What to charge for my work?

[monkeyatakeyboard]

Hello,

I've been making wristbands guitar straps and belts for myself and friends (mostly my self, it's so hard to part with it some things) for just over a year.

Recently I've been thinking about selling my creations to others. My problem is that I have no idea what I would charge. The bulk of what I make is wristbands, so that is what I am going to consider selling, at least to start with.

I have done a little research into what other people are selling them for and it always seems way high or a little low to me. Can anyone suggest a pricing sceme?

Initially I figured I could charge retail prices for supplies and then a flat hourly fee for how long that peticular project took. Of course that begs the question, "just how much is my time worth?"...

But that process will lead to wrist bands having varying prices which just doesn't seem right to me.

I don't know, I guess my best bet is to just start putting things up and watching what happens.

Thanks for your time,

Dave

[Tom Katzke]

Hello,

I've been making wristbands guitar straps and belts for myself and friends (mostly my self, it's so hard to part with it some things) for just over a year.

Recently I've been thinking about selling my creations to others. My problem is that I have no idea what I would charge. The bulk of what I make is wristbands, so that is what I am going to consider selling, at least to start with.

I have done a little research into what other people are selling them for and it always seems way high or a little low to me. Can anyone suggest a pricing sceme?

Initially I figured I could charge retail prices for supplies and then a flat hourly fee for how long that peticular project took. Of course that begs the question, "just how much is my time worth?"...

But that process will lead to wrist bands having varying prices which just doesn't seem right to me.

I don't know, I guess my best bet is to just start putting things up and watching what happens.

Thanks for your time,

Dave

Lots of ways to do this. Most are not correct. This may be one of them but it gets close. It does not properly address the pricing of items that could be wholesaled. To make items that you would be selling to stores and you would be selling retail you would have to double your true production cost to get a retail price. Here is a basic way to set a price, not perfect but close.

Figure out how much leather you are using. For you math challenged it is length X width divided by 144 that will give you square feet. For a wristband it will be much less then a square foot. If you are doing some odd shape make a good guess. It will not hurt to be a bit over because unless you are creative in layout you will have more waste with odd shapes.

Count up the hardware. If lacing or sewing it gets tough but you can work it out for a per inch charge. What you do is sew and lace a fixed length and you will then know how much material you are using and how much time. We have a figure we use that may be different then what you come up with. Sewing will be mostly time and the lacing will be time and material. It is good to figure out for estimating cost on a project.

How much time you spend cutting out, tooling, and finishing depends on how well you work. You may be slow and over charge compared to others. It is important to know how much time you have in to see if you are ready to quit your day job, or just keep doing it for fun. If you are slow then you would compare your work to others and charge based on their work. If you are faster then you are lucky. You will be able to sell wholesale while still being able to sell retail and make a profit at both. Do not charge less then it is worth.

Now that you have a list of time and materials you have a bit more work before you can put a price on. What is you time worth? Well if you are a brain surgeon don't get into leatherwork for the money. If you are an average person a good place to start is take what you get paid at work and double it. If you are working for minimum wage that will be to low. If you are a high dollar executive it may be too high. The idea is to save you a bunch of time calculating an hourly wage using standard methods. What you need to consider is if you were doing this as your sole souse of income you will need to pay your self so you can eat. Pay all the expenses of the business like taxes, phone power and such including the cost of tools and the time you are not producing anything but still working. Bob Brenner has a book out on how to calculate all this but doubling you salary is a good place to start.

So now you have a list of materials and someplace know how much you are paying for them. Take all the materials including that little piece of leather and double your cost (do not forget shipping). Add the cost of your labor and see how you compare to the competition. If you are close then make it a nice round number not $15.43. It could be that you are making an item that will price much lower then it can sell for. Do not leave any money behind and put the higher fair price on it. This item will be one you can wholesale and still make money on.

The subject of selling to others that will mark up your item and sell it is a bit different. If you are intending to sell some retail and some wholesale then you need to make some adjustments. The person selling your item will want to buy a $20 item for $10. You will have to either figure out how to make it faster or to adjust your retail price up so you can still make money selling wholesale. There are others that can comment on what is involved in wholesale pricing, like Bruce Johnson.

How do you know what a fair price is? Well look at what other people are charging after you have calculated your price. If you can not find any comparable items then you have to guess. Asking people what they would pay is not always the best way. I think paying 43 thousand dollars for a pickup is an outrage, that is why GM and Ford do not ask me what to sell pickups for. When setting a price for an item you will know if it is correct by watching how people react to it. From many years of selling stuff at gunshows I have found this works the best. If they can not pay you fast enough it is priced to low. If they walk away and never come back it is priced to high or way to low. If they have to think about it or walk away and then come back the price is just perfect. One thing to remember is if you are traveling to different shows or doing some type of market, different locations will have different customers and people will buy different items and different amounts at different times of the month. I think it is harder to set prices based on sales if you are not selling in one location. If it does not sell you may be selling to the wrong people.

My last comment on pricing is even if you are doing it for a hobby you owe it to the ones that are out there trying to make a living to charge a fair price. Most times that fair price looks high to the hobbyist. That is why most people are not out there making a living at it and doing it part time or for fun. If you just can not see charging what others are then give the stuff away. If you are making an item that should sell for 20 bucks and selling it for 10 then you are killing the people that need to sell it for 20 buck so they can eat. If you give it away you may think that is hurting the commercial guy. In a way it is but not as much as if you are selling for less. Selling for less shows people that the item is not worth what it should be. Giving an item away allows the market to work. The person may see a similar item for sale and say wow I did not know it was worth that much, that was real nice of (?) to give it to me. I hear all the time from hobbyists that they are not into it for the money. If they get a few bucks then they can keep paying for their materials. That thinking kills the market and if you ever do need to make money at leather for any reason or length of time you will not be able to sell at the price needed to pay bills.

Just my thoughts on pricing,

Tom Katzke

Central Oregon

[bruce johnson]

Tom,

Good reply. I know we beat this topic up on another list. Not much to add other than selling at wholesale/retail. I was doing both heavily for quite a while. My prices were not exactly half. I figured my materials cost and markups first. That is NON-Negotiable!! I then figure my time. I have little formulas based on square footage or linear measurements how fast I can do each step. I also do time studies frequently to make sure my rate is still accurate. Then I figure my wholesale rate at materials plus so much per hour wholesale. I figure retail at some much per hour at the retail rate. My wholesale rate currently is $30/hour and retail is $40. This includes my overhead expenses. A project with 35 dollars materials and 4 hours would be $155 wholesale and $190 retail. I am going up to $45 retail. My goal is to make at least as much as the UPS driver who brings my stuff. My wholesale accounts have mostly moved away or found cheaper suppliers. I have one I still do, and he is not a problem customer - pays well, understands lead times, and is honest. My whole sale customers always knew what my selling price was. If they wanted to be higher, that was their business. My stuff was mostly not doubled ("keystoned") because they didn't pay for it until they got it, and often had already been paid by their customer. They had little overhead and no inventory expenses in my custom orders. Some non-custom things were sold on consignment, and others they paid half when they got it and the other half once it sold. This was mainly for things like the trade shows at the National Finals Rodeo, where everything was sold in a short period.

One other factor. Don't sell directly to customers of your wholesale accounts if they contact you. Tempting as it is, just don't. The people you wholesale to are out there working to sell, paying booth space, staying in a motel or paying shop rent space and employees and shop overhead, They have to earn a living too. If you really need their markup that badly, don't wholesale in the first place.

Bruce Johnson

[Jordan]

I have seen handcrafted guitar straps on a few sites with a starting price $150.00 and up, depending on what the customer wants. If you figure that a player has spent well over $1000.00 for an instrument they certainly are not going to stick a crummy nylon strap on it. I made a strap for my gibson because I couldn't afford a good one and the stores carried crap. I ended up giving it away (strap) after nerve damage curtailed my gutair playing dream, can't bring myself to getting rid of the gibson it's just to nice of a guitar.