Questions on Pricing

[Big Papa Leather]

I know this is all subjective and up to descisions each crafter should make, but I have looked on Etsy and other craft type sites and found pricing from the ridiculously low to the obscenely high. I am looking at your staple leather goods, belts, wallets, small handbags etc.

On the lower end if these were made from kits the wallets are being sold for cost in some instances.

On the other end, whoa..... 8X markup.

Just as some of the other threads mentioned 2X material cost is understandable.

Then an acceptable labor rate correct?

Now I'm not knocking anyone who is commanding primo $$$ for thier work. If you can get it more power to ya I say.

Just looking to find a happy medium for me if I decide to sell my stuff. Right now I'd have a hard time giving it away.

Just a little insight would be appreciated.

PS if you want you can contact me off list on this subject....

scissormedic at gmail dot com.

Allen

[tashabear]

  scissormedic said:

I know this is all subjective and up to descisions each crafter should make, but I have looked on Etsy and other craft type sites and found pricing from the ridiculously low to the obscenely high. I am looking at your staple leather goods, belts, wallets, small handbags etc.

On the lower end if these were made from kits the wallets are being sold for cost in some instances.

On the other end, whoa..... 8X markup.

Don't go by prices on Etsy. You're finding a perfect storm of people who have an overinflated sense of their own skill combined with people who don't know what the hell they're looking at. Do a search for "handspun yarn" and see what 25 yards of unusable "art yarn" goes for. It's enough to make me want to pull out my spinning wheel, get a couple pounds of handpainted roving, spin it as badly as I can, and sell it for $75/50 yards -- I could probably pay the mortgage.

Right now I'm covering my materials and paying myself ~$10-12 an hour. I'm just starting out, though, so those rates will go up as I gain experience. I call them my "Guinea Pig" rates.

[broddhisatva]

Pricing is a tough one.

First off, Tasha may be right about some of the people on Etsy. I've seriously seen $20 Tandy kit projects on there marked at 5x. Then again, I've also found a lot of leather websites where they take the kits, use the tooling patterns provided, and price the exact same way, so I don't think Etsy is to blame. I have found some of our board members on Etsy; some of their prices are literally through the roof, but most tend to at least try to keep it reasonable.

I think "per hour" pricing is very much the wrong way to go, though. For one thing, it's hard as hell for me to keep track of how much time I spend on a project : how do you figure in drying time after tooling or staining, how do you figure in the time developing your artwork, or developing your designs? And what exactly is your customer paying for, a product or your play time? As you develop your own designs, material pricing also kinda becomes irrelevant, I think.

What it really comes down to, in the end, is what the market will bear. I find that I get the blink-blink from a lot of folks when I tell them what I get for my work (as in, they stop speaking entirely while they process what I said, and stand there blinking for a few), but there are honestly a large proportion of my customers who think that for custom artwork I'm totally undercharging. Helping to educate your clientele will be a huge help in this regard. If you can show them the qualitative difference between your handiwork and that of mass producers/lesser talents your value goes up instantly. Starbucks was genius at this kind of thing, getting people who were used to paying 69 cents for coffee to pay 5 bucks.

[tonyc1]

What is Etsy?

Tony.

[Daggrim]

I also use $10-$12 an hour for calculating time/materials cost, altho none of that ever goes into my pocket. I'm going to increase my rates, but I'm just getting past the beginning stage. I sell from my website, but do the majority of my business at Renaissance Faires.

I have worked my pricing calculations over 4 years' experience. At the end of a weekend, I can figure out the cost of my time and materials on the items I sold. It usually comes out very close to what my other expenses are...merchant fee, gas, food, camping. So, I get my selling price by tripleing the cost of time and materials. So, about a third of my take is profit. Of course, once I make my expenses for the weekend, then two thirds of my take will be profit.

My prices are on the low to medium side. But my reputation is growing, and so will my prices, next season.

Anyway, this little shorthand way of figuring my prices is working well for me. It's not what the fiscally savy use, but then , mos tof them don't do craftwork, either. In the beginning, y'gotta do what the market will bear.

Daggrim

[broddhisatva]

  tonyc1 said:

<br />What is Etsy?<br /><br />Tony.<br />

<br /><br /><br />

Etsy is an online marketplace specifically for handcrafted items.

www.etsy.com

[tonyc1]

  broddhisatva said:

<br /><br /><br />

Etsy is an online marketplace specifically for handcrafted items.

www.etsy.com

Thank you.

[tashabear]

  broddhisatva said:

Pricing is a tough one.

First off, Tasha may be right about some of the people on Etsy. I've seriously seen $20 Tandy kit projects on there marked at 5x. Then again, I've also found a lot of leather websites where they take the kits, use the tooling patterns provided, and price the exact same way, so I don't think Etsy is to blame. I have found some of our board members on Etsy; some of their prices are literally through the roof, but most tend to at least try to keep it reasonable.

It's like that everywhere, true, but Etsy seems to be a hotspot for that. Leatherwork is just the latest in a long line of saleable crafts I've learned, but the first I've ever tried to sell, so I'm still learning what my work is worth in this arena. I know what my work is worth in knitting and spinning, and truthfully, I don't think there are too many people who can afford me.

  broddhisatva said:

I think "per hour" pricing is very much the wrong way to go, though. For one thing, it's hard as hell for me to keep track of how much time I spend on a project : how do you figure in drying time after tooling or staining, how do you figure in the time developing your artwork, or developing your designs? And what exactly is your customer paying for, a product or your play time? As you develop your own designs, material pricing also kinda becomes irrelevant, I think.

I wouldn't charge for drying time, because I'm not doing anything to make the project progress; I'm just letting it sit. I can use the time that project is sitting to work on something else. Basically what you can do, if you want to get anal about it, is create line items for each activity, and then dole out the time you spend working to the line items in no less than 15 minute increments. (This is what we did at a construction company I worked for, and sometimes the guys would get passive aggressive with me and do their time cards in 5 minute increments. They didn't get paid on time when they pulled that shit.) Otherwise, I would recommend a stopwatch and a slip of paper if you're concerned but not crazy, or just your best guess if you're laissez faire about it.

There are ways I might charge for artwork, but as I'm just getting started and will likely rely heavily on Dover Books, I don't need to develop those yet. I also need to keep myself from getting caught up in minutiae, because I could seriously spend all my time organizing and categorizing stuff and not working.

[Bree]

  scissormedic said:

I know this is all subjective and up to descisions each crafter should make, but I have looked on Etsy and other craft type sites and found pricing from the ridiculously low to the obscenely high. I am looking at your staple leather goods, belts, wallets, small handbags etc.

On the lower end if these were made from kits the wallets are being sold for cost in some instances.

On the other end, whoa..... 8X markup.

Just as some of the other threads mentioned 2X material cost is understandable.

Then an acceptable labor rate correct?

Now I'm not knocking anyone who is commanding primo $$$ for thier work. If you can get it more power to ya I say.

Just looking to find a happy medium for me if I decide to sell my stuff. Right now I'd have a hard time giving it away.

Just a little insight would be appreciated.

PS if you want you can contact me off list on this subject....

scissormedic at gmail dot com.

Allen

There is no such thing as "obscenely high". The object of business is to make money. You can always give your work away... but then you aren't in business... you are in philanthropy.

You charge as much as you can get away with consistent with the volume needed to meet your financial commitments and goals. If you can sell your products for 8X... great! If you can sell your product for 80X that's even better. 800X is a big winner if you can get it.

Customers will always try to get the lowest price no matter what the consequences are to you as a seller. You will do the opposite and try to get the highest price... without regard to the consequences to the customer. When the smoke clears, the conflict of interests between buyer and seller... the market dialectic... will result in your collecting close to the market rate for similar goods. That is the way it works.

So aim high but don't be surprised if you have to settle for less. But if you never aim high you will never hit the big win... only mediocrity of profits. If you enter business with a customer's mentality and not a businessman's mentality, you are very likely to fail within the first three to five years. Never ever feel sorry or guilty for making a profit!! That is a suicidal behavior pattern as far as business is concerned.

[Windy]

  Bree said:

There is no such thing as "obscenely high". The object of business is to make money. You can always give your work away... but then you aren't in business... you are in philanthropy.

You charge as much as you can get away with consistent with the volume needed to meet your financial commitments and goals. If you can sell your products for 8X... great! If you can sell your product for 80X that's even better. 800X is a big winner if you can get it.

Customers will always try to get the lowest price no matter what the consequences are to you as a seller. You will do the opposite and try to get the highest price... without regard to the consequences to the customer. When the smoke clears, the conflict of interests between buyer and seller... the market dialectic... will result in your collecting close to the market rate for similar goods. That is the way it works.

So aim high but don't be surprised if you have to settle for less. But if you never aim high you will never hit the big win... only mediocrity of profits. If you enter business with a customer's mentality and not a businessman's mentality, you are very likely to fail within the first three to five years. Never ever feel sorry or guilty for making a profit!! That is a suicidal behavior pattern as far as business is concerned.

Well put. I have told many an artist " you can not get 1000 dollars for it if you only ask a 100 dollars".

WINDY

[broddhisatva]

  tashabear said:

Basically what you can do, if you want to get anal about it, is create line items for each activity, and then dole out the time you spend working to the line items in no less than 15 minute increments.

My point here, really, was that most of us don't, I think, realistically clock how much time goes into our projects. It was not my intention to say that anyone should get out a stopwatch.

Really.

*insert eyeroll here*

Bree, thank you. Kind of what I was trying to say, but perhaps better worded. I have items that price out at 8-10x material, and I have no problem charging that, and most of my clients have no problem paying it. Works for me. I think any straight formula for arriving at a price is flawed, was my main point.

[broddhisatva]

Sorry for going two in a row here, but I feel I should clarify something.

I feel like what we're talking about here is not 'manufacturing' where you can take a straight formula like (X times material) plus (Y times hours spent) and come out with a price. What we're talking about here is selling our art, and art has entirely different rules. Yes, the quality of your craftsmanship will bear a direct relation on what your art will be able to fetch at market, but that shouldn't be the sole factor. Not everyone appreciates art, not everyone knows how to recognize quality craftsmanship ... hell, most people can't tell the difference between hand-tooling and die pressing. As I said earlier, you may have to invest a little energy in educating your customer base. You're not just selling a bundle of materials that have been manipulated into some other shape, you're selling your vision and your aesthetic as well as your technique and time.

Paintings aren't priced by how much the canvas and paint cost, or by how long it took to paint them. If they were, the painter wouldn't be an artist at all but just another person working a crappy 9 to 5 job, and that seems to take all the fun out of it for me.

Sure, my customer can go to Wilson's leather and get a very nice cookie cutter wallet for cheaper than they'd get one from me, or they could go to Mexico, or to a truck stop .... but then what they have is a cookie cutter Mexican trucker wallet, not my art, not my craftsmanship.

Dig?

[tashabear]

  broddhisatva said:

My point here, really, was that most of us don't, I think, realistically clock how much time goes into our projects. It was not my intention to say that anyone should get out a stopwatch.

Really.

*insert eyeroll here*

Bree, thank you. Kind of what I was trying to say, but perhaps better worded. I have items that price out at 8-10x material, and I have no problem charging that, and most of my clients have no problem paying it. Works for me. I think any straight formula for arriving at a price is flawed, was my main point.

You underestimate my ability to overcomplicate my own life. ;-)

[broddhisatva]

  tashabear said:

You underestimate my ability to overcomplicate my own life. ;-)

ROFL!

[Bree]

Sell your stuff in the Robb Report or other rich kid mags and there is no limit to how much you can charge! Heck I got a catalog from JL Powell with a belt for $15,000. Here it is on their website for only $4,375... shameless opportunists tripling the price in their printed catalog versus the more competitive website.

Make hay while the sun is shining... as they say!!

[stitch45]

Well I guess I'm Anal ... over the past 23 years I've timed "Hands on" time for just about everything I could make, My business is a full time LLC so I have to be Anal, it pays to be that way, Materials, Labor, Overhead, Profit Margin ... Over the years I've found that Labor usually works out to about 35% of Gross sales, so to make things simple I pay myself that 35% and the rest goes into the business. It works well for me, I make a living wage and the business turns a profit.

[rcsaddles]

I have the problem of undercharging. I used to work for a guy, in another line of work, that told me if you don't add 40% to the price of your material, you are not making money.

I do agree that you need to charge what the market will bear. Where I live, no one will pay the price custom work is worth. Go to Bozman, MT and the tourists and locals will pay the price. Does not seem to make sense but that is the way it works.

Sad but true, there is not a set formula to figure prices on anything these days. Look at the gas stations. Why do the supply trucks fill at the same refinery and the stations next door to each other charge a different price?

I think many people don't sell items because we don't price them high enough and people wonder what is wrong with it. If you take something like braiding, should you charge an hourly fee? If the demand is high, you should be able to charge just like a mechanic and make $40 to $60 an hour for the labor. We have to have a building, tools and overhead. I just think we need to look at other "skilled" jobs and consider all the factors. Something I am trying not to do is apologize for my prices.

I got a bill the other day and there was a fuel surcharge on it and the delicery was only 1 .5 miles one way. Do we add for shipping on the leather we have to order in to make a product? Also if we have to drive to the post office or shipping center, do you add your time and fuel expense to the price?

I know this got a little scattered but I am trying to get folks thinking about every aspect of the business and what other business use to figure their cost.

Joe

[Johanna]

Jon always said you have quoted the right price when the customer looks pained, but reaches for his wallet.

That said, you have to figure your time into your work. You are limited to what you can produce with your own two hands. If your time isn't worth enough to ask enough for fair pricing, you're going to be out of business and getting a day job. Anyone who is trying to make a living from leather has got to figure out their bills, and charge enough per hour to cover them. The alternative is "You want fries with that?" and a uniform. (shudder)

Johanna

[Bree]

  rcsaddles said:

I have the problem of undercharging. I used to work for a guy, in another line of work, that told me if you don't add 40% to the price of your material, you are not making money.

I do agree that you need to charge what the market will bear. Where I live, no one will pay the price custom work is worth. Go to Bozman, MT and the tourists and locals will pay the price. Does not seem to make sense but that is the way it works.

Sad but true, there is not a set formula to figure prices on anything these days. Look at the gas stations. Why do the supply trucks fill at the same refinery and the stations next door to each other charge a different price?

I think many people don't sell items because we don't price them high enough and people wonder what is wrong with it. If you take something like braiding, should you charge an hourly fee? If the demand is high, you should be able to charge just like a mechanic and make $40 to $60 an hour for the labor. We have to have a building, tools and overhead. I just think we need to look at other "skilled" jobs and consider all the factors. Something I am trying not to do is apologize for my prices.

I got a bill the other day and there was a fuel surcharge on it and the delicery was only 1 .5 miles one way. Do we add for shipping on the leather we have to order in to make a product? Also if we have to drive to the post office or shipping center, do you add your time and fuel expense to the price?

I know this got a little scattered but I am trying to get folks thinking about every aspect of the business and what other business use to figure their cost.

Joe

Joe...

I won't respond to everything you have said but I will say this. When you work locally, define your work by the local market. If they don't want to pay for braiding, then don't braid for them. The market is what people are willing to pay for. It is what they want.

That said, there is a world-wide market for products and there is no reason why you can't participate in it. You access it via the internet. Here you have a much better chance to define your product and prices in terms that you control. There is still much competition but you can add value to differentiate your product and there are certainly buyers that have the ability to pay.

So braid for the Net and make whatever the locals want in that market. Of course, you can offer your braiding to the locals but the price is the Net price... not the price that causes you to go out of business. If the locals don't feel they can pay what you charge on the Net, then maybe they need to find better jobs so they can afford your "Premium" product.

I have often told customers that want ridiculously low prices that, "There are two ways that I can go bankrupt... I can go bankrupt working for you or I can go bankrupt drinking Mint Juleps sitting next to my swimming pool. Which do you think I am going to pick?"

BTW... Johanna's comments are right on the money!

[stitch45]

I for one do add shipping costs into my leather, I take my total footage plus 15% waste add shipping to give me my true cost per sq.ft. I add a profit margin to that to get what I charge for leather. I add labor, over head, mark up on matiral and profit margin to get a selling price ... If people want quality the will pay for it, Even here in little tiny Eagar, AZ ... If they want dime store prices let em' go get dime store quality.

One must market ones quality.

[Ian]

  Bree said:

Sell your stuff in the Robb Report or other rich kid mags and there is no limit to how much you can charge! Heck I got a catalog from JL Powell with a belt for $15,000. Here it is on their website for only $4,375... shameless opportunists tripling the price in their printed catalog versus the more competitive website.

Make hay while the sun is shining... as they say!!

"only $4,375" Hell, they're practically giving those things away huh? I checked out their website. Man, I'd love to be able to get $200 for a plain leather belt - can you say "serious mark-up"?

[Billy P]

I just wanted to say that for what most of us on the LeatherWorker.net Forum does with our work, anyone who is interested should go to J L Powell's website and look at the shabby quality of the belt that Bree posted. At a couple of hundred bucks that belt is over priced. It is not lined and the chicago screw heads that hold the conchas on are visible in one of the pictures. The whole kit and kaboodle of things are over priced in my opinion. I know that some of our people on here have sold some high dollar stuff, but they did sell a quality product. The belt that Keith S. posted a pic of awhile back, for what about $16,000, or so, I'd bet anybody that Keith didn't make anywhere near on his belt what the Powell Co. is making on their's. One last thing Keith's belt was a one of a kind hand tooled, custom made conchas, lined with finger cut decoration, custom made buckle, etc., while the Powell belt has conchas and a buckle that we could get over the counter probably, no lining, and if it even was hand stamped just one stamp used that I can tell, with my worn out eyes. Just high dollar, shoddy, shoddy work tha most of us wouldn't put our name on. So now to my point about pricing, get all you can, when you can because if we don't someone like the Powell company will. There is with out a doubt, a market for those belts or they would not have them in a catalog or on their website where they are selling. Someone once said "THERE IS A SUCKER BORN EVERY MINIUTE" not meaning that all customers are suckers but there are people with more money than good sense. I'm done for now and thanks to everybody in this forum, all of us together are what is making it the greatest leatherworkers site in the world. Billy P

[Davy]

With ya all the way bree . If you think youve underpriced it , keep adding zero's till you think its right . Its really hard to suggest a formula as everyone has their own ideas . Hourly rate vs art appreciation , dunno . I will work on $50 p/hr minimum rate (used to be $40 before when I was making custom stuff 5yrs ago ) ,and add 50% to material costs .If the product has the wow factor because of the artwork then as i mentioned before keep adding those zeroes . I've got a mortgage to pay and kids to feed so I have to charge that as a minimum . A few things that have to be considered are the quality , customers targeted , and uniqueness of the product . You need high end quality to demand a high price , if your products are unique , a higher price . If you target customers that dont mind paying for a high quality , unique piece of work that is considered exclusive you will always get the price you want . This is what keeps me on my toes as far as quality goes . If you just want a return to pay for materials and a little extra , Then i would suggest at least double your materials , then whatever you want after that . If you want to make a living from it you have to charge an hourly rate and thats not negotiable , you must !!!!!!!! Your artwork allowance is on top of that .

[Bree]

Davy...

I like the way you think! That artwork allowance add-on is special!!

We just got done repairing a young guy's reversible, thin, duo-colored, lambskin jacket that he got in Turkey. It was a job we should have never taken in the first place. No room to sew because there was zero seam allownace and very weak leather. It had to be sewn flat and overlapping with different color threads on top and bottom. Our 110 needle with #69 thread was too big for the existing holes. The little home Singer machine couldn't sew it as the thread kept breaking.

So I had someone helping me and I asked her how much did she think we should charge for this job? She says $20. I laughed and said, how about at least $50? The object isn't to make the guy feel good. It is to make a profit and we are losing money on this job even at $50! But even I have a conscience sometimes!!

[JohnBarton]

One of the hardest lessons one has to learn in business is charging what you are worth and charging what the market will bear. Ingvar Kamprad, the founder of IKEA, said "profit is resources."

He said this in response to the criticism that a large portion of IKEA's goods are made in places like China and Africa. He said that because IKEA makes a healthy profit they can afford to demand better working conditions for their production partner's workers, they can afford to do more to build a better world. Now I don't know that IKEA always uses it's profits so altruisticly but I do know that the lesson applies to all of us.

Another way to say it would be this quote from Mark Twain, "of course clothes make the man, naked people have little to no influence on society."

The lesson is that with profit you can afford to be generous. When you charge what you are worth and what you need to charge to stay in and grow your business then you can decide when to make a sweetheart deal or give someone a break. But when you are always undercharging because you are either unaware of what you should charge, or because you think the customers won't pay then you will be constantly under pressure because what you take in won't cover what you spend and you will spend a lot of your time scrounging for business.

It's funny but the more you charge the more people respect your work. This isn't a license to steal obviously. Your work has to be good enough to stand up to scrutiny. But, as shown previously in this thread, it doesn't have to be the best in the world to charge the most for it.

I try to build the best case I can every time. I don't charge as much as some who don't build as good a product as I do. However I do have a healthy profit built in so that I can continue to grow my business. On the other forum I belong to I am constantly lambasted as if my product costs pennies and I am charging dollars. I wish.

The point that I make to them is that it doesn't matter if the product really did cost pennies and I charged dollars because what really matters is that customer who bought the case feels that it was worth everything that they paid for it and more. I don't care how much my competitors sell their cases for, whether the cases are higher in price or lower in price or how much profit they have. I care about two things, that they are truthful in how they sell their cases and that we deliver the best we know how to make. If those two things happen then I find that we are able to get and retain loyal customers who don't think about price. And those customers are overjoyed when I sometimes give them extras like tooling their name for free or an extra pocket or free shipping. I do this for repeat customers on an individual basis.

It all starts with standing up for yourself and asking for the price you want and need. Don't be petulant about it, don't treat people who lowball you or get sticker shock with disdain. People are generally ignorant about these things. I once had a guy complain about the price and then he came to watch us work and when he left he said, "I can't believe you charge so little for as much as you do".

People have by and large lost touch with what "value" is. They see a row of finished goods on the shelf and they have no connection to what went into making it. They see your little booth at the craft fair and think that a little booth at a country craft fair must equal low prices. This is partly due to the fact that we live in a world where we don't really have a connection with the person crafting our goods and partly due to a lack of education. When we aren't taught the real value of time and expertise then we tend to undervalue them and overvalue that which isn't expertise but instead comes in a pretty wrapper.

18 years ago I used to flat out go off on people who questioned my prices. I also used to sell out a lot to get business. I was at both ends of the spectrum.

Somewhere along the line I realized that people just didn't know how to see the value in what I was offering them. They were either completely ignorant of what it took to make a cue case or they were completely bamboozled by the slicker marketing of my competitors. So I became a teacher and devised ways to pitch the product that educated them about the process and what kind of mental and physical effort goes into making the product. This seemed to work really well and led to a small army of "educated customers" out there selling for me and showing off their knowledge.

I am not saying that this approach is for everyone but it sure did help me to think about it and have the right thing to say handy that didn't sound like a rant against my competitors nor sound like I was accusing the customer of being a fool if they dared to question my prices.

I firmly believe that this allows me to be more confident about asking for and getting what I feel our work is worth.