Business Model & Pricing: No Retail Keystone Pricing - Jackson Wayne Leather Goods

Business Model & Pricing

Infographic: Retail Keystone Pricing Killer

Our Products Aren’t Cheap – They’re a Tremendous Value… Here’s Why 

We sell $1,000 bags for $400.

When you go to a store to buy a leather bag, or even when you shop online at major retailers, you are subjecting yourself to Keystone Pricing. This is standard pricing markup for nearly all retail. Keystone Pricing ensures that you will pay at least quadruple the cost to make the product. You’ll often pay even more depending on how many middlemen there are. The infographic above illustrates this point. 

What is Keystone Pricing and Why do They do It?

Before we can tackle why our products provide a tremendous value, it’s important to understand why Keystone Pricing is the norm. Existing retail stores (physical and online) provide instant distribution channels for brands and products. It can be a great way to get your products to market quickly and to target your customer effectively.

The problem is, everybody who is involved in this process needs to make money too. The retailer has invested heavily in some or all of the following: real estate or leased space, office space, utilities, HR & staff, trade shows, marketing, packaging, taxes, etc.

So, let’s assume hypothetically an item costs $250 to make. The maker can’t sell it to the retailer for $251 or they’d be out of business. And the retailer needs to at least double their money to justify the risk of laying out capital to purchase the items and to cover their own overhead expenses and still make a profit. So everyone ends up doubling their price along the way. It’s not that anyone is being greedy or taking too much. The problem is there are too many cooks in the kitchen.

Our Solution to Keystone Pricing … Kill It.

From the beginning, we wanted to make the very best products possible. We knew we weren’t going to cut any corners and were intentionally seeking out the best materials. This was going to get expensive quickly. Under a Keystone Pricing model, our bags would have to sell for prices that we simply weren’t comfortable with. It’s not that we didn’t think our products were worth it, they are. In fact, they are better than other bags selling for $1,000+. But we wanted to make our products accessible to people like us. That was not possible with a Keystone Pricing model so we had to kill it.

We chose to sell the products we make directly to you online.

And we didn’t stop there. We also actively looked for other inefficiencies and ways to cut costs. We eliminated or significantly reduced everything that wasn’t involved directly in adding value to our products. That means we don’t maintain an expensive office with swag lying around. We don’t pay someone to sit in front of a phone all day (but we are extremely responsive via email). We don’t spend money advertising in expensive print magazines. And the list goes on. All of these little details add up and enable us to reduce our costs even more.

The Result: Tremendous Value

The end result of our business model and pricing is that we are able to invest a hugely disproportionate amount in premium materials like our leather. In fact, we invest more in the leather alone than more expensive "luxury bag" companies spend on leather, thread, hardware, and labor combined! So when you buy one of our products, you’re paying for the best materials available. Your money is not being used to fix Joe Retailer’s broken plumbing in their expensive store.

We’re very proud of what we’ve been able to bring to market, and the price we can do it at while making everything in America. But the downside is that people have to learn about the retail process to fully appreciate what we’re doing. The truth is, our bags are $1,000+ bags by any measure, we’re just refusing to charge our customers that much.

No Discounting or Sales

We don't discount our products. You won't find flash sales and holiday sales here. There's no 50% off coupon code lurking on the Internet somewhere. We know what our products are worth and we're charging very fair prices for the level of quality and materials we provide. So you don't have to worry about buying something today and finding it on sale tomorrow. In fact, we will likely raise prices in the future. That means now is always the best time to buy from Jackson Wayne.  

Secret Deals

There's one exception to what I just mentioned above. Learn about our Secret Deals here.

Bonus: Our Bags Actually Save you Money in the Long Run

Buy it For Life Leather Bag Cost Comparison Infographic