Question about pricing

[KennethM]

How's everyone doing on this lovely Thursday?

 

I understand the standard formula to get your wholesale price.Here my question

 

How do I measure my leather to determine how mich square footage was used to determine my price for leather supplies?..

 

Thank you for your time.

[mikesc]

How do I measure my leather to determine how mich square footage was used to determine my price for leather supplies?.

Your question makes no sense..( and not because of the typo ( we all make them :)) on "much" )

Edited October 18, 2018 by mikesc

[KennethM]

Say I make a minimalist wallet..how do I go about tallying up the square footage of leather used to determine the price of the leather used.

[fredk]

just add up the square inches of each piece. Add a few more square inches for bits you cut off. Divide that total by 144 for your square footage

eg; you do a wallet 9 inches by 4 inches = 36 sq" for the outside, x 2 for the inside as well = 72 sq ". Four card pockets, each about 4 in x 3 in = 4 x 12sq" = 48sq". . . . . 48 + 72 = 120 sq" .....1 sqft =144 sq" . . . . . 120/144 = 0.833 bar, or about 0.85 of a square foot

0.85 sq ft was used but the parts were cut from a larger piece, so I'd round that up to a full 1 sq ft.

Edited October 18, 2018 by fredk

[mikesc]

You measure the leather that you use to make the wallet..if you are measuring in inches, then you measure precisely the length and the width of each piece of leather that you used..( "minimalist" can mean many things ) ..You multiply the width by the length, do it for each piece..That gives you the number of square inches per piece..add them all up..Gives you the total number of square inches used..
A square foot is 12" x 12" = 144 sq inches..
So..you divide 144 by the total number of square inches that you used..
Tells you how many wallets you can make per square foot..
If you are paying $10 per square foot..you divide $10 by the number of wallets per square foot.

Remember that not every square inch of every square foot is usable..nor is ever square inch of very hide..or piece of leather, but you are still paying for that "scrap"..so cost it in..

( Surprised that anyone who is selling ( or doing this for a living / business ) is asking, this is really basic stuff..)

Then you have to add all other overheads, light, heat , thread, wear and tear on equipment, wages, insurance etc etc ..

edited..FredK types faster than I do.. ;)

I forgot taxes ( both the taxes that you have to charge your customers , and the taxes that you'll pay on your earnings or business profits ) ..and any business taxes etc depending on where you are ..

Edited October 18, 2018 by mikesc

[chrisash]

The cost of the leather and thread is the minor cost, labour is the most expensive part and when you work out a selling price and then calculate that price divided by your total hours you will find your pay per hour is crap and its just a love job

[mikesc]

labour is the most expensive part and when you work out a selling price and then calculate that price divided by your total hours you will find your pay per hour is crap and its just a love job

Only if you are doing it wrong ;)

The cost of "the labour" in many luxury leather items ( Vuitton or Hermès for example, and there are many many more in the "luxury", or "specialist leather" items "niche" ) is waaaaaaaaaay less than the final price, which many are willing to pay, and do pay..

Many of us here are running profitable businesses, being paid very well for "our labour" and our knowledge, imagination, expertise and talents..

Edited October 18, 2018 by mikesc

[KennethM]

Thanks for the information..

 

@mikescNot doing this for a living yet(never said I was for the people that assumed) however I wanted to double check .Done construction for many years,i wanted to see the measurements for leather was no different then measuring jobs for a carpenter.

 

Thank you everyone for the information.

[mikesc]

My "assumption" was because you mentioned "wholesale",

I understand the standard formula to get your wholesale price.

which only businesses are involved in..Hobbyists are not normally concerned about price, only businesses ( those of us who pay business taxes , and who declare our income to the IRS or the equivalent tax authorities etc ) "sell"..Anyone else "selling" what they make, is, in reality, simply undercutting the legit tax paying businesses that exist..There is a difference between "leatherworkers" ( those of us who work with leather ) and hobbyists..kinda like if when you worked "declared" ( officially ) in construction, someone next door is working "undeclared" ( unofficially ) and asks to know how much to charge , or how to calculate prices..

i wanted to see the measurements for leather was no different then measuring jobs for a carpenter.

Inches are inches, square feet are square feet..the mathematics to calculate square footage or square inches , whether leather or lumber or concrete or drywall or cinder-block etc..what difference could there be, (it's like a pint of oil or a pint of milk, they are both the same volume , both pints ) ?

[VabaX]

6 hours ago, mikesc said:

 

 

Only if you are doing it wrong

The cost of "the labour" in many luxury leather items ( Vuitton or Hermès for example, and there are many many more in the "luxury", or "specialist leather" items "niche" ) is waaaaaaaaaay less than the final price, which many are willing to pay, and do pay..

Many of us here are running profitable businesses, being paid very well for "our labour" and our knowledge, imagination, expertise and talents..

 

 

Excuse my french, but thats absolute crap.

By far the biggest cost in the small-scale production of quality leather items is labor. When we're talking about some uber exotic alligator skin or something, then the materials cost starts to get up there, but still not usually going to be as high as labor. 

Yes, LV and H have enormous margins gross profit margins per piece, but thats because the economics of their operation is COMPLETELY different to yours and mine. For the purposes of cost accounting, theres not even any point in looking to them as an example. They have millions of dollars in overheads, fixed costs, financing arrangements, tax considerations you've never even heard of, and distribution costs. 

Their marginal labor expense being a small portion of their final sale price does NOT mean that yours will be too. 

 

If you look at your ACTUAL costs, the cost of the thread, the glue, the leather, the shipping expense, the fees, and apportion the overhead fixed costs like a website for example, then all of those factors will still be tiny in comparison to the cost of your time.

If a wallet uses 1 sq foot of leather, even some pricey stuff, lets say $10 for that, a negligible cost of thread, glue, etc, you might have $11 worth of marginal materials costs in there. 
But if it takes you 4 hours to make, and you want to be banking $15 an hour, then the total cost on that product is $71, of which the vast majority is labor.

Edited October 19, 2018 by VabaX

[DV8DUG]

1 hour ago, mikesc said:

... Comments edited ...

Like I said ..when someone talks about "wholesale" as in..

they are usually in business, and usually big enough ( making large numbers of each item ) to be selling "wholesale", as opposed to making only a few of each item , or maybe buying made items from someone else and selling them on , that is selling "retail"..

A hobbyist "selling" is undercutting the legit businesses..I read a lot here about how unfair it is that Chinese businesses are "undercutting", because they have lower costs, and how that "isn't right"..

To me ..it "isn't right" when hobbyists with no business overheads, no business taxes to pay etc ( and maybe another paying "daytime" job, or a pension ) start "selling", without actually going "legit" and becoming a business..That is undercutting the craftworker / leatherworker who has a legit business..

Hobbyists giving away what they make as presents etc, no problem, that is like being good at baking cakes and giving cakes away to friends and family..But baking cakes at home and selling them in competition with the craft bakeries that have to pay taxes on what they sell..that is unfair..
It happens a lot with anything that gets called "a craft"..

I define a leatherworker as someone who works with leather in order to run their business, or who works with leather for someone else's business..

A hobbyist asking about techniques, or machines, or dyes etc, no problem..most if not all of the "pros" here are happy to help or advise..

But asking how to price, when you are not a business, why ? if not to undercut the real leatherworkers..

Curiosity ?

We all know how much a particular leather can cost, ( depending on where we are ) and we all know how much a wallet can cost at retail ( depends on many things ) labour costs depend on where one is, and what one can do with the leather, and how much one's customers are willing to pay..

My comment there

You talk about measuring jobs for a carpenter..
OK..so..what would you think if a carpenter said "How do I measure my sheetrock to get the square footage for pricing?"
Makes no difference what you are measuring, a square foot is a square foot..12" x 12" =144 sq inches.

*Standard formula for wholesale prices ?
Never heard of such a thing..and I've been in business since the 70s..( in more than one country, including the USA ) there isn't even a "standard formula" for retail prices..
 

As a licensed business owner and a carpenter.... Right on!

Edited October 19, 2018 by Northmount
Reduce animosity by removing portions of thread