What Should I Charge?

[David]

What should I charge? How many times has each of us been asked that question by a new leather worker?

My first reaction to that question is to ask, “Are you sure that your work is up to a standard that people will want to spend perfectly good money for it?” There are many facets to leatherwork, tooling, lacing, sewing, dying, antiquing and final finish. All of these must be of a professional quality. In other words don’t try to sell the first thing you make!

I’ve been reluctant to tackle the “how much” question because it will mean admitting the many business mistakes I made over the seven years of making motorcycle seats. First and foremost I never charged enough. But then I had a “real” job and I wasn’t depending on my leatherwork to feed my family.

If you have been to my website (theobaldleather.com) you will see that I charged $400 to $500 for my seats. Now here comes the first mistake. I always wanted to make the BEST POSSIBLE seats. That meant I used Wickett and Graig Leather trimmed double shoulders instead of the cheap stuff, I laced all my seats with kangaroo lace; it’s at least ten times stronger than calf skin lace. If I’d used cheaper materials, I could have made a LOT more money but I wouldn’t have liked the seats as much nor would I have had the satisfaction of making the best that I could do.

Having admitted all that, here is my breakdown of expenses per seat.

Seat pan………………….$65

Leather…………………...$100

Lace………………………$150

Finish products………….$10

Total………………………$320

Yes, the costs are high, I could have saved a lot of money with cheap leather and cheap lace.

For this seat I charged $500…..sometimes. Ok, here is another mistake. I’m a softie for our military. If a customer said, “I was in Iraq”, the price was $400. If they said, “I’m a police officer or retired firefighter”…….$400. Remember, I wasn’t using this money to feed my family…… So here I was spending $320 to make a seat and charging $80 for 30 to 35 hours of work. That’s a bad business plan! But, believe me when I say that I don’t regret anything when it comes to our military and first responders.

I was told many times, by various people that I should be charging more, a lot more. $600, $700 even $800 a seat. And they were correct in order to make it a thriving enterprise those would have been the correct prices. I kept thinking “yeah, but this is Ohio, maybe if I lived in California I could charge that much.”

So the lesson to take from this is to set a dollars per hour fee, keep it reasonable and stick with it. If you decide to charge someone less, go ahead and do it, it’s your business after all. You can charge what you want.

If you are going to give discounts to certain groups, advertise that on your site. Let everyone know about it so no one feels like they paid too much…… yeah, that’s another mistake. I never put my discounts for military on my site. But keep your dealings with other customers to yourself, it is no one else’s business what you charged Joe Smith. Instead of justifying your discount to a customer, just show them your price breakdown let them know they still got a good deal. Heck, I even made seats for free for some folks just because they were friends. And I mean really for free, I ate that $320 per seat and found it was not too tasty.

So here’s the deal. Figure out your price breakdown. Know how much you need to make per hour. From there it is a simple time and materials invoice.

Final advice, work hard and be your own worst critic.

Good luck,

Dave Theobald

Edited April 30, 2014 by David

[benlilly1]

You are so right, David! Thanks for giving us the low down on business/pricing. Waiting to see your next creation!

[Hi Im Joe]

Hey I'm in West Chester Ohio. Glad to see some locals on here. My father in law grew up in Hamilton and my sister in law works for the city. I have another sister and brother in law that live in Hamilton too!

Your seats look GREAT!

-Joe

[David]

Hey Joe,

I'm in Ross, Ohio actually, very close to Hamilton. I worked in West Chester for many years at P&G.

[Hi Im Joe]

  On 5/2/2014 at 9:37 PM, David said:

Hey Joe,

I'm in Ross, Ohio actually, very close to Hamilton. I worked in West Chester for many years at P&G.

It's a small world man!

[keplerts]

If you are going to operate your leather shop as a business is the following a valid way of pricing?

If I make a belt 36" x 1.25" with the following costs:

Materials: Bridle leather $1.60

Buckle SB 1.80

Snaps .10

Finish .50

Total Material Cost $4.00

1/2 Hr Labor $7.50

Total Belt Cost $11.50

So, do I sell the belt for $11.50? All material costs are recouped and the labor (mine) is paid. Or, do I add in a "Shop" Margin for the business? For the business to make a 35% margin on the belt should I sell it for $17.70? Also, would I do this on all services as well? For example: to re-sew a saddle horn takes about and hour. Do I just charge the $15 per hour labor rate or do I add the 35% margin for the business to this and charge the customer $23?

Hope I said this in a way that makes sense. What is everyones thoughts on this?

Thanks,

Tom

Edited June 27, 2014 by keplerts

[Handstitched]

G'Day,

This is something I admit that I don't always get right.

I have often heard the remark " you don't charge enough" or "you're too cheap" .

If I charge too much, I won't sell anything.

But, I have been doing this for 10 years now, and I've learnt to 'read' the customer, and I also know the areas that I operate in.

But I have learnt to come up with a simple method to ensure that I at least cover my costs, and make a profit.

I don't charge for labour.

I do multiply materials x 2, or depending on what it is , materials x 3 , mainly on my 'bread & butter' products, like plain belts etc.

A plain belt using 4mm D/S ( up to 44") $30 . 44" & over $40. A carved belt, around $60-$70

A plain belt using 5 - 5.5 mm harness, $60-$70 . Tooling/carving extra.

Any fancy custom made stuff is ' price on application' .

Hope this sort of helps.

HS

.

[Chief31794]

This is a good thread, just to add my $.02 worth I never see anyone talk about the marketing reality side of pricing. There is a philosophy in business that basically states that, "The price point for an item is determined by the market", it doesn't do me any good to make a holster for say $20.00 in Materials, $80.00 in labor, then add a profit margin (wholesale is normally <=~30%, Retail is normally ~100%) so then it looks like this:

Materials: $24.00 (added 20% for waste, etc)

Labor: $80.00

Profit: $100.00 (retail would be $30 for wholesale then the reseller would add another 60-80%)

MSRP: $204.00 (marketing would put this at $199.95)

However, it does me no good to price my work at $199.95 if people aren't willing to pay that much, they won't sell, it also doesn't do me any good to price the work at $199.95 if people are willing and happy to pay say $250.00 because it won't sell. The reason for that is that most people have an idea what something is worth and if you charge to little their instinct is to believe that it's a "substandard" product or it would cost more. They will buy from your competitor if his is priced at the price point and your's is less. You may think this is crazy, but keep in mind, while you can look at an item and determine it's worth based on craftsmanship and materials, most of your customers can't and they'll think his is better than yours because it costs more. Keep in mind this is mostly in people's heads, but that is where the sale is made. Bottom line from all of this rambling is that you need to determine the price point for an item and set your sales price close to that. If you can't make a profit or get what you want at that price then work to decrease the cost while maintaining the value or move on to another item and don't attempt to make and sell that particular item.

Just my opinion after too many years of studying business (MBA)

Chief

Edited June 27, 2014 by Chief31794

[JLSleather]

I note a lot of people seem to have difficulty determining what their actual cost is. Personally, I question the original posts 'guestimate'. $100 for the leather? At $10/ft (which should get some VERY nice leather) that's 10 feet. For a pan seat? Well, enough ...

Chief is onto something. As the saying goes, "fair market value is what you can get". If the customer is willing to pay it, then that's the price.

Personally, I look for quality materials crafted with actual talent. If you're not selling those, then no amount of speeches about how many hours you put in will 'rescue' your sale. Bottom line, if you purchased the materials, they are then YOURS to do with as you see fit.

I once sold a belt for $300 to a guy who was tickled pink. Next guy said he would NEVER pay that for a belt. I asked what he would pay, and he said maybe half that. Other "crafter" (I never did think much of his work) said 'you can't do that'. So I sold a belt for $8, just to show that I CAN do that. Rather like the commercial -- crunch all you want, I'll make more

[JLSleather]

Oh, and don't go out without mentioning the "hagglers". Well , you have this price listed, but I'll give you $________

Seriously, do I look like I need lunch money?