How To Put A Price On It?

[humperdingle]

I'm well away from this stage, but...

Just wondering if the pro/semi pro folks could answer this...

So you've been asked to do some work - Say a simple wet-moulded document bag - no embellishments, no artwork or carving etc.

How do you go about pricing the piece?

Materials used, time spent... What's the thought process behind giving a price?

[Cyberthrasher]

Most of my stuff is tooled, but even the untooled stuff has the same price. I charge a flat $20 p/h. I know that I'm always paid for the time I put into it and it drives me to continuously improve my speed without sacrificing quality. But, by doing that I also have to know "about" how long it might take me in order to give people an estimate. If it's something you make all the time, you'll have a good idea. There are some wallets I make that I figured out how long it takes me to do without tooling and use that as a base price.

My suggestion for you is to start keeping track of your time now. For starters, you'll have a good idea of what processes take you the longest and where you think you might be able to speed some things up. But, on top of that, you'll have a good baseline for when you do start selling things. I use an app on my phone for time-tracking called "FTS Timesheet". It's pretty cool and keeps track of individual projects as well as tasks within that project. So I can see how long it takes me to dye or tool on average and then go look it up later on the workload reports. You can also put in the hourly/daily rate for a project and it will track your exact revenue both project and task wide.

[Bob Blea]

Good morning,

Your time is going to be your biggest investment in your work. There is nothing fast about leather crafting, especially when you are carving. Cyberthrasher's advice about keeping track of your time is perfect, but you do need to look at the cost of your materials. It is important to know how much the materials that are going into your project cost. A small, simple wet molded case might not cost much in materials but start adding fancy hardware like buckles and conchos and the cost can go up quickly. For me, I lace the edges of all my notebooks, and I found out my largest material expense is in the lace itself. It's also one of my biggest time expenses because I'm not that fast at lacing! That's where Cyberthrasher's recommendation about looking at the time it takes to do things helps: I'm trying to get faster at my lacing to cut down on that itme.

Another thing you will need to consider is your market. If you sell your items at the local farmer's market you will not be able to list the same price you would if you were selling at Nieman Marcus. They each have different customers that have different ideas about what they are willing to pay. There is also a different perception about what your work is worth at each venue, like it or not. If you end up selling to people in your area, you will want to look for comparable items that are sold locally, judge how your quality compares to theirs, decide if there is anything you offer they don't, and then price appropriately. One thing to keep in mind though: Unless there are others in your area doing similar custom leatherwork, you are offering something that goes above and beyond what anyone else is offering. You can make something specific to what your customer is looking for, taylored to their wants and needs. There should always be a premium for that kind of customer specific work.

Hope this helps. Unfortunately there are not any simple answers to this question.

Bob

[humperdingle]

Hi, thanks for the in-depth answers. The question was relating more to how others already charge, not how I might do the same.

Like I say, i'm a looong way off ever charging for anything I make, if ever.

I just like to see how people price items according to what they make and their target markets.

Cheers again.

[Cyberthrasher]

Like I say, i'm a looong way off ever charging for anything I make, if ever.

I just like to see how people price items according to what they make and their target markets.

That's why I chose the hourly rate. I find that it covers everything pretty well and most of the serious customers are willing to pay it. It all works out to the standard price you'll find for custom leather work. My wallets usually end up about $160, card wallets about $60 - $80, stamped belts $80, tooled guitar straps $200ish, etc.... As I get faster overall, I'll be able to increase my hourly rate while still keeping the average prices listed here relatively close. Now that I think about it, that really does nothing for my income except give me more time to take more orders

[dragonworks]

would you charge double the time on a crazy carved and stamped guitar strap, with insane detail kind of stuff?

[billymac814]

I try to figure materials plus time spent. If its an item I need to design first that design time needs to be figured in as well. If its one of my standard items I "subsidize" the design time.

I have more overhead than someone working out of their home so my hourly charge may be higher but the minimum I shoot for is 60/hr but 80 is where I like to be. Any less and its not worth doing, I do occasionally goof up and work for less but other jobs balance it out. I end up turning away a lot of jobs that would take too long and cost the customer a fortune. I'm really starting to head towards the more standard items or semi-custom items rather than full out custom jobs as I find its easier to turn a profit that way. A lot of custom jobs get way underpriced it seems.

We can't work for free though and a lot of people think we should. I get quite a few people in my shop thinking if they can buy it factory made for 100.00 that I should somehow be able to make it cheaper?!?!? I do not understand this logic, they obviously don't understand how mass production works.

[Cyberthrasher]

would you charge double the time on a crazy carved and stamped guitar strap, with insane detail kind of stuff?

Nope. I charge flat rate of $20 p/h, so if the amount of detail they want takes 10 hours, then it's $200, if it takes 40 hours to get the detail and intricacies right, then it will cost them $800. It's all based on an estimate. I tell them "we're looking at around $240" and then get a 50% down payment to start the work. I'll usually ask people if they have a budget to work with before I start designing their work so that i can design the artwork to fit their ability to pay. This is where KNOWING how long things take you is important. Most of my straps end up in the $200 range and I make sure people know that up front, with an addendum that it could be more or less depending on the artwork. Like Billy, there have been times where I've messed up further into the project than I would like and ended up re-working the entire thing from the beginning. It's amazing how much faster you work when you're redoing a project for free

Edited January 29, 2013 by Cyberthrasher

[dragonworks]

billymac and cyberthrasher you both have answered my question very well thank you for all you helped out with. happy leathering.

Edited January 29, 2013 by dragonworks

[billymac814]

Like when you tool a belt upside down? You only do that once, at least now I have a tooled belt example piece for the shop.

Nope. I charge flat rate of $20 p/h, so if the amount of detail they want takes 10 hours, then it's $200, if it takes 40 hours to get the detail and intricacies right, then it will cost them $800. It's all based on an estimate. I tell them "we're looking at around $240" and then get a 50% down payment to start the work. I'll usually ask people if they have a budget to work with before I start designing their work so that i can design the artwork to fit their ability to pay. This is where KNOWING how long things take you is important. Most of my straps end up in the $200 range and I make sure people know that up front, with an addendum that it could be more or less depending on the artwork. Like Billy, there have been times where I've messed up further into the project than I would like and ended up re-working the entire thing from the beginning. It's amazing how much faster you work when you're redoing a project for free

[Cyberthrasher]

Like when you tool a belt upside down? You only do that once, at least now I have a tooled belt example piece for the shop.

I came close to doing that once, but the customer and I both caught it in the design phase. This is the main one I'm talking about. It was Friday night and I had told the customer that I'd be sending it out on Monday, with the only thing left to do being the last coat of finish. It got screwed up and I couldn't fix it, so I spent all weekend re-working a 15 hour strap and getting it done in 11. I ended up getting it out on Wednesday - after I did some sanding and scuffing on the original to make a "road worn" strap out of it to send him for free. I figured it was a highly personalized design and he was a good customer (NO BUDGET!! ). He actually gave me an extra $60 for the rush re-work that wasn't really required in his mind.

[billymac814]

Good call, at least you got a little extra out of it. I don't know how I ended up doing mine upside down, I just started it without thinking. It was for a woman too so for all I know it was probably actually the right way. I didn't even realize it until I was all finished and putting the buckle on and I thought "Something's wrong.........oh sh@&!). So now I have a Patti belt with some floral designs on it. Its good to have though as I'm able to show people the difference between a tooled letter and a stamped letter.

[Cyberthrasher]

That picture was of both of the "finished" products that I sent him - after I had sanded down the original. About a month later he emailed me and said that his friends all liked that one the best. First thing I thought was "Figures". It was my first time using ClearLac. It went on fine on my test pieces but ended up getting too thick in spots on the final piece and started looking like it was cracking and just bad. All the little stuff that goes into our pricing vs. the other stuff that we give away

[prc77ro]

I try to figure materials plus time spent. If its an item I need to design first that design time needs to be figured in as well. If its one of my standard items I "subsidize" the design time.

I have more overhead than someone working out of their home so my hourly charge may be higher but the minimum I shoot for is 60/hr but 80 is where I like to be. Any less and its not worth doing, I do occasionally goof up and work for less but other jobs balance it out. I end up turning away a lot of jobs that would take too long and cost the customer a fortune. I'm really starting to head towards the more standard items or semi-custom items rather than full out custom jobs as I find its easier to turn a profit that way. A lot of custom jobs get way underpriced it seems.

We can't work for free though and a lot of people think we should. I get quite a few people in my shop thinking if they can buy it factory made for 100.00 that I should somehow be able to make it cheaper?!?!? I do not understand this logic, they obviously don't understand how mass production works.

Your absolutly right! Alot of people but not all, see leather products in the stores and expect you to bang it out in minimal time for the same price. They don't care if your drawing the design from scratch, cutting it from a hide, carving, stamping, or even hand stitching(sometimes they say"why don't you get a sewing machine"). But Cyberthrasher is right you have to know or at least be in the ball park with how long the project will take+ materials. But lets say your going to make a holster that anyone could get from the many online websites, but your going to hand stitch vs machine sew do you charge more? or just base it on hrs worked.

[humperdingle]

Thanks for resurrecting the thread

Well, i've sold a few items, but haven't really made a profit when time is taken into consideration. I sold a rifle bolt holder, and the same guy came back to me wanting a shorter version, so that was my first repeat sale (must have been happy enough with the first one!)

Mind you, he got a hand-made, custom size piece, in thick leather for less than the price of a factory-made, machine stitched item.

Materials were negligible, as I made them largely from offcuts and snaps/dye were pennies, so i suppose I might have managed minimum wage from them!

But at this point, it's still all about the learning process.

[Cyberthrasher]

Well, i've sold a few items, but haven't really made a profit when time is taken into consideration.

After about a year and a half, I still haven't made a profit

But, I know my problem. I make sure I have enough stock on hand to get the orders done as they come in, as well as making sure I have the tools to do what I need. I chalk it up to the fact that I'm still in the "startup" phase of building supplies and stuff. I think now I'm getting to the point where I may be able to start saying it's profitable.

[billymac814]

The hand vs machine stitching as far as pricing goes is sort of hard to figure. When I was hand stitching I really just charged my price, I don't think it was higher because I hand stitched, it was just what it was. When I got a sewing machine I certainly didn't lower my prices but I took down the "hand sewn" from my website. To be honest no one ever missed it. If someone requested it to be handsewn specifically I would definitely charge more for that now.

Hourly really only works on custom stuff and even then its tough because people will hold you to a quote and they like to know what its going to cost ahead of time, it can be used as a guideline though to determine the price. You can't charge someone more because you were working slow that day or have inefficient ways of doing things AND you don't want to take a pay cut when you upgrade machinery and tools or streamline your workflow. I have an hourly rate I'd like to achieve on average, some jobs I end up losing a little and others I make out better but I never except in some special cases charge by the hour. My main reason for that is because I get paid ahead of time with very few exceptions. That I've learned the hard way.

[JustKate]

Bob touched on this a little, but I think it bears some additional consideration: the market. Or more a question of which market. At the very least, you have to cover your time and materials, but somewhere, there is a market that is willing to compensate you much more than that. It's called profit, and there's nothing wrong with it, because it involves finding and selling your work to someone who genuinely values it.

What the item is worth to you (in terms of materials and labor) is different from what it is worth to a potential buyer (in terms of their needs and wants). If you need $90 out of an item to cover your materials and labor, but you stumble onto a buyer in whose eyes your heirloom-quality handmade work is worth $240, which will you charge them? Before you find that market, you'll probably find a lot more people who value your work much less than that $90. Don't even give them the time of day, they can't tell you what your work is worth to everyone, and they are clearly not your buyer.

Of course, the problem with that question is, how would you know? A buyer isn't going to say, "Gee that $90 is too low, I think I'll give you $240 for it." One way to at least partially answer that question is, you have to learn to understand the value of your work from the perspective of a buyer, focus on what they will put value in. There are the more obvious things, such as durability, artistry, the look, smell, and feel of real leather. Aside from that, what about emotional benefits? How would they feel showing up at a meeting carrying a finely crafted leather briefcase? Or at a party wearing a genuine leather wrist cuff instead of the vinyl ones that everyone else is wearing? Or taking people out to a restaurant and taking their credit card out from a beautifully-made leather wallet? Compare your own work to a similar mass-produced item. What are the differences that are really going to matter to someone who owns it?

And by the way, It's not inherently better just because it's hand made and it took you a lot of time to make it. Sometimes being hand made makes it inferior, depending on the skill of the person who made it! So be brutally honest with yourself. Is it really better, and if it isn't, what do you need to do to make it so? A buyer isn't going to give a rip how much time you put into it, they want to know whether it's worth it to them to pay that much for something. Really look at it and ask yourself how it is really better than something mass-produced, from the perspective of someone who would own it.

Another part of the puzzle is psychologically going beyond the question of, "Will it sell?" You can sell anything if the price is right. If your $90 belt is getting snatched up by everyone who lays eyes on them, you're probably pricing them too low. The real question is, "Where is the best market where it will not just sell, but sell at a profit?" Where is that buyer to whom my work will be of great value? And to find that buyer, you will talk to quite a few wannabes who will discredit your work and tell you how ridiculous the price is in an attempt to negotiate a lower price they would rather pay for it. The irony of that is, they actually want it, but they just can't afford it. Don't let them make that your problem. Keep looking for that worthy buyer. It's not a question of whether it will sell, it's a question of where it will sell at a profit.

[Cyberthrasher]

I can't add anymore to that.

[billymac814]

That was very well put but here's my question in regards to that. Do you price an item higher because you feel the customer is more likely to pay a higher price? I think I've probably done that unconsciously a little but usually my price is my price. I will say that sometimes I think a customer may not be someone who would spend a lot on something or that they couldnt afford it and they are always the ones who seem to bust out their wallet.

[JustKate]

The prices I set on my work do not fluctuate from one prospect to another. I'm not a brick and mortar, I sell online, so I don't get to observe customers who browse my "shop". I set the price based on my cost, plus a certain amount of profit I hope to make on it. If it doesn't sell right away, I don't lower the price or put it "on sale", I just look for other places to offer it for sale that I think may be attracting more of the kind of buyer I'm looking for. But if it sells very quickly, that's an indication to raise the price.

One interesting thing I'll also mention is, on a couple of occasions, I've gotten flurries of sales after raising my prices. What I gather from that is, it is possible to price something too low.

[Cyberthrasher]

I'm lucky enough to have found my market on a Blues Forum that I was already an avid participator in. I'd say 90% of my sales come from those guys. I do get a lot of inquiries from some of the members there who don't realize how much a strap costs and can't afford it. That's one thing that has led me to push for "budget" models that are still cool enough to leave my shop, but that the older guys on a fixed income can still afford. Some of the other ones just need an argument for their wives, such as "why buy a $1000 guitar and trust a $20 piece of fabric to keep it off the ground?"

The key is definitely to find your market. I wouldn't expect to be able to sell high end custom guitar straps to anybody with a guitar. I had to find a market full of people who understand (and fiend for) the value of a custom made piece of music gear.

[billymac814]

I have found the same thing with prices. A lot of people equate quality to price so if something's too cheap they think there's a reason its too cheap. The same thing goes with turnaround times I think. If you have a fairly long( but reasonable) wait time they realize that your work is sought after by a lot of other people as well.

On the other hand there's the people who want it cheap and fast, they can go pound sand. I do have a rush service so I don't mind those who want it quick and are willing to pay for it.

I have a brick and motor store but still about 90% or more of what I make is sold online, my local customers are a bit on the cheap side but I can get their money in other ways like retail items, leather care products, etc and I do a lot of repair work for them as well. That's really the beauty of the Internet, nobody with an Internet connection should feel limited by their local market.

The prices I set on my work do not fluctuate from one prospect to another. I'm not a brick and mortar, I sell online, so I don't get to observe customers who browse my "shop". I set the price based on my cost, plus a certain amount of profit I hope to make on it. If it doesn't sell right away, I don't lower the price or put it "on sale", I just look for other places to offer it for sale that I think may be attracting more of the kind of buyer I'm looking for. But if it sells very quickly, that's an indication to raise the price.

One interesting thing I'll also mention is, on a couple of occasions, I've gotten flurries of sales after raising my prices. What I gather from that is, it is possible to price something too low.

[Cyberthrasher]

nobody with an Internet connection should feel limited by their local market.

Another very good point. I think I've sold a total of 3 things locally - 2 of which were to a close friend. The internet is what allows us to find the market.