Och! My Cost Factor!

[GrampaJoel]

Hi all.

I thought I had a pretty good handle on my cost to sales price ratio, but damn, I learned another lesson today.

I was commissioned to make a few show halters for Llamas with matching lead lines. The top grain Moc leather was ordered from Goligers, Watts brand buckles ordered and the other hardware was purchased locally. Now finished, and going out to the customer on Monday.

I actually sat down today and figured to the rivet, glue, thread usage, the cost of producing these special halters. I quoted a price of $35.00 per halter and lead line, and was sure with that price that I could make a few bucks and sell something at a reasonable price to friends.

OMG!! my actual cost not including electricity, wear on my tools and labor, I have double checked, and calculate to be $60.65 for each halter.

I guess I better be more careful in the future.

How about you guys? Do you ever figure it out totally what your cost is to create your products?

Joel

Edited May 4, 2012 by GrampaJoel

[Sylvia]

How about you guys? Do you ever figure it out totally what your cost is to create your products?

Joel

OUCH!! I can't say I have actually figured out the cost. But I feel for you... nothing worse than finding out you've paid someone to take your things.

[chancey77]

Well...

I learn that lesson still.

Normal Bench rate is between 30-45 per hour and materials.

Some people charge more, some charge less, but that is what I am comfortable with.

I would guess that each custom halter would be between 90-100. Just because they order more at one time does not mean they get a discount, that only means more work, and wear and tear.

I think I am pretty reasonable, and fair on folks. They want custom stuff and I give it to them; at a price I would pay if I where them.

The general rule for carpenters is time and materials +30 percent on top of those numbers combined for oversights.

Being a carpenter I like to take the same approach to leather.

Maybe some other folks will chime in, but I think most people don't like to talk about what they charge, but it is something that should be talked about a lot more.

I see people making custom guitar straps for 75 bucks when they should be charging 150+ so I guess it just boils down to what do you feel is a fair price for what you have done, and don't be afraid to show some pride in your prices!

I give away a lot of small stuff like bracelets and little stuff like that all the time because I make those and wear them until someone says "Hey that is cool I like that"...then I just say oh ya , well here it is yours:) Normally almost every single time they come back for more real stuff.

I call it leather chum...hahahaha LOL.

Anyway, maybe this helped maybe it didn't, but I thought I would just throw down the hammer and try to make a dent for ya:)

I would call them and tell them, hey after configuring out all the costs this is the price...but I am willing to split the difference. So 47 should be a fair enough upgrade for ya and still fair to them...and lesson learned. You used the best of the best materials; so it is what it is...the best! So now it is time for them to pay for the best! Whats a few bucks between friends anyway??? I am sure it won't be a big deal.

Another lesson is not to give a final cost up front only a ball park estimate and tell people it could be more, but you really don't know until it is done and during the time you are working on custom items keep in contact with the client to let them know how it is going and send pictures that way they feel like you are doing everything in your power to stick with the plan, but they are a lot more understanding when and if you have to tell them the price is double what you originally thought. IT DOES HAPPEN!

Anyway, best of luck!...to all of us:)

[Glendon]

I would have to agree with Chancey. For things you've turned out a ton of times and know your time for, you can set a final price. For custom work, you need to give yourself some wiggle room. I'm still only about a year into this work, so I set my personal hourly at $25. So straight cost of something that took up a square foot of leather, some misc. hardware, and some finishing products, and took a half hour to make would look something like this:

Leather: $6.50

Hardware: $2.00

Finishing: $0.45

Labor: $12.50

My Cost: 21.45

That's still not what I'd sell it for. I would double that for the final retail price.

x 2

Final Price: $42.90

Does that feel over priced to you? It sure did to me at first. But it's a fair price. You are doing two jobs. You are the craftsman at the bench who deserves that $25 an hour, but you are also the manager / owner making the final sales. If you were to hire someone to do one of those two jobs so you could focus on the other one, that's what you'd have to charge. If you want to be generous, knock 20% 25% off the final retail price. Your friends will still get a deal, and you'll still get value out of your work.

.

[GrampaJoel]

Well I see 96 views and only three replies. So, either I am in a pretty big group, or else we three are the only ones to pay others to take our stuff.

I will be honoring my original quote, and I will just kiss good bye $75.00 in my cost plus the labor cost and be a happy guy. But I will not make any more for the same price.

Lessons learned the hard way stick pretty good around me.

I just can't believe I missed my quote by that much.

On the good side is that I now have an actual price per piece of hardware and leather figured out for the future.

I also won't be making any off hand price quotes for my special leather creations, in the future either.

Think happy thoughts.

Joel

[Glendon]

Honestly, that's exactly what I'd probobly do. You made the deal. I'd personally never go back and say oops took longer then I thought, you owe me more. You have to stick to your word, even if you have to eat a mistake. Lesson learned. My guess would be that this customer will be back and happy to buy again, even at the higher price.

[GrampaJoel]

Glendon

Honestly, that's exactly what I'd probobly do. You made the deal. I'd personally never go back and say oops took longer then I thought, you owe me more. You have to stick to your word, even if you have to eat a mistake. Lesson learned. My guess would be that this customer will be back and happy to buy again, even at the higher price.

This customer is a prominent figure in the Llama show ring around the west coast.

I am hoping for business to be directed into my shop due to my customer being in the show ring and winning ( which they constantly do) while wearing my product.

So I guess if I take this view it makes the cost to build loss an advertising investment instead,

Good things to you all!

Joel

[BondoBobCustomSaddles]

This customer is a prominent figure in the Llama show ring around the west coast.

I am hoping for business to be directed into my shop due to my customer being in the show ring and winning ( which they constantly do) while wearing my product.

So I guess if I take this view it makes the cost to build loss an advertising investment instead,

Good things to you all!

Joel

Joel, that's the best way to look at it. You do your best to give a good quote, and then supply what you promised, even if it turned out to cost more than you figured. It's like sewing seeds for your your pumpkin patch. You get those "big" seeds, prepare the ground, fertilize, plant them, add water and nutrients and some time it really gets you what you want, sometimes you learn what you will do different next year. Lessons learned that way, always stick better. Personally I usually charge $35 / hr, plus material. That usually gets it done with a good profit. If I am not sure about how much I will have in it, because it is a first, and still have to give a good quote, I do the best I can, and stick to it, and when the customer picks it up, that's the price he/she pays, however; if it has proven out to be more than I expected, I let them know not to give out the price they paid, because future product will cost more. I usually make out good, unless I have given out a price and then find out that there has been a price increase on something (like sheepskins!) .

Anyway that's the way I do it. Bottom line, you can't give it away because you don't want charge too much. If they want top quality goods, they should pay for it. I hate when someone comes to me with a "sows ear" they bought on ebay and want me to make into a "silk purse" and complain that the cost is too much. The old saying "you get what you pay for" Is alive and well.

Bob

Bob

[GrampaJoel]

Hey everyone!

Sylvia & Chancey77 thanks for the insight. Good thoughts I'll log into the memory bank.

Bob I guess I got greedy thinking I could enter a new field and sell more stuff.

I like the design and creation stage of leather working, and a fine finished product puts a glow in my heart. I bet a lot of leather work is done that way.

I have just not been that interested in doing the paper work. My weakness.

I never really stopped to add up my total cost on anything I just gave a rounded guesstimate of what it would cost me, or looked at what someone else was charging and moved on from there. I didn't want to seem to high priced.

But from now on the paperwork will be in the upper most part of the design stages. That's for sure.

From this point out I will just say let me figure it up and I'll give you a price, or else I will just create what I want and see if anyone has a need for it at my totally figured and re-figured out prices.

Joel

[rosiart]

Joel,

I think those of us who do this as a hobby tend to underestimate the costs involved. In part because we normally buy things when they are on sale, to have a stash,rather than for a specific project. So the price isn't as tied in our mind to the specific article. I think the other part is, we REALLY don't want to know how much we have spent on our hobby, or we don't wan't someone else to know so we tend to deflate the cost a little lol . Many of us just have a hard time charging what our products are worth. That old confidence issue makes us undervalue our time. I do feel you did the right thing though, honouring the quoted price. Fortunately it was only for a few items and hopefully the advertising value will greatly exceed the loss. And your customer is likely very happy, most people like to feel that they got the bargain of the century.

Rosemary

Edited May 6, 2012 by rosiart