Running it like a business

[Dan OHare]

Originally Posted by Glenn

Eliminate waste
Design or redesign projects to use multiples of the total length of the stock size.
For instance 20 feet of steel can be cut to
5 feet (4 pieces)
4 feet (5 pieces)
40 inches (6 pieces)
30 inches (8 pieces)
24 inches (10 pieces)
20 inches (12 pieces)
16 inches (15 pieces)
12 inches (20 pieces) etc.

When you cut multiples, there is no waste. This has the advantage that if you need a 12 inch piece you can use a 24 inch cut, or a 4 foot cut and still have no waste.


Make life easier
Clean off the work table so there IS a place to work. Put the tools back where they belong. Build storage racks for hammers, tongs, etc, build a point of use holding table for tools or whatever that gets in the way on the work table. Turn on some music, the kind of music you enjoy.

Glenn is THE MAN, doing a great job always in bringing all of us this great site. (FOR FREE!) In this quote I believe I will bring... a couple of quotes... from Benjamin Franklin (good advice is timeless).
1.) "The smallest of leaks, left untended will sink the mightiest of ships"
2.) "Look after the pennies and the dollars will look after themselves"
Dan.

[the_sandy_creek_forge]

I know I'm gonna catch all manner of stuffin for this but....

My general labor charge is $20 per hour. That is $20 worth of me working on a weekend, doing something that I ENJOY doing. If it needed to be done two weeks ago, and the person is calling me today (rush job) the price just went up to at least $45 per hour. Why? because I am gonna have to cut my overtime at my day job AND pay for a babysitter so I can work weeknights to get the project done ASAP. The base $20 plus what I make working overtime, plus the babysitter all adds up to at least $45. I know that $20 seems kinda cheap, but again, it is something I ENJOY doing. If it ever got to the point that I was doing this full time, I'd have to charge more, but right now it's a full-time hobby that helps pay for itself every once in a while.

With the railing project I am gearing up on right now (the materials just arrived today in fact) the client originally needed it done as a rush job. I was very up front about the situation of a rush job, and,when I explained my shop practice to said client, they quickly saw that, while it would be nice to have the railing in so they could finish remodeling the living room, they could probably live with the old railing for a month or two and work on the kitchen while I worked on the railing during the weekends. I get the job, make money, come out ahead, and the client gets their railing at a very reasonable price. Everybody's happy.

I also have various "set prices" for various things. Example: I know what a headache it can be to make something with all joints being riveted/tenoned and riveted, especially when it's an object that's hard to support while riveting. Therefore I charge a set price PER riveted joint.

As far as running it as a business: If you bid on a project with a deadline, make sure you hit that deadline. I've passed on things because there was a deadline that I knew might be difficult for me to make. I'd rather pass on a project than end up with the bad publicity for not hitting a deadline.

Multiples/ production work: While I wish that I could make every single piece as an individual piece, somethings really are more practical to make as a production run. Example: Steel roses. I've found that for me to mark out, cut out, drill out, texture, join, shape, and finish a single rose takes me somewhere in the realm of 1.25-1.5 hours. If I get enough materials to do a half dozen at a time, and do everything as a production run, I can cut it down to about 50 minutes per. AND I can get the same price whether the rose was a one off or part of a production run.

Sorry if that got to rambling too much.

-Aaron @ the SCF

[rthibeau]

dief has a valid point insofar as material is a fraction of the cost to do a project. His first example is close to my own calculation that material is about 10% of the project (YMMV) so if you can say there is $100 of steel involved, the charge should be in the $1,000 range; HOWEVER, some projects will require a lot more time than others to use that same amount of material dollar wise. So time is an important consideration in pricing. If you go into the artistic part of the calculation, then, in essence, you are looking at what vehicle did the client drive up in. A Rolls driver will pay a lot more than a VW driver. That is simply a fact of life. Every single blacksmith has a different set of circumstances and expectations to deal with. One size Will Not fit all. The simple version is that you must charge (and receive) more than you spend to complete something....how you arrive at that number is arbitrary to the extent of how well you wish to live off your blacksmithing efforts. A "hobbyist" has a lot of leeway...it's personal preference. A "professional", one whose sole livelihood is blacksmithing, and whose children won't eat if he don't make profits, has none of that leeway......a dollar here and there is the difference between feeding and clothing the children. So, one has to take into consideration at which level they are going to work in. If you wish to "make a living at blacksmithing" add every minor detail plus 25% into the calculation to survive. Some work you can take and some you can't do to pay the bills..it will not pay...you have to say No and walk away...You are not in this to give charity...you are in this to provide for your family and get paid justly for your efforts. It is not easy, but self-employment is not easy. The rewards can be great. Don't forget that you have to cover the cost of Materials, Time, Overhead, Intangibles, and end up with more Cash in your pocket than you started with.

Any questions, feel free to ask, consultations to blacksmiths is Free.

[rthibeau]

Dang (love that word) should have added that I have a degree in Accounting and Business Management, I do consulting for small business professionally, I am a blacksmith and do break even or better, and am willing to help anyone on IFI wanting to do better with the details of getting ahead of the power curve in this line of endeavor. PM or email.

[Daryl]

Quite simlar to Sandy Creek. Though I charge $27/hour for my time at the forge (I will explain later), I also charge a separate fee for design. Once my design is finished, the customer can not take it with them until they pay for the design - this way, if they choose to have someone else make it, I am not out money. I am very good at design and layout (and proud of it, too), and several of my designs have been done by a mass-production shop (with much of the details, rivets, collars and finials eliminated); one of my designs never has been done - the customer had the large sheet with the overall design framed and matted.
I charge that much for my time for several reasons: I am paid quite handsomely at my regular work (despite spending almost 40+ hours a week smithing too), I also like spending some time with my family, AND I will not cheapen my work just to sell it for less than the smith who IS full time and can't afford to have another guy undercut him just to make a sale. If a customer truly appreciates the handwork of smith, paying an honest price isn't a great concern.

[drogo]

My general rule is:
Time + Materials x 2 = Wholesale
Wholesale x 2 = Retail

There are certain things that vary. Sometimes the equasion is multiplied by 3 or higher. sometimes only by one. I do manly production work so I always make things in bunches.

The reason the prices vary is simple but wierd. I have found that if you raise the price rather that lower it the item sells better. It tends to work like that accross the board.

Drogo

[fat pete]

drago I have been told that alot about raising the price

[tbrforge]

one of the things from quoting in sheetmetal and heavy fab for years that popped into my head

when you get the job you quoted to low
if you didn't get the job you were to high
and if you get the job, its up to you to do it "profitably"(which is in the eye of the beholder)

[mtforge]

My shop rate is a little different. I make at least $25 an hour for wholesale and $50 an hour for retail. The retail is to cover the expense of going to an event and such. Most of my business is geared toward reenacting. I have maybe 10% custom work. Half of the work at a show and a little back at the shop. The rest are items I want to make. Part of the challenge is to come up with a procedure to make an item within my rate. I record stock needed and steps to make it (even pictures of setups). If I need to adjust the item later I can without guessing.

[Alan B]

I recently took on a rather unique job for a real estate company. I made an old fashion sign post with their sign on it. I kept close track of the hours, material and all other expenses. This is how it all broke down.

hours=27 ( this includes any help I recruited )
material= $183.00
Travel @ $.50 per mile= $62.00 ( 124 miles )

The job was bid at $950.00. When they went to pay me they had taken up donations, this was a gift for their boss, they had actually collected $1350.00. I wound up with a $400 tip.

Pictures are posted in the gallery.