Help with pricing

[Kolton45]

Hi I'm still pretty new to leatherwork and do it mostly as a hobby but most of the work I do is custom orders from Facebook or Instagram or just word of mouth and I have not set a standard for pricing yet and find it very difficult to think about hahah I typically will ask people how much they were trying to spend and go from there and tell them what I can or cant do for the price they say so any advise on that would be much appreciated and also another question when to get the money I have always done pay when pickup but I have had people who take weeks sometimes months to pick up stuff and so far only one who hasn't picked up at all so how do you guys go about collecting money? I've been thinking about doing 100% up front for anything with name or initials

[Alexis1234]

I have never sold any of my work,lol... but I know others that typically get at least 50% down on a custom order- if not 100%. The best words of advice I was ever given  was from a local harness maker" Do yourself and everyone in this industry a favor... charge what you are worth". Hope this helps: a little :)

[cowhide]

after40 years of doing custom work my advice is , if u put anything on it that u can not resell, then u need to get 100% before u make. also on anything also get a 50% deposit

[Kolton45]

What do you use to collect money PayPal or one of those new apps they have? Cause like I said most of my orders are from social media so I dont typically see the people until pick up

[JLSleather]

Paypal is painless.  There are other 'versions' now that didn't exist before, but Paypal has always treated me well (and still do).

As for money, I recommend billing up front for anybody you don't know.  I HAVE done work prior to payment, but only if it's something I would normally make and sell anyway.  AS A RULE (and I do break them);

• Basket stamped belts - I probably have some on hand most of the time.
• Holster for a model I make frequently - no bill up front most of the time.
• Tooled belts with patterns I already have - pay a deposit, amount depending on a few things.
• "Normal" work flow items, but requires additional materials not usually in the shop (such as exotic leathers or unusual hardware) - pay for the "extras" up front, but not the whole item.
• Tooled and/or stamped with names, initials,  or custom (and off the path) colors or shapes -- payment in full before I start that.

[Kolton45]

Ok thanks for all of the advise I'm gona figure out how to use the PayPal and deffinetly start charging up front from now on 

[cdthayer]

7 hours ago, Kolton45 said:

I typically will ask people how much they were trying to spend and go from there

That's probably the best thing you're doing at this point Kolton45. That one important question will tell you a lot about what the Buyer has in mind (or, if they're out of their mind). Some people who don't do crafts of any kind don't realize what is involved to make an item just to their specifications.

The only other thing that I would mention, is to not let friendship determine who pays up front and who doesn't. Get a plan together on what gets paid when to avoid being left holding the bag for non-payers, and then stick with that plan for everyone.  Friends included. Lots of friendships have been ruined because of what the friend is supposed to pay and when.

CD in Oklahoma

[cdthayer]

I forgot to add, that although we have PayPal for online payments, we also use SquareUp for on-site credit card payments.  It used to be free for the gadget to go on a Smartphone to swipe cards, but we've had to buy the updated gadget that reads chips and swipes cards both.  We like SquareUp and have used it for several years.  I hear that PayPal may have a similar gadget for Smartphones now.

CD in Oklahoma

[JLSleather]

28 minutes ago, cdthayer said:

I hear that PayPal may have a similar gadget for Smartphones now.

Yup, we use PayPal card readers.

[bikermutt07]

Also, make sure to mention changes in your pitch. You will find people who think you can just throw something on anywhere in the process. Make it very clear to them that if they change their mind along the way, they have to pay for that also. 

Be firm, but fair.

[keplerts]

@Kolton45  where are you located in PA?  I am in Mifflin County.

[Kolton45]

4 hours ago, keplerts said:

@Kolton45  where are you located in PA?  I am in Mifflin County.

Chester county 

[Kolton45]

And thank you everyone for sharing your advise and knowledge

[TonyRV2]

I just keep raising my prices until somebody faints, and then lower them by 10%.
Seriously though, many people use a simple formula of doubling the cost of materials and then add in your hourly rate. Your hourly rate is not just for your time, but for your shops time as well, to include your overhead. The average wage in the U.S. across all occupations is approximately $25/hour.  So in my opinion, as an experienced craftsperson, there's no way you should be charging less than that. You might then tack on more to your hourly rate depending on your shops expenses...lighting, heating and cooling, insurance, rent, and so on. Just add up all your monthly shop bills, and divide by 200 (or whatever number of hours you spend in your shop per month). So maybe your shop costs are $2000...then based on 200 hours tack on another $10. Some might argue that your shop should also show a profit, just like materials, so you might even double that to $20/hour. Add in $5/hr for miscellaneous expenses and we're at $50/hour total...at a minimum.  So that wallet that you spent 2 solid hours making using $10 in materials (cost) should sell for no less than $120. 

[JLSleather]

22 hours ago, TonyRV2 said:

many people use a simple formula of doubling the cost of materials and then add in your hourly rate.

I don't do formulas, nor do I recommend anybody else use them, nor do I pay anyone according to them.  Don't take this any kind of personal, but I'm going to be a bit silly to make a point here.

Your work is worth what it is worth - simple as that. And it's not worth what it's not worth. The TIME you took to make it, the EXPENSES you had where you make it, what the "average wage" is, what you think is a "fair" profit ... NONE OF THAT has anything to do with what your item is WORTH. 

Let's assume you made a belt.  It works - holds my pants up just fine, so it qualifies as a belt.  But its not really very nice looking - the ones at the box store look much nicer and cleaner.  Some examples of how ridiculous it is to use these "formulas" to price it:

Well, yeah, it doesn't look like much, but it took me 6 hours to make, so that's $150.  And I have lease fees and electricity about $100/day, so 1/4 of that is another $25, and I drove here to sell it, so that's $10.  Add that to the $20 it cost me to make it, and this belt is now $205.  Oh, and I need to make a profit, so the ugly belt is $250.  

Now, you MIGHT find one here and there who will buy that.  Mom will probably take TWO  But as a rule, you'll be done making those shortly.

Did you spend a few hours making videos to "promote" (pronounced BS) your work?  You can add that to the price if you want, but I will NOT be paying more for something because there is a video about it.  And I'm not buying the video, either... if I came to buy a holster, I want a HOLSTER, not a SHOW ABOUT a holster.  Your video did not increase the VALUE of that holster one bit.

MOST of "pricing formulas" is just more BS. You can probably quickly find 100 people to SELL you a formula (probably comes with some videos) for a price.  When I'm BUYING something, I COMPARE THE GOODS.  I want to know what I'm getting and what I'm paying -- the rest is just noise.

Not silly enough?  What if I buy a new truck?  Isn't that an expense?  So, my not-very-well-done belt is now "worth" $500/month more than it was?  What if I move to a bigger, nicer building?  Does that make my belt "better"?   Obviously, that's ridiculous.  Also ridiculous to suggest that someone get $25/hour (or 50, or whatever) based on something OTHER than the quality of what they're selling.

A few years back (or maybe 15) I had a buddy who was doing some renovation work.  Started to make a few $, and bought a new truck - and he was a bit proud of his first ever "brand new" truck.  Fair enough, he can afford it and it's what he wanted.  Course, his "expenses" went up, so his prices went up.  Showed up at the house one day, basically wanting to show off his new truck.  It was nice.  I said so.  And he launched into the "speech" about how customers need to see you in a nice vehicle when they think about hiring work on their home - it shows (according to Richard) "professional" and "responsible".  I told him I'd rather see the truck that looks like the guy in it has done some work, maybe shows some tools with some wear on them (seriously, anybody can go buy a shiny ladder and mount it on a shiny truck).  When I see a shiny truck pull in my drive to discuss the new driveway I'm ordering, I don't see "professional and responsible" - I see a guy who likes shiny trucks and thinks I SHOULD PAY for it 

But, now I'm running behind for this morning.... so maybe somebody will get something out of these old blog posts .... go read em (I think they're both informative and entertaining, but - regardless - there's no charge).  Git lookin'... they'll be moved in the menu by Monday

https://www.jlsleather.com/compare-items/

https://www.jlsleather.com/hand-made-well-made/

 

[TonyRV2]

Well JL...if you cater to the 'ebay and walmart' crowd' then you are absolutely correct. Then you need to compete with the with the prices offered at ebay and walmart. In my opinion, that is also a losing proposition. Part of being in business is knowing your target audience. There's a reason companies like Hermes and Louis Vuitton can sell handbags for literally thousands of dollars apiece. They have created a reputation and a demand and they know how to and to whom they should market it. Of course, I'm not going to compete with either one of those guys either. But I'll say this, when the right customer sees that they can have a hand crafted quality 100% leather handbag for under 500 bucks (some charge more, but this is my 'formula' price) they are happy to get such a deal. Again, the key is to target the right customers, which for a small timer like myself can take many years to cultivate.

[JLSleather]

1 hour ago, TonyRV2 said:

Part of being in business is knowing your target audience. There's a reason companies like Hermes and Louis Vuitton can sell handbags for literally thousands of dollars apiece

Yes, there IS a reason.  Rather like the emperor's new clothes.... find a bunch of people (market) who are ignorant enough (don't know any better) to buy something BECAUSE SOMEBODY ELSE SAID SO, regardless of quality (many of these are bought site unseen) because somebody will be impressed that you have it (insecure). 

I understand Elvis' used underwear sold at an insane amount at auction.  That doesn't make me want one, and I was NOT bidding

 

[chuck123wapati]

Both JL and Tony have good points but I think have very different business models so have taken different approaches. Obviously very few will pay out the nose for crap, some will compare your stuff to box store items that usually aren't even leather. The first step is making the decision of what you are selling, ie stamped belts machine sewn etc, or totally handmade custom ordered belts , for example. Yes they are both belts but take different supplies, construction methods. Time, etc. , they cant be compared simply because they are belts and hold up your pants. Your ability to sell is just like any other commodity, supply and demand. First step make plan, decide on a product, find a market for your product, at that point then your pricing has to be competitive with those in the same market unless you are very famous which you aren't yet. That involves also supplies and your ability to drop your overhead, no new truck, you will be competing against those that have through the years found the cheapest sources for their supplies, quickest ways of construction with less defects and have created a name for themselves.  There will always be those that want your custom handmade belt to be just as cheap as the stamped belts on the rack at Costco but they aren't buying customers plain and simple don't even think about them or vegans as real customers lol, remember you have found your target group, if it isn't big enough then you wont make it no matter how nice your work is or how much competition you have. in my experience those that have bought from me understand full well what they want and what the quality should be and the price of comparable products. If your quality of work isn't up  with the apples to apples competition you wont sell as much and those that do buy wont come back and wont refer you to others at that point you have to change something quality or price.

[JLSleather]

59 minutes ago, chuck123wapati said:

competing against those that have through the years found the cheapest sources for their supplies

You're CLOSE to a good point here.  To drive that home, as they say.. consider --

• One guy buys Hermann Oak leather, uses only top shelf A-grade leather from the tannery.  He pays $8 per sq foot.
• Other guy buys Hermann Oak leather from a popular retail outlet.  It's B-grade, USUALLY (or just CLAIMED "B" sometimes).  He pays $13 per foot.

Both make a belt.  The one from the retail store cost 63% MORE to make.  No rational person would say it is then "worth" 63% more without seeing both.  And upon seeing both, if they were IDENTICAL, would the one that paid more for materials be justified in selling it for more (hint: that's a no).  Even though it's made from a lower "grade" of leather? 

Another tip:  That LV bag only sold for that amount - someone was willing to pay that -- BECAUSE they know there's another person who will take it off their hands.

And I'll say it again.... I don't know if Stohlman was THE best leather carver ever. But he certainly was the BEST KNOWN.  But he was carving 60 years ago.  Is your stuff "worth more" than his work because rent is higher than it was then (I'm being ridiculous again..).

[cdthayer]

1 hour ago, JLSleather said:

And I'll say it again.... I don't know if Stohlman was THE best leather carver ever. But he certainly was the BEST KNOWN.  But he was carving 60 years ago.  Is your stuff "worth more" than his work because rent is higher than it was then (I'm being ridiculous again..).

I think that inflation plays a large part in what carved and/or sewn leather should cost today compared to 60 years ago.  I just don't know the answer to the actual cost comparison, unless you run the numbers through an online inflation calculator.  That would require knowing exactly what an item sold for back then, and that may be hard to determine.  I've not ever done that, but it might be interesting....

CD in Oklahoma

[cdthayer]

As an example of inflation, back around 1980 before I was making my own belts, I had a couple of belts made for my wife and I that had our CB handle names on the back. All hand-made with a floral pattern, cut-out letters in back with bright blue backing leather beneath, antiqued finish, and buckstitched with white lace.  I think they cost me $40 each, which was sort of expensive for us at that time.

I just ran the 1980 $40 amount through an online inflation calculator, and it said that $40 has become $131 in 2019.

And don’t forget to figure in more labor cost now that everyone’s wages will be going up with the House of Representatives passing a $15/hour minimum wage for everyone this week.

CD in Oklahoma

 

[TonyRV2]

8 hours ago, JLSleather said:

Yes, there IS a reason.  Rather like the emperor's new clothes.... find a bunch of people (market) who are ignorant enough (don't know any better) to buy something BECAUSE SOMEBODY ELSE SAID SO, regardless of quality (many of these are bought site unseen) because somebody will be impressed that you have it (insecure). 

I understand Elvis' used underwear sold at an insane amount at auction.  That doesn't make me want one, and I was NOT bidding

 

Dang...I didn't hear about the Elvis auction...could've made 15 or 20 bag liners with those. 

[chuck123wapati]

5 hours ago, cdthayer said:

I think that inflation plays a large part in what carved and/or sewn leather should cost today compared to 60 years ago.  I just don't know the answer to the actual cost comparison, unless you run the numbers through an online inflation calculator.  That would require knowing exactly what an item sold for back then, and that may be hard to determine.  I've not ever done that, but it might be interesting....

CD in Oklahoma

So does the market! sometimes leather is in sometimes its not! Leather was far more sought after in the western look back then, now maybe the money is in biker stuff, your cb handle story is a perfect example of trends that drive the market, Stohlman may not have done any better than us if he were in our time. But HE had a name and still has a name and his floral carvings would sell for more simply because of that, quality of leather wouldn't matter. The biggest  variable in leatherwork or any of the crafts and probably the most problematic =when your work quits being  just functional and becomes art, how do you price an artistic piece comparative to other people artistic endeavors? People buy products for a number of reasons, that run the course from frugality to just spending for spending sake everything in between. I think that's the best reason to pick a market, plan on selling to frugal people , rich people, bikers, whatever but don't consider others out of that target group as potential buyers. Your target group has to be able to support you and your competition by itself. What people paid back in the day is inconsequential to many other variables have changed.

[JLSleather]

On 7/19/2019 at 6:02 PM, chuck123wapati said:

But HE had a name and still has a name and his floral carvings would sell for more simply because of that, quality of leather wouldn't matter.

So you think if we just put your belt and Al's belt side by side on a bench, and showed them to the same people, and didn't tell anybody who made them, people would be inclined to buy YOURS?  Perhaps, but IF that's true and they don't buy it when you remove the name, then he's selling HIS NAME, not really selling the leather.  Hey, I "get" that too ... I might buy something belonged to Elvis - not that I WANT it, but that I know there's somebody out there who will PAY MORE for it (I'm flippin it).

On 7/19/2019 at 6:56 AM, TonyRV2 said:

Well JL...if you cater to the 'ebay and walmart' crowd' then you are absolutely correct. Then you need to compete with the with the prices offered at ebay and walmart. In my opinion, that is also a losing proposition. ... But I'll say this, when the right customer sees that they can have a hand crafted quality 100% leather handbag for under 500 bucks (some charge more, but this is my 'formula' price) they are happy to get such a deal. Again, the key is to target the right customers, which for a small timer like myself can take many years to cultivate.

Strange, this.  I don't recall saying anything about either of those selling venues.  But I would be interested in a link to your bags "under $500" -- just so I know what $500 is getting these days.  I made a lot of TOOLED bags in the 80's for quite a bit less than $500, though there weren't that many around who could match them. 'Course, that was when $6/hour was a wage ...

 

BUT all of this is INTENDED to answer the guy's original question (remember?).  Keep in mind that at some point your work IS going to be compared to other work.  Some really is good.  Some really is a lot of hype and noise.  The world is getting faster, and more view-able, and that has not been good for some -- easier and easier to COMPARE ITEMS.

There are many who love to click a button on their phone, and get something at their door by tomorrow.  Some won't purchase anything if it isn't "free shipping".  Some KNOW it's not top quality, but they'd rather have IN THE HAND than the one they KNOW is better by next week.  Some will buy something they know isn't quality, JSUT BECAUSE their friend bought one and they're TERRIFIED of being "the one who doesn't have that".  Fair enough - guy can do what he wants with his money.  Just information regarding pricing your goods.

[chuck123wapati]

45 minutes ago, JLSleather said:

So you think if we just put your belt and Al's belt side by side on a bench, and showed them to the same people, and didn't tell anybody who made them, people would be inclined to buy YOURS?  Perhaps, but IF that's true and they don't buy it when you remove the name, then he's selling HIS NAME, not really selling the leather.  Hey, I "get" that too ... I might buy something belonged to Elvis - not that I WANT it, but that I know there's somebody out there who will PAY MORE for it (I'm flippin it).
 

Actually I was talking about ALs work in the context of trends in the market. Then vs, now,. I don't consider myself nearly as good and I'm sure no one else would either. Most young folk buying leather wouldn't.t know Stholmans name from anyone else's unless they googled it. Now leather crafters or collectors seeing his name would buy it just because they knew who he was.