Questions on Pricing

[Ian]

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.

[MADMAX22]

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!!

It shouldnt be sometimes it should be all the time. I tell you there are a couple of sales poeple that I let get the best of me and if this world goes to crap I have a couple of .40" slugs of metal with there name on it. Its still a large portion of whats wrong with the worlds economy.

Yes charge what its worth but dont be taking the dime just because you can get it from them. Then your no better then bank of america or who ever else you wanna compare too.

Same goes for Billy P too, just because someone else will rip them off does that mean you should too. Lets all go find the suckers and see if we can get there wallets.

This isnt meant as a personal attack, lets charge a fair price but dont be taking more then what its worth just because someone else did.

[Ian]

I've never been able to get a handle on pricing - been told many times that my prices are too low, but in the area I live, people just wouldn't pay the price that the internet 'artistes' get. A case in point is motorcycle seats by Paul Cox. There are a ton of guys who went into the seat business when they discovered what Paul was getting. However, Paul has spent many, many years building his name, travelling to shows all over the country and has been featured in dozens of magazines, TV shows, etc. And, of course his association with Indian Larry was a big starter. Never mind, I can't imagine what expenses of working out of New York City must be.

So, even though the quality of work might be similar, can the guy working on his kitchen table ask for the same money that a guy like Paul Cox, who has international recognition, get? I don't think so. Someplace there is the world's greatest guitar player who no one will ever hear, because he never got out of mom's basement, and he'll never fill a staudium at $200 a seat.

There is a company out of LA that makes wrist bands, watch straps, etc, and by their own admission - the work is rough. Yet they are the go-to guys for many rock musicians and movie companies because of their name, and they get the big bucks for stuff I could whip out with my eyes closed on a bad day. Yet I wouldn't dare price my stuff as high if I ever wanted to sell anything.

However, neither could I price my work at $10 an hour. That's what they pay the guys at Walmart who have zero investment in learning their job. I can't claim to be anything beyond a decent leather craftsman, but I couldn't even begin calculate the thousands of hours that have gone into learning his. So, $10 is way out of the question. Although, when I had a store front business, by the time I calculated my overhead, that's about what it came out to.

So, after all that, I still don't have an answer on how to price.

[rdb]

I work out of the shop I built on my property. I don't advertise, other than business cards, I don't carry liability. I don't have a business plan. I have no business loans. I could go on.....

Suffice it to say, I don't have business expenses, other than gas to get to the fairs, or the heat and electricity to run the shop. I have spent some thousands to supply the shop with small tools and equipment, leather and hardware...

I base all my work on $15 an hour plus materials. From everything I read here and elsewhere (and many of my customers), that's just a plain stupidly low price to charge.

But like Ian, when all is said and done, I'm lucky to be making $5 an hour, after figuring how much work I sell, and the cost of replacing materials....BUT, every week keeps getting better. Every week some one has heard and calls me. Someday I'ld love to not have to truck everything to the fair, but that time isn't here yet. The first week that I have 40 hours at $15, I promised myself to refigure everything. If my waiting list grows to weeks instead of days, I will double prices.

All the planning, figgering, and every other way you look at it, there's is no definitive way to map out a business and it's prices. As cheesy as it sounds, "Build it, and they will come". You either have it, or you don't. Smart people succeed and fail. Stupid people succeed and fail...Explain that to me and I'll write a business plan.

[Go2Tex]

As always, this is one of the most interesting topics and most difficult areas of the business. One of the problems with pricing is that it is not a constant. Your price is always changing. Your costs change, the market changes, your skills change, (improves, hopefully).

A good tool for pricing is right at your fingertips. The Internet is a vast marketplace research tool. I am constantly looking at what others charge for similar products. It's what I do as a buyer, so why not do it as a seller? Of course, you must use the formulas of cost of materials, plus overhead, plus labor but then you need to compare that figure with reality. Keep in mind that what someone else charges is not necessarily what they are getting. We don't know if they sold any of those belts for $15000.

What are your goals? Are you just trying to break even or are you trying to grow a business? Either way you must first cover your bottom line, then determine what the market will bear, then offer a quality product at a competitiive price, keeping in mind human nature and the old adage that if you don't value your work, nobody else will. If you charge high prices for low quality products, it will come back to haunt you. So, be honest in your personal assessment of your product, be it work or art or both. You must get out and look at what others are producing. Go to some shows, competitions. How does your work compare?

[Bree]

It's funny but the more you charge the more people respect your work.

<snip>

It all starts with standing up for yourself and asking for the price you want and need.

I snipped a couple of lines from your post. Something happened this morning that proves your points. About 3 weeks ago, a guy who works at a store that I frequent found out that I have a big leather stitcher and that I do stuff with leather. He asked me if I would be willing to make him a 6" belt tapering to 4" like weightlifters wear. He wanted to know how much it would cost. I told him that I would have to think about it and let him know. He gave me his number and info and I left.

I hadn't seen him in 3 weeks and I hadn't called. I knew that he wasn't going anywhere and he wasn't in any great hurry. I didn't want to appear as if I was in a hurry either.

I called the store this morning just before they opened to tell them to put a sale item on the side for me as I was coming in to get it. The guy asked to speak to me. He wanted to know if I could tell him the price on the belt.

I said, "You can buy this belt from the Chinese for $20 or $25. I am going to charge you at least double that. He said, "So $40?" I said, "At least $40. Maybe more." I said that, "I have some ideas that will make the belt better to support your back." He said, "Well one is made in China versus one made in the USA. The Chinese belt will probably just fall apart! Build it for me." I told him that I had ordered a 4" double tongue stainless steel roller buckle the day before.

Later I was looking at some items in the store and he wandered over and said, "Are you interested in that Oneway chuck for the lathe? I said, "Yes". He asked me to step over to a quiet part of the store.

Well folks before it was over he offered to trade me a $200 Oneway chuck he doesn't use for the belt! And he offered to throw in a $100 set of chisels to boot! I am picking up the goods tomorrow morning. I will begin working on his belt tomorrow as well.

Oh... by the way I forced him to remeasure himself after he gave me a measurement that didn't ring right in my mind and sure enough he was a couple of inches off. His American belt just started getting better than the Chinese model and he has started getting a return on his barter investment.