Och! My Cost Factor!

[GrampaJoel]

Wise words of wisdom. Thank you Rosemary. I agree completely.

Well for me I don't have to make a lot of money with my leather products, as I am retired, and doing ok.

All things being equal though, I do prefer to break even with my leather work costs and making a few dollars extra is very nice also.

But I am striving more for the art aspect of the leather work and not so much the dollar / production factor.

Don't get me wrong, I do prefer to make money. Plus I don't have an unlimited bank account.

The art and skills are what I am truly after. I love seeing something that is a one off come out of my shop.

hence my surprise when I discovered just how much I had underestimated the cost of these halters.

Oh well, Live and learn.

It's a nice day here in SOCAL. I spent yesterday at a local horse event and my world is right again.

Joel

[bruce johnson]

There are a few things I have bought that have really paid me back. One was a marriage license. The other was Bob Brenner's book - "How To Establish Price For The Saddlemaker or Leatherworker". You don't have to get hung up on the actual numbers he uses in the examples, just learn the principles. These aren't probably anything new for making anything, but his application of them to the leather business makes it more "real". After I read Bob's book I made up several worksheets to determine costs of materials and pricing that. Then allow for waste and incidentals used but not priced out like rivets, thread, finish, etc. I did time studies for my common procedurres - average time spent for a measurable unit like time cutting a piece, prepping, tooling like basket stamping an area vs. time, tooling a common floral or oak corner, length vs. time for handsewing or machine sewing, finishing based on sq/ft worked best, etc. I added the time and that is my time estimate. I still check myself every so often now and compare actual vs. the estimated time. I can add the materials and time estimate and be pretty close for something I haven't done before. Bob's book is usually listed for sale in the classifieds of the LCSJ.

[Sylvia]

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.

I agree whole-heartedly. A person's word is their bond....

That said I would probably ask the person that bought them to let others know that the normal price is $80 (or what ever) a set.

[Cyberthrasher]

All good advice. The only thing I can add that I do, which seems to help the leery buyer, is give a range estimate upfront. The size of the range will vary based on the item, but at least then they know up front how much they could expect. So, taking a Kindle cover for example. I told my wife that when people ask about it she should tell them it would be between $300 and $400 for a similar style, but a simple sleeve the same size would probably only run them between $250 and $350 depending on the artwork and coloring requirements. My "base" rate is about $20 p/h right now because I'm still pretty new to it and I feel I'm pretty far from perfection. But, I'll also adjust as needed, so the ranged estimate gives me about 5 hours to play with just in case I get really hung up on something. As I speed up and get a lot of the physical design stuff all figured out then I could still charge the same total price, but basically give myself a raise. All the more motivation to put out better work quicker and quicker.

So, using the kindle cover as an example, there's plenty of room for all the odds and ends that we don't usually add up when pricing work. Estimated amounts since I did it for my wife.

1 sq/ft of 8/9 oz = $6

1 sq/ft of 1/2 oz liner = $3?

Dye = $1 (if that)

5 yd 1/8 lace = $5

Total material - $15

The total time was around 20 hours or so. That leaves me lots of room to work on my speed to build a better profit while still charging similar prices to what other people charge.

[GrampaJoel]

Bruce - Thanks for the Bob Brenner heads-up... You always have the inside tips. I'll look the book up.

Cyberthrasher - I agree an adjustable estimate range is the way to go. Good advice.

Thanks all

Joel

Up date.

The customer received the halters today and loved them. They said they had already lined up other customers that have interest in having me build for them..

Bruce - I found that the Bob Brenner book is available through PROLEPTIC also.

Thanks again everyone.

Edited May 8, 2012 by GrampaJoel

[mulefool]

I still struggle with this on custom work after nearly 30 years in business. Although usually my intuition is good on some things, when it comes to pricing it's not. I almost always underestimate the time it will take me to do a custom job. Like you I feel if I do give an estimate I need to stick to it. One way to handle it is give a preliminary estimate and say, "this is off the top of my head, let me take some time to figure out the details and I will call you back with a more accurate estimate." The other thing is to give a range, then if you can hit the bottom end of the range the customer is really happy. I've actually found if I think of a price off the top of my head and then double it, it comes out about right. I hate it though when I give an estimate and the customer says, "Oh, that's way less than I thought it would be".............Then I know I probably estimated low.

Just one little comment about not needing to make money if this is a hobby. I don't think the value of the work should be based on how much you NEED it. the work is a skill that we should all be proud of and that we deserve to make a decent wage for. It also makes it more difficult for those of us who DO need to make a living at it to price our work at a fair price. Chris

[BIGGUNDOCTOR]

This subject was covered in my blacksmithing forum Iforgeiron.com . Time, and materials are easy to figure, what isn't is the perceived value. This is the value that the customer feels it is worth, and really comes into play with artistic items. Then there is the Walmart affect which sounds like " Why is that ( hand thrown custom glazed ) ceramic mug $30? I can get one at Walmart for 99 cents." Some people just don't realize, or appreciate craftsmanship. Personally I hate time and material quotes, and preferred giving a set price with a possible 10% overrun when I had my machine shop. From a buyer's point I also don't like them, as I like to know what my final cost is for budgeting. This will also help to avoid starting a custom item that the customer may say later is now too expensive for them. Now what do you do? Set a price, stick to it. If you missed it, learn from it, and move on. BTW I NEVER charged enough when I had my shop. Example; when I worked at the Jelly Belly Candy Company as a mechanic I was asked by the purchasing agent how much I would have charged to make an item they just got in. I looked at the simple aluminum plate, and asked "how many?" 20. "OK after setting up it would take less than 1 hour each to make with minimal material cost, I would have a hard time telling you $100,and it probably would have been closer to $60 ea." Then he tells me that they paid $300 each, and it was less than the OEM wanted. So I was willing to quote $1,200 on a job that someone else got paid $6,000. I charged for my time , and materials. Someone else got the perceived value on top of that.

Another method is described in one of my gunsmith kinks book. Say a guy wants a recoil pad installed. Watch his face and start by saying that will be $25 for the pad, no reaction, $10 for disassembly, and reassembly, no reaction, $40 for refinishing the stock, see a twitch - stop there, as you have reached his pain level for price. Some will be lower, some will be higher. It is the sliding scale of pricing and perceived value. Some folks are leery if you don't charge enough, as they believe $$$$ = quality.

I agree that you need to let your customer know that their price is not what you will be charging others, so please do not quote that to others who are interested in getting one made.

[Leather Girl]

As I pay more in Canada for leather etc., along with if I have to ship it in. If I ship it in it is the cost of goods, shipping, what I am hit for gst and customs along with brokerage. I charge $30. per hour on top of it for my labour and tooling, I like to leave a little wiggle room and people always whine I am too expensive. However they will go to the GAP and buy cheap crappy leather made in some sweat shop and pay twice the price. Then it will either fall apart or crack and they just wasted $600. on a crap vest.

Randi-Lee