A topic of discussion among younger saddlemakers and leatherworkers has always been about how to price work. At art shows I often look at other mediums and wonder how the artist came up with their prices. I am very interested in this topic outside of my medium. I will share what I have done for leather since sometime in the 1970s, and over the years I have sold retail, wholesale, consignment and had sales reps in the western states. I now sell retail on the Internet, at art shows, and I have one small local wholesale/consignment account. The job now is about half art fairs and half studio work.
Cowhides come into the studio as half of a cow or "side" either purchased as ten side rolls from the tannery or as single sides from a jobber(wholesaler). Sheep, goat, calf and exotic leathers come in by the skin or whole hide. Leather is not uniform in texture like a sheet of silver or bolt of fabric. You have a lot of waste in the head, neck, legs, belly and elbows of the beasts. Industry standards are about 15% waste but mine is down around 10%, thanks to emphasis on managing scrap in my apprenticeship (1959-65). When I price my work, the scrap loss has to be covered. For material first cut out of a side the multiple for material cost is 2.5X. Sometimes like for saddles and belts, the cost of material is the 2.5X the entire side rather than a square footage. Now it gets interesting. During the next round of cutting material, "scrap" from round one is priced at 2X- 2.5X in job costing, and so on until the last little pieces used are priced at 1.5X. The other component of pricing is labor. My labor rate also includes my overhead. A lot of authors will tell you to look at last year's numbers to get an overhead number, but I look at it quarterly. It doesn't make sense to me to use an outdated number if overhead takes a jump in the current year. All my numbers go into an Excel spread sheet for job costing individual products. Where I am different, is that I have cells where I back calculate my labor rate for work sold wholesale and on consignment. I usually just play around with labor costs here unless the product is one that uses up a special amount or type of "scrap". If I decide to give someone a discount at an art show, I know where I am at with my numbers, and believe me I am not loosing any money on the deal.
For other mediums I wonder how a painter after purchasing canvas, paint and brushes, comes up with a price. Does the wildlife photographer include travel expenses? From my own silver work I know that the jeweler recycles scrap for cash or credit, but what about the iron mongers and glass folks? Do the ceramic people factor in replacing their kiln in each piece? If time is involved, do you use the chronometer on your watch? I am very curious and hope to learn more from all of you.
You need to be a member of Art Fair Insiders to add comments!
I used cost of materials, including waste, overhead which would be gas, oxygen, electricity, a percentage of phone/internet charges, paper goods, jury fees, travel expenses, booth fees, auto mileage,receipt books, etc. I add the cost of labor which is what would you pay someone a fair wage to make your work. I add a design fee depending on whether it's one of a kind or limited production. Add all that up and then tack on profit. That is my wholesale price, then double it.
If you currently feel that your retail prices are fine, ask yourself how you would answer this question, on-the-spot in your booth. "Do you wholesale and are your wholesale prices 50% of your posted retail prices? If your answer is NO, then you are underpricing your work.
Thank you Martha. Some of the old time saddlemakers from the 1930s and 40s would price their work as 1/3 materials, 1/3 labor and 1/3 profit. Some still use that. I too have an add on designing fee for custom work, mainly for custom cases. Back in the 1980s I had a wholesale account and the dealer was marking everything up 100%. I raised my retail to avoid two prices floating around. It taught me a lot about what the market will bear.
Hi Richard
I price my work based on the following formula: cost of materials + time involved to make each piece + cost associated in selling the piece. I figure cost to sell based on how many pieces I take to a show and how many actually sell. This is an estimate. Then I build In the profit margin on top of that. To further explain the cost to sell formula let's say in costs alone it costs me $600 to do a show and I take 60 pieces with me and sell 20 I divide the $600 by 20 and get $30 per piece to sell the work. Naturally, this varies show to show, so it is only an estimate, but it helps to get a ballpark figure when calculating overhead before the sales actually occur. At the end of the year it is simple to see how much each piece costs to sell it by adding all costs and dividing by number of pieces sold.
Hi Richard, I am a painter and I have a range of sizes from 9"x12" to 4'x4' and sometimes bigger. So I think it's important that my prices reflect on the size. I price my painting by square inch, kinda like how you price real estate by square foot. For instance, lets make it $1 per square inch, a 9x12 would be $108 and so on. Sometimes I may spend more time doing a 11x14 than a 24x30 but it just wouldn't make sense to most people if the smaller painting was more than the larger one. The only thing I will add in is if the smaller piece is framed, then I will add in the framing costs and a little extra for labor. This format works best for me and avoids confusion by customers.
Lisa Foster > Brian BillingsApril 8, 2013 at 9:23pm
I use a modified price/sq inch formula. My smaller pieces tend to cost more/sq inch than my larger ones. They tend to take me longer to make/sq inch. There's all the brain work that goes into a painting before I ever pick up a brush. It's usually about the same for a large piece as a small one. I guess it's like adding a design fee. So for any given size my pieces are priced the same. Some of them take me longer, some less. I figure it averages out.
I'm still trying to get pricing that works well for me.
Thanks Lisa. I know what you mean about brain work. I often get an idea for a design while working on a project a mull it around for maybe a month or more. How do you price that time, I don't know. Guess it just goes with the territory.
Thanks Brian, that's interesting. I have priced some stamp jobs on leather by the square inch and that is also a way to price engraving on silver as well as tracking time.
I do pastels. I have 2 different groups of work, tall skinny pieces and traditional sized pieces (16x20 etc.). Each group of work has a small, medium and large. I take my total expenses for the year and divide by 52. Then I estimate how many of each size I can produce in a week. I add a 2 week salary to the total weekly expenses ( 2 weeks instead of 1 to account for travel time) and divide by the amount I can produce in a week. This gives me an estimate of what I need to make on each price point to consider it profitable. When I take a new size to a show, I sometimes raise or lower the price in the opening weeks to find its real market value and make sure the work sells.
Replies
I have often wondered how the potters arrive at their costs. Any potters out there willing to share?
I used cost of materials, including waste, overhead which would be gas, oxygen, electricity, a percentage of phone/internet charges, paper goods, jury fees, travel expenses, booth fees, auto mileage,receipt books, etc. I add the cost of labor which is what would you pay someone a fair wage to make your work. I add a design fee depending on whether it's one of a kind or limited production. Add all that up and then tack on profit. That is my wholesale price, then double it.
If you currently feel that your retail prices are fine, ask yourself how you would answer this question, on-the-spot in your booth. "Do you wholesale and are your wholesale prices 50% of your posted retail prices? If your answer is NO, then you are underpricing your work.
martha
I price my work based on the following formula: cost of materials + time involved to make each piece + cost associated in selling the piece. I figure cost to sell based on how many pieces I take to a show and how many actually sell. This is an estimate. Then I build In the profit margin on top of that. To further explain the cost to sell formula let's say in costs alone it costs me $600 to do a show and I take 60 pieces with me and sell 20 I divide the $600 by 20 and get $30 per piece to sell the work. Naturally, this varies show to show, so it is only an estimate, but it helps to get a ballpark figure when calculating overhead before the sales actually occur. At the end of the year it is simple to see how much each piece costs to sell it by adding all costs and dividing by number of pieces sold.
Hi Richard, I am a painter and I have a range of sizes from 9"x12" to 4'x4' and sometimes bigger. So I think it's important that my prices reflect on the size. I price my painting by square inch, kinda like how you price real estate by square foot. For instance, lets make it $1 per square inch, a 9x12 would be $108 and so on. Sometimes I may spend more time doing a 11x14 than a 24x30 but it just wouldn't make sense to most people if the smaller painting was more than the larger one. The only thing I will add in is if the smaller piece is framed, then I will add in the framing costs and a little extra for labor. This format works best for me and avoids confusion by customers.
I use a modified price/sq inch formula. My smaller pieces tend to cost more/sq inch than my larger ones. They tend to take me longer to make/sq inch. There's all the brain work that goes into a painting before I ever pick up a brush. It's usually about the same for a large piece as a small one. I guess it's like adding a design fee. So for any given size my pieces are priced the same. Some of them take me longer, some less. I figure it averages out.
I'm still trying to get pricing that works well for me.
I do pastels. I have 2 different groups of work, tall skinny pieces and traditional sized pieces (16x20 etc.). Each group of work has a small, medium and large. I take my total expenses for the year and divide by 52. Then I estimate how many of each size I can produce in a week. I add a 2 week salary to the total weekly expenses ( 2 weeks instead of 1 to account for travel time) and divide by the amount I can produce in a week. This gives me an estimate of what I need to make on each price point to consider it profitable. When I take a new size to a show, I sometimes raise or lower the price in the opening weeks to find its real market value and make sure the work sells.
-
1
-
2
of 2 Next