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nstarleather

A little game for y'all: Guess the target price/A lesson about asking the right question about a project

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Hi Folks, I just played this game over on r/leathercraft on reddit, so if you saw it there, please no spoilers!  

 

Anyway, for those of us who do leathercraft for a living, we get approached semi-often with projects and have to analyze them before taking them on.  Sometimes this involves considerable design-work or at the very least some general calculations as to labor and materials...you can save a lot of time by asking the right questions. 

 

I ended up saying "no" to the following project and saving myself lots of time after asking only one incredibly important question: What's your target price?

So for a bit of fun today, I'd like you leatherworkers to take a look at the project and guess what price I was suppose to hit.

 There are the details:

 

The main piece of this item measures 20"x7" when complete the font is roughly 7"x7".  The quote is for 500 pieces two times per year.

So everybody, take a look, take a guess.  Also, after, if anybody and meet their price, I'm happy to pass along the information.  Also feel free to ask any questions, I'll do my best to answer.

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Well that's about a sqft of what looks like 3mm buff back veg tan leather. I don't have a splash riveter, which takes the price of dies up a bit (gotta put the punch tubes in). Cheapest veg tan I'm willing to put my name on is £3.50/foot. Let's say 10% quantity discount on 500sqft. Looks like an efficient shape so allow a 15% wastage which takes it to £3.62 of leather per unit. Allow 50p per unit for thread and rivets (I only use solid brass). £4.12 materials per item. No big clicker of my own so I'd have to rent one. Guessing about a week's work (one man band) to assemble 500 so add five day's labour. Even if I pay myself minimum wage that's another 50p per item. Markup to cover various other overheads say 40% (considering quantity discount) takes it to £6.46 I would charge a one of originating fee to cover the dies and die design so I wouldn't have to factor that cost in.

Already we're at £ 3,232 but that's a bit of a pie in the sky figure, I've never done any large qualities like this, and I've only calculated paying myself minimum wage. Furthermore I would recommend against the unfinished veg tan, and the raw materials would go up.

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I am really looking forward to reading the answers on this as I am just getting into selling my products. I have been working on leather for a couple of years now to learn. 

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11 minutes ago, Matt S said:

 I don't have a splash riveter, which takes the price of dies up a bit (gotta put the punch tubes in)....No big clicker of my own so I'd have to rent one.

So just to clarify, for me it's die cut with clicker I own, customer buys the cutting dies, machine sewn, self-feeding foot powered riveter.

Quote

Cheapest veg tan I'm willing to put my name on is £3.50/foot. Let's say 10% quantity discount on 500sqft.

I'd say you may be underestimating the footage a little.  The main piece is almost a foot plush the other two pieces (divider and pocket), so just guessing but with waste maybe 1.5-2 feet cut. 

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After reading Matt's breakdown and pricing, I ain't even gonna bother. I am paying around $20 per square foot for any vegtan from 2mm to 5mm!

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52 minutes ago, Rockoboy said:

After reading Matt's breakdown and pricing, I ain't even gonna bother. I am paying around $20 per square foot for any vegtan from 2mm to 5mm!

$20 wow!  No shot in the dark to what they might have expected?

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Going by what you and Matt have said so far regarding square footage, fittings, time to produce etc, I am gonna say ... under $10 ... how about $9.75 each for 500 pieces?

P.S. I have never seen Reddit or know how to get there, so I haven't taken a peek.

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I get asked this a lot, too.  Especially regarding holsters.  

I'm guessing OP's customer wanted to pay around $15 or less for each bag.  "I can buy bags from china for $12.00!!!"    

That price won't even pay for the leather.  

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So far everyone is high, but much more in the ballpark than the folks on Reddit... I had guesses of $145, $80, $50, etc...

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Is this something you already make? 

A wise man once told me what it your day rate? How much do you need to make in a week to live the way you want? If you are an artist look to recoup the cost of your material but charge for your time. If you are a production shop then you need to look at it from total cost of manufacture including the wage at which you could hire someone to do it for you, all over heads, cost of leather and supplies take that total and multiply it by your minimum attractive rate of return say 15 to 30%.

 

Thus... How much is the leather and supplies to do 10 of them how long would it take you to do 10, 100, 500,1000. Is it just you ? Do you have people you pay. Can you make 1000 in a year? Do you want to make 1000 a year? Do you want to be the tool pouch guy? Are you selling to a someone who is reselling them or using them? How much can they sell them for and expect half of that... sooooooo many questions

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Just a shot in the dark... im going to say the customer wanted 500 pcs for right around 6 bucks ea after the discount esp if it was a repeat order 2 times a year.

Well..........

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5 hours ago, nstarleather said:

$20 wow!  No shot in the dark to what they might have expected?

20$ a sq foot?? Holy smokes i just got 24.8 sq ft. 8-10 oz Tan Bridal for only 197.16 ttl.  if you are state side ill give you the company name we use. might be of a bit of pocket relief!

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46 minutes ago, tomsmith85717 said:

Is this something you already make? 

A wise man once told me what it your day rate? How much do you need to make in a week to live the way you want? 

Thus... How much is the leather and supplies to do 10 of them how long would it take you to do 10, 100, 500,1000. Is it just you ? Do you have people you pay. Can you make 1000 in a year? Do you want to make 1000 a year? Do you want to be the tool pouch guy? Are you selling to a someone who is reselling them or using them? How much can they sell them for and expect half of that... sooooooo many questions

Yes I'm a production shop, not something I already make...I believe the inquiry was from a reseller to other resellers, but I'm not sure.... didn't get that far.

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Having been asked repeatedly (by less than quality operations from every foreign corner of this planet) I would say that the "purchaser" was looking for a cost per unit of about $7.00 shipped (give or take a few pennies) and would not be open to accepting anything more than that.  We all know that they will sell this thing for no less than $30 per unit and would be very quick to redirect ANY and ALL claims of quality into your lap while taking no responsibility from a business operations standpoint.  

I have been approached by one "seller" in Pakistan what wanted me to produce belts, much like the quantities requested here, that have been stamped and/or carved & tooled; when I quoted him my price per unit he promptly responded with, "I can get them from China for less than that", so I told him to do so because I DON'T use Yak hide for my leather and I DON'T roll my leather straps through an embossing machine, I do everything by hand and if you want real quality leather work done that this is how much it costs.  He was not happy, to say the least but then again I really didn't care about that because if you think that the rest of the world is going to fall in line with the traditional garbage production that so many consumers are spending their cash on you must be some kind of idiot.

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2 hours ago, NVLeatherWorx said:

I DON'T use Yak hide for my leather 

Umm have you looked at the price of yak hide, you couldn't afford to yak hides are expensive about twice the price of bison. Yak hide tool pouch probably would cost about $90.

 But to ask the op's original question If you couldn't make 20% over costs bidding them for $12-15 I wouldn't try. Unless made in USA of US parts is important then $15 - 20

Edited by tomsmith85717
being a smart ass

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I could do the plastic sleeve for $7 each, shipped.  The leather and thread and rivets are out of the question at that price.  It is a mass produced item that needs mass produced cheap leather and cheap labor, not a quality hand crafted item made with attention to details.  So, since it isn't my market, I'd move on.  Besides, I work way to slow, so no way I'd get 500 in a week.

YinTx

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17 minutes ago, YinTx said:

 I work way to slow, so no way I'd get 500 in a week.

I'm a production shop with 17 employees and I wouldn't promise 500 in a week.

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So it's been 24 hours, lets end the game.  They needed me to come in under.........

 

 

$6.50

 

Many of you actually came close (if anyone can make these for that, PM me and I'll pass it along)...

 

The purpose of this post was to show the importance of asking the question right out of the gate, some people are shy about asking "How much are you expecting to pay?" but in the end, you save hours of calculations, or even design.  At the very least you save yourself a bunch of back and forth email with design questions. 

For me, I would have taken the time to price it out at around $15 and would have said "yes probably" for anything above $20, but with $6.50 I knew there was no way I could do it for even double... 

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13 hours ago, NVLeatherWorx said:

Having been asked repeatedly (by less than quality operations from every foreign corner of this planet) I would say that the "purchaser" was looking for a cost per unit of about $7.00 shipped (give or take a few pennies) and would not be open to accepting anything more than that.  We all know that they will sell this thing for no less than $30 per unit and would be very quick to redirect ANY and ALL claims of quality into your lap while taking no responsibility from a business operations standpoint.  

I have been approached by one "seller" in Pakistan what wanted me to produce belts, much like the quantities requested here, that have been stamped and/or carved & tooled; when I quoted him my price per unit he promptly responded with, "I can get them from China for less than that", so I told him to do so because I DON'T use Yak hide for my leather and I DON'T roll my leather straps through an embossing machine, I do everything by hand and if you want real quality leather work done that this is how much it costs.  He was not happy, to say the least but then again I really didn't care about that because if you think that the rest of the world is going to fall in line with the traditional garbage production that so many consumers are spending their cash on you must be some kind of idiot.

I'm willing to bet that that this guy already new he could get "lookalike leather belts" cheap from China. What he wanted to be able to say was that these belts were top quality belts from the USA and thus charge more for them while being able to buy at the China prices

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11 minutes ago, kiwican said:

I'm willing to bet that that this guy already new he could get "lookalike leather belts" cheap from China. What he wanted to be able to say was that these belts were top quality belts from the USA and thus charge more for them while being able to buy at the China prices

I'm surprised someone from Pakistan would bother trying to source from here...I get calls all the time with people wanting to sell me stuff, but the overseas inquires to buy are usually only Europe or Japan.

  I have a suspicion, that  this guy had a buyer who wanted "Made in USA" and he was just going through the motions to get a price quote to scare him back to the foreign made stuff.  No offense to NVLeatherWorx, but I can tell from the retail prices that the Pakistani buyer probably never had any intention of buying the belts (if they bothered to look), and there are even a few "cheaper made USA options" out there, but I expect he was looking for a higher price to come back with.   Just a theory.  I heard a story of something similar about some catalog companies that sold patriotic merchandise, they'd have a crazy-high price they could quote if somebody got upset about their "American" stuff being made in the developing world.

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15 hours ago, NVLeatherWorx said:

Having been asked repeatedly (by less than quality operations from every foreign corner of this planet) I would say that the "purchaser" was looking for a cost per unit of about $7.00 shipped (give or take a few pennies) and would not be open to accepting anything more than that.  We all know that they will sell this thing for no less than $30 per unit and would be very quick to redirect ANY and ALL claims of quality into your lap while taking no responsibility from a business operations standpoint.  

Great guess!

You are remarkably close, $6.50 would probably have been around $7 shipped...

As I sad in the previous comment, I think it's possible that some of these companies just go to us with absurdly low targets so they can go to the boss/customers and say "we tried to source from USA but it was too expensive"

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8 hours ago, kiwican said:

I'm willing to bet that that this guy already new he could get "lookalike leather belts" cheap from China. What he wanted to be able to say was that these belts were top quality belts from the USA and thus charge more for them while being able to buy at the China prices

Most likely true but then again, none of these people who are contacting us for this type of work are even thinking about whether or not it is USA made or whatever, they are just looking for some poor dumb sap to bust their butt on a huge "volume project" with the promise of more to follow and all of that for less than the materials would actually cost.  And this my friends is why I DO NOT do any form of wholesale work for anyone, not even a local shop; there are too many "resellers" looking to make more profit from your hard work and creativity than you would from them when making them at wholesale.  I sell direct to clients and the bulk of my work is custom; I do ask the question of how much a person is willing to pay when confronted with a potential project and when I bust off a quote for them within a couple of seconds they either acknowledge my price or come back with a "holy you know what" at which time I will lay out for them what it would take for me to do what they are asking and that if the price is not within their wheelhouse they may want to consider just wasting their money on the cheapo China or Pakistan stuff because REEL leather work ain't cheap and I am not a charity.

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I'm 90% wholesale but that only works for a certain kind of business.  I usually get doubts when I find out they want "distributor prices", as in they want to wholesale the items... with today's world of the internet the whole idea of making money as a middleman that way is going to die out.   If the manufacturer is easily found, why not just go direct?   I've done lots of "promotional" swag for movies and TV (Ash v Evil Dead, Son of Anarchy to name a couple) before mostly though a 3rd party who specialized in that stuff but more and more I'm getting contacted directly.

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