Questions on Pricing

[broddhisatva]

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]

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]

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]

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.