Getting the price right for your work...

[Davek0974]

Dont forget to show your workings guys - we have two figures, 201.85/199.99 and 270

Thanks BTW

 

[AllUpHere]

Dont forget to show your workings guys - we have two figures, 201.85/199.99 and 270

Thanks BTW

I just worked out what you would need to cover your costs, used £25 quid per hour for your labour, and added a small percentage to cover use of equipment that will need to be replaced at some point.

I'm still very much of the opinion that a little research and planning would see you sell something that would take exactly the same amount of time and resources for twice the price though. The way we have worked out the figures basically creates a job for you at 25 quid per hour. Personally I think you could do better.

 

[Davek0974]

@Haunted Worlds I'm confused. I just read back through the thread and you seem to be arguing against your own points. You used Drew Pritchard as an example, but his model demonstrates my point perfectly. He doesn't add a set markup to what he buys, he literally sells for whatever the market will accept. If he buys something for a tenner, and can sell it for a grand he will.

Yes but the difference here is that I cannot see a way to predict "what the market will stand" - I make a product, I want to sell it, preferably pretty quickly to recoup costs and make a little on top. I dont want to do the artists method of make something then advertise it for years until someone with a deep wallet just happens to think its worth the ten grand price tag i put on it.

That is why i view cost-plus as a safe and workable pricing method in my instance YMMV.

Take my standard brackets, there is a market on these, other makers doing similar stuff and all the prices fall in the £20-30 range, therefore I made my ones fall in that range too, no point otherwise as they just will not sell. Now, my custom stuff is different - most of the competition does not offer custom so i have an edge there and the prices reflect labour-plus.

 

[Davek0974]

The way we have worked out the figures basically creates a job for you at 25 quid per hour. Personally I think you could do better.

That pretty much sums it up, I want a job, with me at the helm, providing enough to live on comfortably not lavishly and also enough left to get the odd new tool or once every few years a bigger bit of plant if needed.

Everyone could likely do better, but the question is do they want to, or are they happy as they are???

 

[john1989]

I have done a quick costing based on your information, and I get your costs to be:

Depreciation: £6600 / 5 years / 47 weeks (working weeks) / 40 hours / 4 for 15 minute block = £0.18 per 15 minute block
Labour based on £25per hour
Labour per 15 minute block = £6.25


Labour on CNC table £12.50
Labour on cleaning and prep £6.25
Labour on welding £43.75
Labout on finishing £18.75
Labour on driving £25.00
Steel used £27
Steel wastage @ 10% £2.70
Galvanising cost £15
Plasma Consumables £10
Gas £45 / 6 hours / 4 for 15 minute block X 13 £24.38
Grinding Discs £4.00
Mig wire £1.90
Depreciation on equipment @ 13 x 15mins * £2.34
Total Cost to produce £193.57

The labour hour is based on £25 to include NIC, holiday, sickness. Amend if necessary as I don't know what you could get a welder in at.

 

[john1989]

As I say, that was very quick and done on my phone whilst eating a sandwich so don't be too critical!

 

[AllUpHere]

That pretty much sums it up, I want a job, with me at the helm, providing enough to live on comfortably not lavishly and also enough left to get the odd new tool or once every few years a bigger bit of plant if needed.

Everyone could likely do better, but the question is do they want to, or are they happy as they are???

I guess we are looking at this from opposite angles. If I were you I would prefer to find interesting projects that I would enjoy that would also be much more lucrative financially. If you are happy to potter around making bits and pieces then you are quite right, your existing model will serve you perfectly well.

 

[AllUpHere]

As I say, that was very quick and done on my phone whilst eating a sandwich so don't be too critical!

We are coming in within a few quid of each other, so we can't be far off.

 

[cjd]

Cost your time and your materials. That's your absolute bottom line. If you charge more than that, you're making a contribution towards your overheads. After that, it's all magic and assumption. If you were producing just one component you'd draw a graph showing your variable costs (T&M) inceasing with volume. On the graph you have a horizontal line which is you fixed overhead costs - rentals, power, telephone etc. Where the two lines cross is where you start making a profit. There'll be an explanation of it somewhere on economics websites.

But I don't think you're going down the right business path - as someone else said - there's no margin making basic everyday objects - that's for the mass manufacturing process. I'd seriously consider making up-market, 'designer' art objects. It's a big market where you don't concern yourself too much with cost and think a lot about price. A one man band is more able to sustain himself making high value, highly priced but low volume products with a large margin.

 

[john1989]

Agreed, but both slightly flawed.

The costs will go up again when you factor in:-

• Insurances
• Storage / manufacturing facilities
• Telephone costs
• Advertising
• Computer equipment
• Professional fees
• Disposal costs
• Transport / vehicle costs
• PPE

Probably need to be selling these at upwards of £500.

 

[AllUpHere]

A one man band is more able to sustain himself making high value, highly priced but low volume products with a large margin.

I completely agree. It's much easier for a one man band to get work selling expensive stuff, than it is for him to busy himself full time making reasonably priced items.

The assumption is often mistakenly that selling cheap items will be an easier sell, but in this type of business it isn't the case.

The Op has an advantage when operating in certain sectors, but seems to be aiming at sectors in which he has a distinct disadvantage.

 

[Davek0974]

Cost your time and your materials. That's your absolute bottom line. If you charge more than that, you're making a contribution towards your overheads. After that, it's all magic and assumption. If you were producing just one component you'd draw a graph showing your variable costs (T&M) inceasing with volume. On the graph you have a horizontal line which is you fixed overhead costs - rentals, power, telephone etc. Where the two lines cross is where you start making a profit. There'll be an explanation of it somewhere on economics websites.

But I don't think you're going down the right business path - as someone else said - there's no margin making basic everyday objects - that's for the mass manufacturing process. I'd seriously consider making up-market, 'designer' art objects. It's a big market where you don't concern yourself too much with cost and think a lot about price. A one man band is more able to sustain himself making high value, highly priced but low volume products with a large margin.

I can see where you guys are coming from with the idea of the up-market high value stuff but, and this is a very very big but.. coming up with designer stuff that can happily carry the price tag desired needs one thing that I am very short on - creativity!

I think creativity is a basic essential for artists, sculptors, anyone building stuff from the depths of their minds. Personally I tend to look at stuff, think of a way I can make the design better, easier, different then make it. I'm an adaptor not creator I think. I'm not void of all creativity of course, but do not think I have the ability to just dream up a "thing" and stick a big tag on it.

As for the prices, my app gives me a total of 194.45 and was thinking of going at 199.99 so all seem in the right ball park.

 

[AllUpHere]

You don't need to be hugely creative to maximise your profit. You could also do so by making exactly the same products, but just carefully tailoring them to markets that would pay more for them.

 

[The Byre]

Plasma cost £1600 for the cutter and £5000 for the CNC table, probably estimate 5yr life.
Plasma consumables on this job - £10 max probably £5
Gas - £45 for a bottle, lasts maybe 6-7 hours continuous welding.
Mig Wire - negligible, £19/reel, usage on this job maybe 1/10th reel or less
Electric - maybe call it £10 per day, probably less
Grinding disks - £4 for this job
Time to drive to galvanisers and back - 1 hour
Labour - what would you charge here?

That is a totally bogus calculation!

That is like asking "What does it cost to build a car?" and I say, well, a VW Golf has a marginal build cost of about £2,500 and you say "Ah, that is as may be, but I am building this car out of matchsticks!"

Or how about "How long does it take to start a fire?" and I tell you that I have put a ball of newspaper, some cardboard and kindling down and have lit the thing and it is burning merrily in 60 seconds - and you say "Ah, yes, but I am starting a fire, by rubbing two boy scouts together!"

In other words, there isn't a single task in that lot that I would do the way you are doing them! We are talking hanging basket brackets here (I hope!) and not the Space Shuttle!

A few pennies worth of mild sheet steel, cut with a simple punching machine or a band-saw and bent to take its footing with an ordinary bending machine and welded to its footing with a spot-welder and finished with a small hand grinder, then throw into an acetate bath to clean. That whole process should not take more than five minutes.

Follow that up with chucking it in some primer, followed by finishing paint and then bake - job's a good'un!

 

[Andrew Chambers]

No reason you can't do both, your £200 bits (not sure why John thinks it'll have to be £500, you've already made your desired profit via your hourly rate, maybe a fiver a item to cover the extra costs he mentioned), and when the mood takes you produce the arty-farty pieces and see what you can actually get for them.

Just make sure you enjoy what you are doing.

 

[cjd]

I can see where you guys are coming from with the idea of the up-market high value stuff but, and this is a very very big but.. coming up with designer stuff that can happily carry the price tag desired needs one thing that I am very short on - creativity!

You don't need to be creative if you copy! The Victorians had books full of designs for wrought ironwork. Somewhere there'll be great piles of books on blacksmith designs. Is there a trade body? Ask them. I bet the V&A is full of designs.

When I worked for a large company I was quite shocked to see the graphic artists rooting through huge quantities of design books to steal ideas. You only need a handfull of designs to get you started - I'm not suggesting you sell one-off pieces, but if you hit on a really arty looking piece you could do what the print artists do - a limited edition of - say - 100, numbered articles with a signed certificate. If you're producing lots of the same thing, you can afford to make jigs.

 

[Root 66 Woodshop]

Sorry AllUpHere, you're misunderstanding what I've actually said... try reading the first part where I've said...

Sorry, but I disagree.

All of the products Dave makes are bespoke products no matter how large or small - it's not off the shelf stuff therefore how can he price according to the market?

Example: Look at Drew Pritchard - technically speaking of course no offence to the chap as I actually love what he does... buys crap at a low price sells same crap after a bit of a spruce up (in some cases he doesn't even touch the stuff! ) sells for a higher price... and he does it well!

Drew Pritchard sells according to the market - Products that Dave manufacturers cannot be sold according to the market they have to have a realistic sale price based upon cost of manufacturer.

 

[Davek0974]

That is a totally bogus calculation!

That is like asking "What does it cost to build a car?" and I say, well, a VW Golf has a marginal build cost of about £2,500 and you say "Ah, that is as may be, but I am building this car out of matchsticks!"

Or how about "How long does it take to start a fire?" and I tell you that I have put a ball of newspaper, some cardboard and kindling down and have lit the thing and it is burning merrily in 60 seconds - and you say "Ah, yes, but I am starting a fire, by rubbing two boy scouts together!"

In other words, there isn't a single task in that lot that I would do the way you are doing them! We are talking hanging basket brackets here (I hope!) and not the Space Shuttle!

A few pennies worth of mild sheet steel, cut with a simple punching machine or a band-saw and bent to take its footing with an ordinary bending machine and welded to its footing with a spot-welder and finished with a small hand grinder, then throw into an acetate bath to clean. That whole process should not take more than five minutes.

Follow that up with chucking it in some primer, followed by finishing paint and then bake - job's a good'un!

Ok, lets take a bracket shaped like a westie dog, one of my most popular items - unless you were going to produce tens of thousands of these, all identical, punching is 100% out of the question due to the costs involved in getting a die made.

Forget the bandsaw too, it's not capable of cutting the detail I do, might as well use a hammer and cold-chisel.

My costing example was not a few pennies worth of steel, what was it, £27 ok not a pile but not insignificant.

Not being personal, but based on your description of your finished product, it would be exactly like every other £2.99 Homebase bent POS with the paint or so-called coating dripping off of it, poorly held together and produced as cheap as possible - EXACTLY what I do not produce. I try and produce a product where the quality holds it above the bottom-feeding junk already on the market, way above.

 

[Root 66 Woodshop]

Which as I'm sure Dave gets it... is what I'm saying...

Homebase, B&Q even homebargains tat = a market price

Dave's prices:

Bespoke products = a realist price based upon quality of workmanship

I'll stand by my previous post. I worked out as a general that the cost to create the item (your previous post) came to an estimated £127 - if it's a stock item x 1.8 = £228.6 I posted £229 I believe... rounded up... if you had to factor the other products in as an estimate based upon quantity I believe I said add £50 per item manufactured? coming too £279

The higher price would probably cover everything and anything as of which would/could still allow for movement based upon quantity of purchase from one customer.

 

[Root 66 Woodshop]

To be fair, the only similar items I can find online are in fact Dave's products on Amazon... tells me that there is a market for this kind of stuff, and Dave's the market leader

Why the hell are you asking us ya great divvy! You're already there lol

Joking around though... as I said earlier, some good stuff you got there, the only way I can even think that you'd lose business is if someone can create to the same standard and afford to sell cheaper... at this moment in time I think that's a long way off bud.

 

[AllUpHere]

Drew Pritchard sells according to the market - Products that Dave manufacturers cannot be sold according to the market they have to have a realistic sale price based upon cost of manufacturer.

Why?

 

[The Byre]

My costing example was not a few pennies worth of steel, what was it, £27 ok not a pile but not insignificant.

Not being personal, but based on your description of your finished product, it would be exactly like every other £2.99 Homebase bent POS with the paint or so-called coating dripping off of it, poorly held together and produced as cheap as possible - EXACTLY what I do not produce. I try and produce a product where the quality holds it above the bottom-feeding junk already on the market, way above.

1. So these brackets weigh about 20 kilos??!!

2. Spot welding is in no way inferior to MIG welding - it's just cheaper and quicker!

3. I remain convinced that you are producing the wrong product.

Let's look at this again. You are able to build a steam traction engine. That makes you an engineering hero in my book!

And you are using that level of knowhow, equipment and skill to bang out cut-out dogs??? In the words of that great thinker, philosopher and poet, Dizzy Rascal "Bonkers!"

 

[Carl Mintern]

So my take is as follows-

No point doing calculations with raw figures alone, simply work out the cost of breaking even. By breaking even I mean out of pocket expenses + whatever you'd have earned elswhere in the time allowed.

This figure is your baseline. Start pricing them somewhere above this, at £y

Now market your widgets...

Now look at your order book....

Do you have a waiting list of customers? Yes = raise prices by 10%
No = lower prices by 10%

When you have a waiting list of X number of days, where X is a figure you are happy with (a whole different metric and conversation), if y is higher than your baseline figure you have a business, and have successfully priced your item. If y is lower than your baseline, it's not a business.

Obviously, the above is grossly oversimplified, but I believe the concept to be correct.

Of course there are a million and one things you can do to increase demand for your product (what's an iPhone "worth"? Certainly more than the materials + labour.) and that's where the fun begins, and why some say (myself included) every part of your business is marketing....

 

[Davek0974]

1. So these brackets weigh about 20 kilos??!!

2. Spot welding is in no way inferior to MIG welding - it's just cheaper and quicker!

3. I remain convinced that you are producing the wrong product.

Let's look at this again. You are able to build a steam traction engine. That makes you an engineering hero in my book!

And you are using that level of knowhow, equipment and skill to bang out cut-out dogs??? In the words of that great thinker, philosopher and poet, Dizzy Rascal "Bonkers!"

My pricing example was not for a bracket, and yes it does weigh around 20kg.
Spot welding IMHO is generally used for thin metals in low stress applications, I would not like to spot weld a 3mm thick 300mm long bracket to a 3mm thick wall plate, its a relatively high stress joint and needs a fillet weld.

What I can do and what I want to do are two different things, i suspect they are for many people. I am not geared up for building engines, or any other precision engineering, machinery too old, too slow and the engine market collapsed just after i sold my last one, not recovered yet and that was a few years back.

 

[Matt1959]

blimey what a thread

you need 2 streams of work....

bread and butter work that pays the bills and the other work that gives a fat profit then over time build up the fat profit work and reduce on the bread and butter.

I do not believe for a minute that it is not possible to work out what price a market will pay for ANY product with Google at your fingertips.

Waste of time even mentioning how much wall brackets sell for in Homebase as its irrelevant to a one man band because its mass production, prob imported.

Disregard any customer type that buys on price. There are always those that will pay much more for a better product - people love spending money on nice things for their home.

and its often the case that one underestimates ones ability - thats re. your comment about your creativity so need to keep that in perspective....

 

[Davek0974]

blimey what a thread

you need 2 streams of work....

bread and butter work that pays the bills and the other work that gives a fat profit then over time build up the fat profit work and reduce on the bread and butter.

That is very apt, exactly how i see it. My brackets, tools and low cost items are the B&B stuff, the fire-pits, planters and other ideas i have sketched out hopefully will bring more ££

My next, and most likely biggest issue is marketing - this has been an excellent thread so far, anyone fancy rolling into marketing plans and strategy??

 

[MOIC]

Marketing is your only issue.

It has been from day one.

You seem to have neglected the most important single factor in your (or any) business.

Without marketing you are not targeting your correct customer type, nor charging the "appropriate" price.

Research how similar types of businesses, manufacturing similar products, market their products.

This is not a one hour job and should be your primary consideration.

You will also get inspiration from your research.

To be frank, to charge your time at £25 per hour, you may as well be an employee at an engineering company. (Management, given your capability).

 

[wqgdhdg]

You can make those until you are blue in the face, but it will still remain a hobby.

 

[Davek0974]

Marketing is your only issue.

It has been from day one.

You seem to have neglected the most important single factor in your (or any) business.

Without marketing you are not targeting your correct customer type, nor charging the "appropriate" price.

Research how similar types of businesses, manufacturing similar products, market their products.

This is not a one hour job and should be your primary consideration.

You will also get inspiration from your research.

To be frank, to charge your time at £25 per hour, you may as well be an employee at an engineering company. (Management, given your capability).

Ok, any suggestions while I do some research?

I know they all have web sites, some professional, some not so, without buying a copy of every mag going I have no idea if they use printed media, none of them will use TV or radio, fairly certain none have local outlets.

I did dabble with Adwords but even with help did not manage to find a campaign that provided any results i.e. conversions, lots of hits but no conversions, it's still set up but practically dormant.

 

[MOIC]

What suggestions are you after?

Where you can see like minded people offering individual crafted items?

Top Drawer (Olympia London)

Interior Design Shows

Antique Craft Fairs

High End Magazines (Homes & Garden)

Antique Shops (Middle England)

Look to export your ideas & products to the Middle East & Japan where your value will be more highly appreciated.

Architects

Show House Designers

Grand Designs (Exhibition)

The above just off my head (5 minutes)

Depending where you are located, antique & craft markets (Camden Lock (Camden Town), Campden Passage (Islington), Spitafields (Shoreditch)

If it was my business, I would take as much time off as possible to visit the above (and many more) for a month or two to get information and knowledge, as well as vital contacts to stock your products..

The internet is fine for initial searching, but at some point you need to get out and start "smelling" what there is out there.

BTW Do you have a brand name you can start to build and get recognised?

Good Luck

 

[Funding for Communities]

Set up charge - this could be a fixed amount per job, regardless of size. Rather like the call out charge for a plumber. This is an important element to include.
Materials - direct cost
Time - calculated to pay the hours worked on this item only.
Worth - any addition you feel you can make as additional profit. (eg factors like the value to the customer, how busy you are at the time, the uniqueness of the job)

Graeme's method as above seems to me to cover what your looking for without getting too complicated.

 

[Davek0974]

Ok, picture below is one of my products, a unique fire-pit, heavily built not a pressed tin POS

Running it through my pricing app, I get the following results...

Labour 4.5hrs = £112.50
Plasma Piercing - 147 @10p = £14.70 (covers consumables on plasma probably only about £5)
Materials £72.44 (I use cost*2 here to cover materials, handling, unloading etc)
Plasma cutting £22.03 (based on the raw material cost * 125% * distance cut, this covers machine wear and electricity etc, probably only £5, using the material cost allows for thicker/slower cuts or more exotic metals which also cut slower)
Spray paint £32.51 (covers paint and time to apply)
Welding £7.50 (based on distance welded, covers gas and wire usage)
Total £261.68

I think it works reasonably well and seems to cover most bases, unless i have missed something out?

Obviously I could take that figure then and tweak it etc but the raw figure should be ok no?

I will have a play tonight and try the other pricing methods, see what happens.

 

[cjd]

Well that's a thing of beauty, but what it's worth often has only a passing relationship to what it costs to produce. In the right market, that's easily £500 (Not sure about the gloss paint though, matt seems more appropriate for a fire box.)

Hand Forged Billy Brazier
by BEXSIMON COLLECTIONS
£1100

Hand Forged Crown Fire Pit
by BEXSIMON COLLECTIONS
£1300

 

[Root 66 Woodshop]

I'll be honest here...

I think you're under estimating the value on this product... I could see that unit going for at least £299 - £399 because it's "more" than a standard fire pit...

https://www.notonthehighstreet.com/...sIUReuRL5gnbPWdYEO-d5P3oZzMJgX0a4EaAk9x8P8HAQ

take these variations for instance, I'd say your quality of work is either on par of better than this yet look at the price difference... Granted the one in this image does look really cool with the fire going behind it, but I bet yours isn't that far off either...

Get one of these fire pits and get the fire going, then take the pictures - a much better advertisement for the product... don't you think?

EDIT: Actually, I agree with cjd - it's probably within the £500 - £600 region...

 

[cjd]

Rather fond of this one though

There's some clever work in that but I bet its not x6 yours...... get some nighttime shots and a good website...

Sperical Firepit With Orchid Theme
by THE FIREPIT COMPANY
£1799

 

[john1989]

Marketing is your only issue.

It has been from day one.

You seem to have neglected the most important single factor in your (or any) business.

Without marketing you are not targeting your correct customer type, nor charging the "appropriate" price.

Research how similar types of businesses, manufacturing similar products, market their products.

This is not a one hour job and should be your primary consideration.

You will also get inspiration from your research.

To be frank, to charge your time at £25 per hour, you may as well be an employee at an engineering company. (Management, given your capability).

When I did a quick costing earlier on in the thread, I used £25ph as the labour element.

The selling price would have had to have a decent profit element on top of all the costs.

The £25 labour factor should be there so as the business scales, the model allows for staffing.

I wouldn't risk starting my own business for returns of £25ph.

 

[Davek0974]

Thanks, very interesting stuff there. Those fire-pit balls are hand cut and would have a lot more labour in them than my offerings, much more. That being said, I can see your points re my pricing, the hard part is going to me getting them into that arena i feel.

BTW the paint is satin finish, just looks gloss because it was new and un-baked

I do have some lit pictures of my ones on my site, but not evening ones, thats a great idea and will get that underway.

 

[Davek0974]

I wouldn't risk starting my own business for returns of £25ph.

But not even if you were just looking to replace a day-job and had lowish outgoings - no kids, no mortgage, own workshop etc???

 

[Andrew Chambers]

But not even if you were just looking to replace a day-job and had lowish outgoings - no kids, no mortgage, own workshop etc???

You're right, 100%. There's a lot to be said for earning enough self employed, and no more. The freedom, doing what you want when you want, no staff issues, business plans, bank "managers", overdrafts, business loans, leases. I've been there and done it, and honestly I've now "created a job for myself" and never been happier. Forget growing a business and enjoy earning a decent living on your terms.

 

[Davek0974]

You're right, 100%. There's a lot to be said for earning enough self employed, and no more. The freedom, doing what you want when you want, no staff issues, business plans, bank "managers", overdrafts, business loans, leases. I've been there and done it, and honestly I've now "created a job for myself" and never been happier. Forget growing a business and enjoy earning a decent living on your terms.

Spot on, the thought of the above is very appealing to me, that is the idea.