they'll take it to one of your competitors, too high and you could make a loss.
You might decide to try and stick to a basic policy of always aiming to multiply the cost price by a certain amount. You could, for example, decide that you'll aim to double the cost price and add to this the cost of any renovation work. However, you'll probably find in practice that you need to be a bit flexible, making up on one item what you lose on another.
In general, you'll need to set your prices according to the type of outlet you have and the sort of clients that you aim to attract. Customers who are prepared to spend hours rummaging through a disorderly yard looking for anything which, once cleaned up, might look nice will be expecting a bargain. On the other hand, wealthy individuals who are looking for a particular high quality period item may be prepared to pay top prices.
Pricing individual items
When it comes to setting your buying and selling prices, take into consideration the following:
- the condition of the item
- the scarcity of the item
- any costs incurred and time taken cleaning and restoring it
- how much value - if any - you think you have added to the item
- how much space it takes up in your outlet - particularly if space is at a premium
- how quickly you expect to be able to sell it on
- the state of the market - are items like this in demand at the moment?
- what other salvage dealers charge for similar items - and what sort of price they go for on eBay
- if applicable, how much a similar item sold for last time you sold one
There may be some situations when you're prepared to accept a lower price than normal for an item. These could include:
- when you sell an item to a fellow salvage dealer, or to an antique dealer
- when you sell an item to a regular business customer like a builder or designer
- when you source an item to order for a client (although if this takes a lot of time and effort you might actually decide to charge a higher price than normal)
- when you sell something online - a special internet discount
- because you're offering a discount for some other reason
When you sell an item by auction on eBay, the price you get is normally the price that the auction finishes at - you can't control this. You can, however, set a starting bid and/or a reserve price. Or you could use a 'Buy it now' advertisement with no bidding.
Many of your customers - buyers and sellers, private and trade - will expect to haggle over the price. Keep negotiations friendly and fair and always have in mind a maximum price you can pay for an item and a minimum price that you can accept for it. Of course, there may be times when you'll be prepared to accept almost anything for an item which has proved hard to sell.
Charging for other goods and services
If you sell other goods, like wax polish and wood filler, then you'll need to decide how much mark up to add to the cost price. Your suppliers may be able to advise you on this.
If you offer services like wood stripping, restoration and installation then you'll probably charge by the hour. You'll need to set your hourly rate at a realistic level. If you carry out specialist demolition services then you'll be able to offset the value of the salvage against the labour cost of demolition.
When it comes to other services, like packaging items for export and storing them for customers, you'll need to decide on your pricing policy. Will you pass on postage and packing charges at cost or will you make a profit on these? Will you charge customers for services like storage or will you offer these free as a goodwill gesture?