How Do I Price?

[Jazznow]

Hi.

I know your problem. I always have difficulties to price my stuff too.

At my last fair I had a nice chat with some of the other craftspeople and they all were like 'woah just 200 eur for that bag, that is a joke isn't it?' (it was a full carved steam punk messenger bag, but with a simple construction)

And I thought 200 is at the higher end of the scale, lol.

Im glad I don't have to make a living with my craft (though I want to someday). As long as I do it as a hobby, I can take any price I want. A price that feels good to me. And when I gain some confidence I will eventually make them higher step by step.

Greetings

Jazznow

Edited September 22, 2012 by Jazznow

[cdthayer]

I've been doing some repair/alteration work on harness and straps. ... need to determine an hourly rate that incentives repair vs replacement, but don't want to work for free....What do you guy's charge??

... blue collar wage averages from $10/hr plus...I was thinking $15/hr plus material with a minimum.

Hi Reuben,

Since you’re talking about repairs and alterations instead of new fabrication, you need an hourly rate for that type of activity. With some of the things customers drag in to the shop for repairs, we seldom actually know how long the repair or alteration is going to take until it’s done. Those jobs need to be quoted by whatever time is required, instead of a finished amount. Sure, we’ll have an idea, and will quote them an estimate, but repairs/alterations are a whole different world from fabricating. You’ll be surprised by what they bring to you to repair and at how “well” (or not) that they want you to “repair” it. They won’t always want the best fix. An example could be repairing a harness or strap just to get by for a couple of days until a new one comes in to replace it, then they’ll discard the old one. Fix it as good as the customer wants it done.

We went through a process to determine our hourly rate. When my wife and I opened our little shop 6 years ago, I looked up information on the median income of the area and found it to be $10/hr. So, that was our first labor rate for about a year to get going, but “median income” usually reflects wages for a warm body only, and no buildings, tools, or equipment. We own our building, all of our equipment, and our inventory, so no pressure to meet a loan payment. That helps. We don’t have any employees either. Each year, we’ve increased our labor rate a little. We’ve added additional/better equipment along the way, and we’re becoming more experienced every year. We’re at $18/hr now, or 30 cents per minute, plus materials. No extra charge for thread. We have our rate posted on our website, so everyone pays the same rate. Now, I have done some repairs for friends in the past and just for the heck of it, let them pay me what they thought it was worth to them. I quit doing that. I started feeling guilty for being overpaid by some and shocked at how worthless my work was to others. I’m not complaining. It taught me something that I needed to know about my friends.

To help implement our prorated hourly rate, I bought some little battery-powered kitchen timers and have them at our various work stations. When we start a repair or alteration that is not on our flat rate list, we start and stop the timer as we do the job. It works real well, when we remember to push the buttons.

We tried having a $3 minimum for the first 2 or 3 years, but dropped it. It didn’t allow for those little jobs that took less than 10 minutes to have them back on their way. Simply charging the regular timed rate makes the customer feel good and is good advertising. Charging a minimum just made it seem like we were trying to gouge them at times, (as in “Three dollars!!! And it only took you 3 minutes?”). When the customer gets to thinking that since you charge $1/minute, then that must mean that your rate is $60/hour, which in this area at least, is too much. No telling how much money our $3 minimum cost us by scaring away potential return customers.

CD in Oklahoma

Edited September 23, 2012 by cdthayer

[Northmount]

I think a $5 or $10 minimum charge is quite reasonable. $2 or $3 hardly makes it worthwhile to do the bookkeeping, look after sales tax, file income tax and all those pesky time consuming things that goes with being in business. People these days think nothing of dropping $10 on things of absolutely no lasting value. The work and repairs we do have much longer term value than a bag of popcorn or a soft drink at the movies.

If you aren't going to charge for reasonable value, then skip the charge and just do it for free. No bookkeeping, no taxes ...

Put a tip jar on the counter, just like a box for pennies that people don't want and leave for someone else to make up those few cents difference to round out a nickel or dime. If you don't want the tips, give it to a charity end of each week. Let them do the accounting.

Over 20 years ago in a computer business, we decided that the only way to price the small bits and pieces was to start at $5. It didn't make sense to mark up 30% on a $1.39 item when you look at all the time and costs that go into ordering, picking up, stocking, etc. It sure made pricing a lot more simple and no one ever complained. Only high volume sales can make money on $1 items. And we are not high volume sellers.

Think about it. Remember our work has lasting value. Keep that in your mind when working and pricing your time, labor, talents, skills, etc.

CTG

[cdthayer]

Just wondering if reuben cogburn came up with a labor rate for repair work yet....

And while on the labor rate subject, I thought I’d ask if any repair work shops on here charged a premium (extra fee) for “rush jobs”?

CD in Oklahoma