How to compete with Cabella's

[bruce johnson]

Patrice,

I'll kick in here. At the risk of sounding like a broken record (people who know me from other lists will attest) the best book on this subject for me is one by Bob Brenner. It is called "How to Establish Prices for the Saddle maker or Leather Worker". He usually has an ad in the classifieds of SHop Tak magazine or The Leather Crafter and Saddler's Journal. Some people get hung up on his numbers, the principles are more important - in fact my small business advisor saw mine and recommended it to other crafters not in leatherwork just for the principles. I can't tell you how much money I lost (didn't earn) before I got this book and used it.

Basically for a project to estimate costs. Materials first - I take the square footage of the actual pieces and add 20% as my waste factor usually. Large odd-shaped pieces higher waste, smaller pieces - still keep the 20%. I multiply this by the cost plus shipping for the leather. I add in any hardware. I total this and add 15% to account for the miscellaneous like thread, oil, finish, tacks, dye, things consumed in the piece. (I got this 15% figure as a recommendation, and looking back on a few years records - it is pretty darn accurate). Then I multiply the total by my markup rate. Everybody is comfortable with different rates - really depends on how fast you are turning over materials inventory and how much you have tied up in it. This gives me my materials cost - non-negotiable in any deal.

For labor, I figure overhead and a labor rate. Probably takes a couple years records to average out the overhead. Total them up and that is the hourly "shop rate". I have timed myself on different steps and know pretty closely how long each step takes. For instance - Cutting - I charge a flat rate of 15 minutes. It takes me that long to get the side out, cut a piece, roll the side and put it away. Sewing - I handsew at 5 minutes to prep a thread and then 1"/minute. Machine sew at 5 minutes (machine prep/maintenace) plus 1 foot/minute. I do a medium basket stamp at 1-1/2 sq ft/hr. A flower and two leaves or two oak leaves take me 15 minutes, and so on. I use a kitchen timer to measure how long each step takes me based on size or length on several things, and take a high average. Every so often I time myself again to see if I am still close.

This sounds tedious, but I made up work sheets, and now have them as customized templates in my spreadsheet program. I enter in the type leather and size - it spits out how much I am using with the waste factored, enter the latest cost, the hardware, and it totals up my materials cost. For labor I enter the square footage of the project for things based on that like stamping, oiling, applying finish. I enter the linear measurements for things that are linked to that like sewing and edging. Then enter the time to install hardware. Any special tooling like flowers are added up and multplied by the time and added in. If this is a new pattern not to be reused, or lettering for a name - add it in. Then total the minutes for the estimate and multiply by the shop rate. The first few times you do this - shock and awe looking at the calculator.

These are the basics of what is in the book, but he goes into a bunch more detail and covers some more points that are pretty important.

I do mostly custom orders. Someone can call me and tell they want a checkbook cover with a their brand as an inlay, and two oakleaves, and I can kick out an estimate that will pretty right on. Same with a belt, photoalbum, or most anything. Even things I have never done - I figure up the measurements, what they want on it, and it spits me out a price for materials and labor. Makes life easier for me and the accuracy is scary at times. Beats guessing off the top of my head. I always guessed way low. Doing this also keeps me from trying to or having to compete with the lower priced items. Some of these things are priced lower than my materials. I can go into my shop and know how much money I am going to make. Before When I would price based on market comparisons - I made $7/hr on a headstall, and $35/ hr on a leather covered toilet lid. Bad thing was, I always had a lot more headstall on order than toilet lids. Now labor is all equal.

I used to do some wholesale work for a couple of mobile tack businesses that went to rodeos, horseshows, and set up booths at trade shows. I priced their work with a lower labor rate, since it was usually batched items, and efficient time use kind of made up for the lower rate. It kind of filled in some light periods then. I have kind of priced myself out of that now, but have one good customer left who takes custom orders and I have lower labor rate figured for them. Still works out for me, and gives him incentive to take the order. He does all the dealing with the customer, and I don't have to worry about him paying me - he's good. Also gets my work out where it gets some notice by markets I don't always see. Probably more than you might have wanted to know, but that's how I do it.,

Bruce Johnson

[Oscar B]

This is very good information. Know from experience that was not charging enough for my stuff. Was not having sales so tacked on about twice the price and starting selling more, then went to three times a much and had more work that what I could handle.

[BruceGibson]

Ain't it wild how that works? I know there are times I'll cringe at a high price, but it's almost always the result of better quality and attention to detail. I was talking to a friend of mine about price, quality, and the "tiny details" today. The quality (greater cost/better quality) of the raw materials provides a much nicer canvas for us to create on than the lesser quality (cheaper) stuff. And the little details DO matter.

[Oscar B]

I found this web site and will give some idea of what other charge.

http://www.leathersmith.com/

[AKRob]

A sale without proffit is just a gift.

An excellent little book on CD ROM called Artisans and Money really summed it all up well for me.

I started selling holster full time 3 years ago, worked a full time job for about 9 months and then just took off with it.

MArketing your products is the key. I use the web and it still amazes me how well it works:-)

[CitizenKate]

Rob, please do share some of what you have learned!

Kate

[AKRob]

First, I recommend you read this book- Artisans & Money http://www.thingswestern.com/artisans.htm

it best quantifies what I learned- (I am not making a dime on this and only know about it because I bought my first Tippmann Boss from Joe.)

I skip the wholesalers and NEVER sell on commission to retailers; my holsters are worth paying for or they are not.

I never do shows- biggest waste of time as far a selling that I can think of.

I have watched a couple superior Leather Artisans at the shows- they are more skilled at leather work than I am, but they both work day jobs because they won't market their excellent gear.

Use Ebay to get started- eBay frustrates the heck out of me for some of their policies BUT they are a handy portal If you do a "buy it now" sale and target your customers- I advertise by specific model of gun for a given holster for instance. So far- it's working.

I make a couple specific products and after 2 years of expanding my product line and options, I am reducing the variations available to streamline production.

Don't be shy about doing a press release about a new product: most trade journals are starved to publish something new.

Focus on your target market- shot a rifle like ad campaign directly at the folks MOST INTERESTED in what you make. Don't try a shotgun approach.

In other words, if you make western holsters advertise to Western reanactors and the SASS folks. Not in a general interest gunzine like Guns and Ammo.

The exception to the above is if you can get your product mentioned by a gun writer in an article about a specific gun- THAT works well.

I certainly don't k now it all, I know I have a LOT more to learn, but I have been blessed and this eather artisan has had a modest success so far.

Rob

Edited June 16, 2007 by AKRob

[fleabitpokey]

First, I recommend you read this book- Artisans & Money http://www.thingswestern.com/artisans.htm

it best quantifies what I learned- (I am not making a dime on this and only know about it because I bought my first Tippmann Boss from Joe.)

I skip the wholesalers and NEVER sell on commission to retailers; my holsters are worth paying for or they are not.

I never do shows- biggest waste of time as far a selling that I can think of.

I have watched a couple superior Leather Artisans at the shows- they are more skilled at leather work than I am, but they both work day jobs because they won't market their excellent gear.

Use Ebay to get started- eBay frustrates the heck out of me for some of their policies BUT they are a handy portal If you do a "buy it now" sale and target your customers- I advertise by specific model of gun for a given holster for instance. So far- it's working.

I make a couple specific products and after 2 years of expanding my product line and options, I am reducing the variations available to streamline production.

Don't be shy about doing a press release about a new product: most trade journals are starved to publish something new.

Focus on your target market- shot a rifle like ad campaign directly at the folks MOST INTERESTED in what you make. Don't try a shotgun approach.

In other words, if you make western holsters advertise to Western reanactors and the SASS folks. Not in a general interest gunzine like Guns and Ammo.

The exception to the above is if you can get your product mentioned by a gun writer in an article about a specific gun- THAT works well.

I certainly don't k now it all, I know I have a LOT more to learn, but I have been blessed and this eather artisan has had a modest success so far.

Rob

Thanks for the link Rob. Just ordered my copy. Stephanie