Monday, December 06, 2004

Marginal Utility

One of the few things I took away from my economics classes in college (and there wasn't much) was an appreciation of marginal utility. If I understand the concept correctly (please don't flame me if I don't. You'll crush my ego.), marginal utility is the relationship between price and satisfaction. If you're very thirsty, you'll pay $2.00 for a bottle of water. You'll get more satisfaction from the water than you would from using that $2.00 for another purpose. After you drink the water, you'll only be slightly thirsty, and probably wouldn't pay another $2.00 for a second bottle of water (for a bathroom however...). The marginal utility of the water has decreased since your consumption of the first bottle.

The only thing I can discover that marginal utility doesn't apply to is yarn. I think most knitters can agree that they can buy a shitload of yarn, and easily go out and buy more the next day. Pity we can't knit it that fast. It's one of the peversities of nature.

Anyhoo, I went to a craft fair last Friday. It was just a group of local artists who set up booths in the ball room of Newcomb Hall, not too far from my office. I wandered over, not really expecting to find much, but you never know. There was some neat pottery, a photographer, some jewelers, woodcarving, the usual craft fair fare. I saw a few things that interested me, but not enough to go to the ATM to come back with the cash.

There were also two knitting booths there, both of which disturbed me a bit. The first one was selling felted handbags. Booga bags, Constant Companions, call them what you will. I will admit, I've never done any serious felting since I don't have my own washer, and must use the coin-op in my complex. However, my understanding of the process is that it is fairly simple. Anyways, I didn't find these bags to be particularly intricate. They were all a single color, with Fun Fur (or similar) edging the top, and an I-cord handle. The smallest of the bags was slightly larger than a change purse, and was $30.00. The larger ones, more like a small ladies handbag (maybe 8"x6") was $60.00. There was also a middle size for $45.00. At another booth was a lady selling novelty yarn scarves. Fun Fur, eyelash yarn, whatever. They were very basic garter- or stockinette-stitch scarves (she was knitting one right there on at least US 10 needles), and were going for the bargain price of $30.00. Now a novelty yarn scarf I have made, and I know that I spent $7.00 on yarn, and it took me about 8 hours of mindless knitting to make.

I know how much work and time goes into knitting. But these prices really felt like a ripoff to me. Maybe it's a double standard- I feel okay charging $50.00 and up for a pair of my socks. (For the record, almost all my socks cost ~$15.00 in materials, are knit on US 0's, and take about 25-30 hours a pair.) But I'd never pay $60.00 for a felted handbag - especially one that I knew I could make myself for about $10.00 and a weekend. Same with the scarves. Do people out there really pay this much money for this stuff? Had it been me, I would've sold those scarves for half that price, and the bags for maybe $20.00 max (adjusting for cost of materials). Maybe I'm discounting too much, but I really think that if I tried to sell my socks based on their pricing scale, I'd be asking at least $150 a pair. We often have pricing conversations on the Socknitters list and the Knitlist. The rule of thumb traditionally tends to be three times the cost of materials, adjusting for a particularly onerous project. Going by that, $30.00 for a novelty yarn scarf doesn't seem so far out of whack. Yet, knowing the skill that (doesn't) go into them, I'd still be incredibly reluctant to buy one.

On the other hand, people often pay thousands, if not millions, for paintings - which are essential canvas, oil, and pigment, applied with a hair-based brush. I guess my marginal utility regarding hand-knitted items has become skewed. Since it's something I can do on my own, I'm much less willing to pay others for providing the skill for me. That, and I've become more aware of how much some (certainly not all) knitters inflate the price of their work. Or maybe I'm just a cheapskate.

I hope this post doesn't make me sound like too much of a pricing snob. I guess the difference between me and those women is that I rarely work on comission, and prefer to knit only for my pleasure and the enjoyment of giving it away to those around me or a charity. I'm not trying to turn a profit or run a business, so I have a different set of priorities than they do. That still doesn't make me want to spend $30.00 on a novelty scarf, though.

Oh, and for the record, both the tables were still pretty full when I left the fair. I only saw one person buy a felted bag, and no buyers at the scarf table. Maybe I'm not the only one with an overdeveloped sense of marginal utility.

4 Comments:

At 8:18 PM, Blogger Lauren said...

I usually define addictive goods as those where your utility from the good is an increasing function of past consumption of it, so then the marginal utility would be increasing, so it makes sense if yarn is addictive.
-a PhD student in econ

 
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