Pricing leatherwork

[HavenHillJay]

I have a question about pricing.  I have someone wanting to buy a Celtic Knotwork checkbook cover I made.  I was wondering how you would price that out.  I have calculated my cost per square inch for the various materials After some mark up it comes to about $20 to charge her in material costs which is about what Tandy would retail the unfinished kit for.  I will actually be using a piece of Craftsman Oak I purchased and would make a little money on that.  If I figure 2 hrs labor I would be asking about $60-$80 for a customer checkbook cover.  Is that in line with what you are seeing or have charged?

[TonyRV2]

I think it depends upon how established you are as a leather work as well as your overhead, machinery, etc.  If you don't have any machine costs and are hand sewing then imho I've always figured labor is cheap.   Someone just starting out, unestablished with low overhead (and by that I mean without a solid customer base) might charge twice the cost of materials.  For someone that has an established customer base with a lot of overhead (machine costs, building rent, etc.,) might get upwards of 40 or 50 dollars per hour on top of materials cost.  So I guess the question you have to ask yourself is where you are given those two extremes and decide accordingly.  Heck, starting out I would give stuff away at cost just to get word of mouth going.

 

[HavenHillJay]

Thank's for the feedback Tony. I have no machine costs, my skills are still developing, and I see the value of word of mouth advertising.  Much appreciated. 

[Halitech]

I'm about 3 years in and I'm like you, no overhead, no machine costs and certain skills are still in the rough stage and I usually go with 2x the material costs plus 15% wiggle room. Some things with little room for screwing up (like belts with nothing on them) I've looked around etsy and local customers to come up with a price that most will pay with little to no issue and then work up from there depending on what is being added. If it's a stamped name, do it for next to nothing or for free to get a favorable customer word of mouth advertising.

31 minutes ago, TonyRV2 said:

Heck, starting out I would give stuff away at cost just to get word of mouth going.

 

I really don't like seeing anyone give anything away. 1. You start giving stuff away and people will always expect it. 2. It makes people not value your work at all and even starting out, you are better then those that can't make anything.

[TonyRV2]

1 hour ago, Halitech said:

I'm about 3 years in and I'm like you, no overhead, no machine costs and certain skills are still in the rough stage and I usually go with 2x the material costs plus 15% wiggle room. Some things with little room for screwing up (like belts with nothing on them) I've looked around etsy and local customers to come up with a price that most will pay with little to no issue and then work up from there depending on what is being added. If it's a stamped name, do it for next to nothing or for free to get a favorable customer word of mouth advertising.

I really don't like seeing anyone give anything away. 1. You start giving stuff away and people will always expect it. 2. It makes people not value your work at all and even starting out, you are better then those that can't make anything.

Perhaps I should have pointed out that when I gave stuff away at cost it was to family members and close buddies....guys I thought I could count on to not give any more of my stuff away. 

[HavenHillJay]

Halitech, thanks for the input.  I've seen checkbook covers on Etsy for much lower than I would want to go.  Thinking the same thing on setting an expectation.  I'm still working on coming up with a maker's mark so I don't really have a recognizable brand yet though I would want positive word of mouth.  

Tony, thanks for the clarification, lol to hoping friends won't give stuff away for you.  The lady who wants the checkbook cover came into my son's workplace and had a crafted leather pouch with some kind of design on it and my son mentioned I do leather work.  She gave him her number to give to me.  He is my most active salesperson so far!  Ha!

Again thanks for the helpful advise!

 

[NVLeatherWorx]

The main thing here is what is your intention or direction?  Do you plan on making a few items here and there and selling them at local fairs/shows and even dabble in the Etsy market or are you planning on getting serious about it and putting your stuff out there for more of a global exposure and maybe even see if some local shops/stores would carry your products?  If you plan on local and not going too deep into it then go to the lower side of things; if you are looking more on a global scale and maybe some brick & mortar then you need to price just like any other professional business.  And for those who think that labor is cheap and that doing it all by hand should be on the lower scale of things, try it out sometime and see how cheap it is.  Hand-sewn is the best result if you are looking at creating a serious and long lasting product, regardless of what all the "Cowboy" and "Adler" and "Tippman" people think and I have many repairs of machine sewn merchandise to prove that.  And I can also tell you that it wasn't cheap for the customer to get the repair because I do this for a living and have done it by hand for over 40 years due to the fact that a machine can't create the best, most durable stitch on leather products.  If you value your labor, or that of anyone else, as cheap then you shouldn't be investing your time in making things for other people, regardless of which direction you take to market and retail.  Be careful how you look at things and how you relate them to our overall industry and the skills and experience of those of us who can do this in our sleep.

[JLSleather]

15 hours ago, HavenHillJay said:

If I figure 2 hrs labor I would be asking about $60-$80 for a customer checkbook cover.  Is that in line with what you are seeing or have charged?

#1 rule - remember that in the end it is nobody else's business what you charge or why.  Having said that, I'm only commenting because you asked.  If you charge a "mint", not my business.  If you GIVE it away, STILL not my business.

#2 (which is related to #1) - what someone else charges shouldn't have much of anything to do with what you charge.  If you're simply thinking "fair market value is what you can get" - then I guess you get what you can. But I've seen some leather work which showed obvious talent, and some which showed an obvious lack of talent -- I wouldn't be interested in one that was priced the same as the other, and saying that all leather checkbooks are equal is not true.

#3 there are pricing "formulas" all over the place. Double the material cost -- plus the price of diesel fuel in Japan - plus stand on your left foot facing west on tuesday mornings ... blahblahblah....  All of it means virtually nothing, since if it's not well done, I dont' buy it. Even if the price is low.

 

For myself, I don't buy anything based on "per hour" charges.  I want to know what it is I'm getting, and then I know how much I'm willing to pay.  It's the only RATIONAL way to do it.  Consider teh other way around.... PersonA makes a wallet, takes him 5 hours and it looks good. PersonB makes a  wallet, takes 10 hours and it's hideous and poorly done.  Doesnt make sense to pay the second guy more than the guy who knew what he's doing.

Another example.. when I had the roof done, I agreed to pay about $8,000.  If they do it in 2 days, they get $8k.  If it takes them half the third day, they STILL get $8k.  If they are the type to "hurry" because they don't get paid "by the hour", then they don't get paid at all at my house (not even hired).

 

SO THEN:  all that said I do think there are some factors which influence price:

• Are you making something different nobody else is offering?
• Are you doing something widely used, but doing it differently?
• Are you making something common, but yours is notably better than others?

But I don't consider machines or the lack of them a factor in pricing.  

• For a project which is stitched, is it stitched well?
• If I buy a new truck to go pick up the leather, should I factor that in? (that's intended to sound ridiculous)
• If I have a clicker to click out the parts, the machine costs money, but the labor goes way down.

 

 

 

[CaptQuirk]

@TonyRV2-I would argue the machine sewn price vs hand sewn price. If done well. hand sewn is as clean and strong as machine sewn, but more labor intensive.

[TonyRV2]

3 hours ago, CaptQuirk said:

@TonyRV2-I would argue the machine sewn price vs hand sewn price. If done well. hand sewn is as clean and strong as machine sewn, but more labor intensive.

Don't get me wrong.  I agree that hand sewing is superior to machine sewn leather goods.  The only point that I was making is that overhead costs (like purchasing and owning a sewing machine) may influence the price you charge for leather goods.  Of course in some respect machine purchases are offset by savings in labor, but I would still advocate that labor is cheap.  There is nothing in your shop that you pay less for than your own labor.  I think this is where most of the leeway is in terms of setting a price for something.

[NVLeatherWorx]

3 hours ago, TonyRV2 said:

Of course in some respect machine purchases are offset by savings in labor, but I would still advocate that labor is cheap.  There is nothing in your shop that you pay less for than your own labor.  I think this is where most of the leeway is in terms of setting a price for something.

Labor is only cheap, using your explanation above, if you don't pay yourself from your sales.  Which goes back to the whole question here in the first place.  JLS pretty much hit the nail on the head here and I agree with him that it is no my business as to what YOU charge for your goods anymore than it is is your business to know what I charge or why I charge what I do.  I do this as a business and have global exposure (and have for many years now) so I know what my overhead is and none of it includes any machinery of any kind; I still pay myself an honest and fair wage based on my skills and experience and I can guarantee you that I earn well.  I can also guarantee to my clients that they are receiving the best that their money will buy and the value is far more than what they pay to receive their goods.  Value to the customer is the most critical thing to think about when pricing your goods, otherwise, you may as well just peddle yourself at the town square and make just enough to cover cost of materials and your space rental.  At least you won't be giving it away for free.

[TonyRV2]

NV....you are at a whole 'nother place than the poster is.  For someone that's established the sky's the limit and the market decides whether you're worth it or not.  For someone starting out.....not so much.

[Big Sioux Saddlery]

7 hours ago, TonyRV2 said:

7 hours ago, TonyRV2 said:

Don't get me wrong.  I agree that hand sewing is superior to machine sewn leather goods.  The only point that I was making is that overhead costs (like purchasing and owning a sewing machine) may influence the price you charge for leather goods.  Of course in some respect machine purchases are offset by savings in labor, but I would still advocate that labor is cheap.  There is nothing in your shop that you pay less for than your own labor.  I think this is where most of the leeway is in terms of setting a price for something.

I guess I always thought of it as the other way around.  Machinery is cheap compared to labor.  I buy any given machine one time, and then it works for me.  Hopefully doesn't cost me anything more than the purchase price and occasional maintenance, and of course having the money tied up.   Myself, well I have to eat every day and  I don't have to tell anyone what it costs to live these days, even if I DO live pretty cheap compared to many.   If you were to ask just about any business, they will tell you their biggest expense is labor.  If the owner's labor is less than anything else in the shop, he's not paying himself enough.  I understand the whole experience and quality thing, but I still think that we, as leatherworkers, do not value our time as much as other trades. I've said it before and I'll say it again,  I urge ANYONE in the leather business (whether it's a REAL business or just a hobby) to get and read Bob Brenner's book "How to Establish Prices for the Saddle Maker or Leather Worker."  It will give you a better understanding of all the costs involved in making something.  Speed and better quality work will come with experience and while nobody starting out can expect to charge the same as someone that's been doing leatherwork for 20 years or 50 years or whatever, you still need to value your time and understand how to figure your prices.  Maybe if you intend to make just a few things for friends and family, it's not a big deal, but word gets around and people see your stuff and pretty soon you've got orders and have no idea what to charge.  Kind of like what's happening to you with this wallet,  HavenHillJay.  Best of luck to you.

 

 

[HavenHillJay]

I just want to say thank you to everyone who posted replies, thanks for taking the time to put detail into them.  I find instruction in all of them.

Tony, you are pointing out that the most wiggle room I have in pricing is in what I value my labor hour to be worth vs. how much I'm willing to discount that in order to grow my "brand".

JLS and NVLeatherWorx, from you I am reminded that from the consumer's standpoint, my overhead costs are immaterial, and that the uniqueness of my work and it's quality are what the consumer will be judging in addition to their personal need/want for whatever product they are buying.  Just like everything else in life.

Big Sioux you, I agree I do have to remember that my time is valuable no matter what are the surrounding circumstances, and thanks for the well wishes.

CaptQuirk and Tony, thanks for the side note on hand stitching, I didn't realize that hand stitching produced superior results.

I know that as my skill [hopefully] grows, what I produce will increase in what it can command in the open market.

If I missed anyone's point, and you feel inclined to do so, let me know.

Funny side note, I ended up giving her a price that was a little lower than what I wanted.  She got back to me with the comment that it seemed high and then proceeded to ask me about repairing a bag she has had for years.  lol

[Big Sioux Saddlery]

56 minutes ago, HavenHillJay said:

Funny side note, I ended up giving her a price that was a little lower than what I wanted.  She got back to me with the comment that it seemed high and then proceeded to ask me about repairing a bag she has had for years.  lol

I'm glad you can laugh about it as you will likely get a lot of it.  It has less to do with the quality of your work and more because you are new and every relative and friend of a friend will hit you up for leatherwork at a cut rate price because they ARE a relative or a friend (of a friend). At least that's what I experienced when I started out and for years afterward. Most people have no idea the amount of time that we, as craftsmen, put into our products, and by how much they are superior to most of the off-the-shelf stuff made in another country.  Some are so ignorant as to think that as a small shop, opposed to not being a big business, we have no overhead and can work cheap.  Sometimes I feel like at least half of my job is educating my customers.

Edited November 16, 2016 by Big Sioux Saddlery

[JLSleather]

13 hours ago, Big Sioux Saddlery said:

the amount of time that we, as craftsmen, put into our products,

I agree that labor is the largest expense.  But not all labor is good labor.  An extreme example.. say picking up the leather.  One guy takes the van,  takes two hours.  Other guy walks.. takes all day.  I don't pay the second guy more because he doesn't think (even though there was more labor).

13 hours ago, Big Sioux Saddlery said:

nd by how much they are superior to most of the off-the-shelf stuff made in another country

And THERE is the point of "handmade"- IF it is in fact superior.  People have always argued manufactured vs "handmade", but if the hand made 'version' isn't BETTER than the manufactured, then WHY would I pay more?!#!@!  If someone spent 10 hours making a product that was inferior to the one I can get "over the counter" (and it happens all the time) .... then calling it "handmade" and asking a "good" price is insulting to both buyer and seller.

I see that ALL the time.. yet another guy (or girl) with a shoddy product, asking far too much and justifying the price by going on about "handmade", "made in USA", .. usually accompanied by long stories and why-tube videos (TIP:  making a video does not make poo less odorous).

 

"Overhead" is a legitimate conversation anywhere - has to be in there somewhere.   But equipment without knowledge isn't of use to anyone.  $10k will get enough stuff to start making a lot of things.  But I don't let someone hand me poop and tell me they made it on their whatever [clicker, stitcher, skiver....].  The Lexus is worth less than the bicycle to the guy who can't drive ...

 

[Big Sioux Saddlery]

5 hours ago, JLSleather said:

I agree that labor is the largest expense.  But not all labor is good labor.  An extreme example.. say picking up the leather.  One guy takes the van,  takes two hours.  Other guy walks.. takes all day.  I don't pay the second guy more because he doesn't think (even though there was more labor).

And THERE is the point of "handmade"- IF it is in fact superior.  People have always argued manufactured vs "handmade", but if the hand made 'version' isn't BETTER than the manufactured, then WHY would I pay more?!#!@!  If someone spent 10 hours making a product that was inferior to the one I can get "over the counter" (and it happens all the time) .... then calling it "handmade" and asking a "good" price is insulting to both buyer and seller.

I see that ALL the time.. yet another guy (or girl) with a shoddy product, asking far too much and justifying the price by going on about "handmade", "made in USA", .. usually accompanied by long stories and why-tube videos (TIP:  making a video does not make poo less odorous).

 

"Overhead" is a legitimate conversation anywhere - has to be in there somewhere.   But equipment without knowledge isn't of use to anyone.  $10k will get enough stuff to start making a lot of things.  But I don't let someone hand me poop and tell me they made it on their whatever [clicker, stitcher, skiver....].  The Lexus is worth less than the bicycle to the guy who can't drive ...

 

I agree with everything you said above.  I should have said, "assuming the quality IS better in the handmade product."  We see this with saddles.   I see some pretty poor "handmade" saddles.  Fact is, I've seen a lot of production saddles that I would trust further than some of the handmade ones, even if the handmade saddles ARE made in this country.  So yes, the quality has to be there to start with in order for this justification to be valid.  I believe in my product and work hard to make sure it will never come back to me because of inferior materials or workmanship.  Hours spent do not guarantee a quality product. The "know-how" has to be there and then if it is indeed a better product, it should be worth more, although it's not always going to be worth the time spent making it.  That's the balance, one has to evaluate if the extra time spent making something by hand justifies the increase in cost. If it doesn't then you either have to accept less, find a better (more cost effective) way of making it, or quit making it.  There are things that I made when I was first in business. After a few years, I realized that even though they WERE better than anything that was commercially available, I simply couldn't charge enough to cover my time, so I quit making them.  People still wanted them, but they didn't want to pay for the time. Too bad, so sad.  I can't work at a loss to ensure someone else gets to have a cheap hobby.  

I use clickers, sewing machines, other various tools and machinery to make my job easier and faster, and hopefully better. I still consider my product handmade.  There are some arguments I don't buy on handmade being better. Stitching for example. There are always going to be things that HAVE to be sewn by hand, no matter how many sewing machines a guy owns.  I don't buy the theory at all that hand stitching is always better than machine sewing.  I have wallets out and about that are 25 years old, carried on a daily basis. They were sewn by machine and the stitching is still intact.  Poor machine sewing is in fact inferior to good hand stitching, but that's not comparing apples to apples.  You won't get an argument from me that there is a lot of "handmade" garbage out there.   I see it on a regular basis.

This is a perfect example of where advice given does not apply to every situation.  Sometimes it's easy to assume that someone starting out knows more than they do.  Something simple that is so obvious to those of us that have been in business for years, or decades, may be completely foreign to someone new to the craft.

If a person is going to use the argument that handmade is better than production to sell their product, then you better have your ducks in a row and have VALID reasons, and be able to back them up, on why it may actually cost less in the long run to buy a decent handmade product.  It's kind of like buying batteries for my pickup.  I'll spend the extra money to buy GOOD batteries that I don't have to run to Walmart every 14 months to get replaced on warranty because they're junk to start with. It is a waste of my time, it's inconvenient, and plus I hate Walmart.  Some people don't mind buying cheap and replacing the item every 6 months. I'd rather spend the money one time and save myself the hassle of having to go back into town to buy it again.

Edited November 16, 2016 by Big Sioux Saddlery

[JLSleather]

18 hours ago, Big Sioux Saddlery said:

The "know-how" has to be there and then if it is indeed a better product, it should be worth more, although it's not always going to be worth the time spent making it.

Yikes.. I wrote all them there sentences, when i coulda jus said this

Only time I mention "hours", or allow someone else to tell me about "hours" -- is whether it will be ready by noon on Tuesday (noon is an 'hour') or can I pick it up after work ('after work' is an hour).  If the maker sets his price by the time it took that's up to him/her -- but when you want to sell it I just want to see the item and hear the price.

Edited November 17, 2016 by JLSleather