(my pseudo)psychology of pricing

I am serious about selling horsey2x. I asked my uncle wawis to make 2 horsey2x — one for mati, and another for me to sell. So right now I have 1 stock — that can make or break my toys r us business. =)

But then seeing Sir Mike’s comment asking about the price, I realized that I need to ‘strategize'(sp?) my pricing. Well, actually I was thinking of selling it at P1,500 because I saw a ‘horsey2x’ at fooda priced at that. And, I feel I could afford the P1,500. But then I guess to be fair to my future ‘customers,’ the price must be based on some reliable financial studies than just because of my feelings.

Except for the common sense of adding the costs of building the product + whatever profit margin, I really have not much experience about pricing. Well, probably the stint I have as ‘Book Orders Specialist’ (short for saleslady) at Xlibris can be taken as experience. If I can still remember it right, the mark-up given to books was 60%. The 60% mark-up was to cover for the customer support, the order preparation, book system, royalties to authors, their profits, and blahblah. And, also for Xlibris to be able to give 60% to distributors, 20 or 40% discount to retailers without losing anything. 

If translated to Pinoy style, prices are marked up to give way to the haggling part. So if I will sell my horsey2x at P1500 — I ‘feel’ it is just owkei. A carpenter’s day is P300 (given he worked for 1 horse/day) + 300 for the materials + 200 for my uncle wawis + 200 for miscelaneous, and the rest is for my ‘talent fee.’ =)

Given that after all the economic chuva feasibility studies, P1500 is really the right price. I kinda think, now my problem is how to convince people to buy my horsey2x at P1500. Well, for a change it’s Made in Cebu, Philippines toy, not Made in China. It sounds lame. So I made some study — I read ‘Don’t Just Roll the Dice’ by Neil Davidson. It’s about pricing your software. Yaa, horsey2x is quite far-off from software but then the pdf version of the book is free so I have to contend with it.