What to charge?

[flashbacpt]

I will toss in my two cents..... Over the years, I joined various Christmas Boutique, paying a flat rate for a booth or table space. I always made money. In fact, I sold out (my inventory) everytime, except for one show, where I had to take two items home.
Initially, I was intrigued to see if I could actually sell anything, thought it would be fun, and quite frankly, was somewhat upset at some of the prices that people were charging from previous shows. This was the driving force that made me want to try it out.
I never wanted to do it as a business venture.
The were several reasons that I feel that I was successful. The first and main reason was that I did not "over price" my items. In the craft world, you break down the cost of your materials, and never charge for your time to make the items! Remember, it is to be fun! After determining your cost of materials, you add on a reasonable amount to that cost. This reasonable amount is something that you would be satisfied with and nothing else, and a price that would entice people to buy your item! People are looking for bargains or something that they can afford.

I stopped doing the Christmas shows for the following reasons. It was no longer fun! I found myself having to start in January to be ready for November/December shows. The price of booths/space became too costly which would require raising prices on items, which in turn, would mean less sales. I refused to be part of that!

Today, I continue to go to the Christmas Boutiques, and I can safely say that people (customers) walk in, look around, and buy the reasonable priced items! If they don't see anything reasonable, they walk out empty handed and I don't blame them!

Also, the quality of the boutiques have gone down. Women are now selling, or trying to sell their Avon and Mary Kay products. People don't want these items. Unfortunately, you just don't see the "woodworking items" very much anymore. Makes one wonder if we have lost some "skills" over time in this country?

John
FlashbacPt

[Ed in Tampa]

I think the practice mentioned in the first post had become standard business practice in this country for the last few decades. However before that, price of an object was established on actual cost. Labor cost material cost and etc.

If there was a middleman his cost was added, labor and such.

Then the idea of profit came into play. A fudge factor if you will. So the cost becames labor cost, material cost plus profit. Sounds reasonable until you think if your the only one involved your getting the labor costs and profit so in fact your making a living (labor costs) plus your getting the profit. People were getting rich and borrowing like crazy to live large.

Sounds good! Except the prices have steadly creeped up and now no one is buying anything. One in 5 are now unemployed in this country. The dollar is worth less than half what is was, most banks hold more junk than real assets and businesses are closing at record rates.

I think if you want to sell in today's economy I think it time to get back to actual cost and forget the profit.

If you making a craft the price should be the cost of your time to make, obtain materials, transport and sell the object plus the actual expenses.
When you try to add in the magic "profit" you lose a sell.

When I go somewhere I look at the price, my rational is what would it cost me to make that paying myself between $15 - $20 an hour. If the price is in ballpark I buy it if not I walk on.

I believe that is fair on my part since I would be only making one and the whole process would include learning which adds to my time est. If you have made more than one I'm sure you have learned time saving steps. This my labor est. is bound to be higher than actual labor costs.

[a1gutterman]

I think the practice mentioned in the first post had become standard business practice in this country for the last few decades. However before that, price of an object was established on actual cost. Labor cost material cost and etc.

If there was a middleman his cost was added, labor and such.

Then the idea of profit came into play. A fudge factor if you will. So the cost becames labor cost, material cost plus profit. Sounds reasonable until you think if your the only one involved your getting the labor costs and profit so in fact your making a living (labor costs) plus your getting the profit. People were getting rich and borrowing like crazy to live large.

Sounds good! Except the prices have steadly creeped up and now no one is buying anything. One in 5 are now unemployed in this country. The dollar is worth less than half what is was, most banks hold more junk than real assets and businesses are closing at record rates.

I think if you want to sell in today's economy I think it time to get back to actual cost and forget the profit.

If you making a craft the price should be the cost of your time to make, obtain materials, transport and sell the object plus the actual expenses.
When you try to add in the magic "profit" you lose a sell.

When I go somewhere I look at the price, my rational is what would it cost me to make that paying myself between $15 - $20 an hour. If the price is in ballpark I buy it if not I walk on.

I believe that is fair on my part since I would be only making one and the whole process would include learning which adds to my time est. If you have made more than one I'm sure you have learned time saving steps. This my labor est. is bound to be higher than actual labor costs.

Hi Ed,
Your thoughts on this sound reasonable, until, that is, you throw another consideration into the mix: If you only charge for materials, other actual costs and enough labor to "make a living", you are knot including the costs of buying new tools, maybe lessons to increase your ability, and any other cost that will enable you to do better. IMHO, "profits" are the funds that you use toward those ends and are justifiable. Just my 2cents worth.

[JPG]

Hi Ed,
Your thoughts on this sound reasonable, until, that is, you throw another consideration into the mix: If you only charge for materials, other actual costs and enough labor to "make a living", you are knot including the costs of buying new tools, maybe lessons to increase your ability, and any other cost that will enable you to do better. IMHO, "profits" are the funds that you use toward those ends and are justifiable. Just my 2cents worth.

How does one make a living without net profit? Posts above refer to gross profits(no pun intended, that is the correct term)[except TIM] and do not include those expenses not obvious.

The old timey philosophy was 'charge what the market can bear'. The trick was to know what it could bear.

The aspect of 'availability' has not been brought up. Gold does cost more than sand! Yes gold requires more 'processing' but it's lack of abundance is what makes the processing viable.

Similar to availability is who else has it? Greater profits are necessary to offset development costs(hence the patent laws).

I realize this expands the original question re reasonable price for hand made items.

The answer lies in the answer to who are you making it for and what is it worth to them.

[Ed in Tampa]

How does one make a living without net profit? Posts above refer to gross profits(no pun intended, that is the correct term)[except TIM] and do not include those expenses not obvious.

The old timey philosophy was 'charge what the market can bear'. The trick was to know what it could bear.

The aspect of 'availability' has not been brought up. Gold does cost more than sand! Yes gold requires more 'processing' but it's lack of abundance is what makes the processing viable.

Similar to availability is who else has it? Greater profits are necessary to offset development costs(hence the patent laws).

I realize this expands the original question re reasonable price for hand made items.

The answer lies in the answer to who are you making it for and what is it worth to them.

The old time idea of charging what the market would bear was tempered by something that seems to be missing today.

The economy is in a slump and as such prices should fall instead they are going up. Money is hard to borrow and as such interest paid to investors that make money available to borrow should go up instead it is coming down.

Greed has entered the picture.

I agree with Tim you do need to consider replacing tools and paying for training but again these are all tangible numbers that can be accurately arrived at. You don't swag it, double it and add a fudge factor if you want to stay in business today.

Also you can't add profit over profit if you want to stay in business today.

I still say the right way to do things is figure how much time it will take you to build, add in tool replacement costs and such. Then add to this the cost of material along with cost to market it and you should arrive at a fair price.

Right now our economy is going crazy and people better start rethinking their business practices if they want to survive. I simply won't buy a thing I think is over priced. Needless to say I ain't buying much these days and if the number of business that are closing is any indication others aren't buying either.