pricing

[stxsmith]

i have been forging things for friends an family for a while, but have just started for the general public. how do i price pieces of work? by the hour to build, by the skill to build, or just stick a price? some say i am cheap on some things and expensive on others?. i need some advice so i can sell things and not go broke doing it!

[Finnr]

A very rough figure would be twenty dollars per hour on things I run fairly quickly plus twice the cost of material. It will often be different , but that's a guideline of sorts.
Finnr

[Glenn]

There are several discussions on pricing in the IForgeIron Archives (bottom of the forum page).

[S.Willis]

Its really hard to figure because the cost of the coal or gas,power,grind disc,wear and tear on tools,etc. I would have to agree with Finnr. At least twice the cost of material. $20 an hour being a rough figure. Keep in mind if you go to their house to take measurements and design something for their specfic needs that would be extra.

[Frosty]

A very common and much discussed topic for sure.

There are so many variables it typically takes several pages just to outline them.

A short list includes:

Cost of living in your area, including shop overhead, materials, consumables, etc.

Market in your area.

Your skill level, including fit and finish, speed, design, execution, etc.

Tools and equipment.

Gvt. involvement including, Taxes fed, state and local. Zoning, neighbor relations, etc.

The list is so much longer I start hitting brain freeze about here. I keep subcatagorizing and worse.

So there are a few basic methods.

One of my favorite is "shop rate." You have to account for the variables that dictate what you MUST bring in t keep the shop open, a roof over your head, feed and supply the family and keep you in a little walking around money.

Then account for how many hours you want to work a week and divide the money by hours to determine break even. Double it and you may be charging enough to make it.

You can charge by the piece, good if you're a mostly hobbyist like myself. To do this you need to determine how long it takes to make an item. (You have to do this for any fair pricing method so keep a notebook, take pics, etc.)

It isn't fair to charge for your first efforts as you will get faster and better with practice. You'll NEVER stop improving so you can't expect to hit a maximum efficiency but after a period (which differs person to person and with increased general skill) you will plateau. This is generally a fair example of how long and such it will take you to make the item. Some guys say this is after 100, some after a couple dozen, it'll depend on you.

Keeping careful notes will let you transfer one element to other projects. For instance you're making a finial scroll for a widget. It's a small one, say 3/8" dia and 3/4 curl. After doing a couple dozen you determine you can make one from scratch in one heat and 45 seconds.

You decide $1.25 ea. is fair. (I just pulled that number out of the air so don't get too picky. okay guys?) You take a couple snaps of it and listing the amount of stock you started with and write it up in your notebook under "Finials"

Later you need to bid a project where that or a similar finial will work for you so go to your notebook and with a little tweeking for material costs, dimension, etc. you have a good starting point for bidding THAT element.

Bidding a job is another form of piece work tough much more complex and make or break for a business. The method is much like the above for piece work which is why it's a good idea to compile as many and as complete notebooks as you can. (Nothing wrong with keeping them on your computer in a spreadsheet type program but remember crashes happen and backup)

A bid entails a lot more estimation than pricing piecework. It isn't very practical to build a dozen so you know what the time and materials are. Having a good handle on your own skills, time management, materials management, etc. is a must. (NOTEBOOK. Right?)

The downside if you miss your bid is you are legally obliged to produce it for that price and you can end up losing your shirt.

Changes of order happen but you MUST have it covered in the contract or you'll lose your other shirt.

This is the barest glimpse of the shadow out of the corner of your eye of proper pricing. Many papers, online articles, page after page of advice and hundreds of books have been written on the subject.

Frosty

[Ted T]

The general topic of the business end of the blacksmith / welding craft pops up every once in a while. I believe enough that we should consider condensing anything having to do with the business end of blacksmithing/welding trade and placing it where it would be easily found.
Several Blacksmiths such as Glenn, Dale Russell, Frosty and many others have given opinions about costs and business operations. That is because guy’s like my self needs it!
The need for you all to share the “know how” of the business end of the Blacksmithing craft cannot be over emphasized in my opinion. A person who is considering taking the craft from a hobby to the level of making a real business out of it needs to know exactly what to prepare for.
The difficulty of setting up and running a business is most definitely not as easy as it was when I was in the business in the 60’s and 70’s.
As of this week I finally determined that I did not have enough knowledge of the business end of the craft to start my own business. If I was to follow all of the OSHA, and “all” other legal City, County, State, and Federal requirements connected with the legal operational functions and expense of a one man “Welding / Blacksmith” business, I could no longer do it at this time in my life.
Don’t let me discourage you though, I am just an old man and not in very good shape!
I have friends who are in the welding/ blacksmith business. Some of them pretty well keep under the radar of the law by doing a lot of Bartering and Trade Work. I say that I do not blame them.
I feel it may be useful to make a running log here at I Forge Iron so that we can add information about of “Product Pricing Strategy’s, OSHA laws specific to a welding / blacksmithing operations, of the various permits and the necessary record keeping requirements needed for city, State, and or federal agencies.
I had a lot of dreams about re-starting into the business, but now I finely accepted that I am a backyard “hobbyist” blacksmith, and happy to be doing it!
Ted

[firebug]

One thing I would say is do not cut the throat of other Blacksmiths in the area. You are not only harming them but yourself and the business as a whole. A perfect example is the Mexican stuff that comes into this country. Now we all know that it cannot compare to hand forged stuff found in the states MOST of the time. But, it is cheap and that is what many in this country have come to expect, cheap blacksmithing. It is no different when we cut each others throat just to get a job. I no longer NEED to practice on many things that I do so I charge what it is worth. If I lose the job then I would rather not work than to work for nothing. If you sit down and figure you can build that widget for 5 dollars and everyone else is charging 25 dollars for it, wouldn't it be foolish to only charge 10 dollars for the widget? You could charge 22 dollars, which is 3 dollars less than the other guy. He will still get some work because you haven't cut his throat, you will make an extra 12 dollars compared to what you were going to charge. Everybody stays in business. I would rather charge more and do less work and make more money. The point here is to get what it is worth which many times can be based on what others are charging for it. Do some research if you can concerning other smiths in the area. Remember to be realistic about your ability and the quality of work as compared to other more experienced smiths. People will buy a less than perfect piece many times as long as the price reflects it. As mentioned above, what is the cost of living in your area? What kind of market do you have, small town, high end neighborhoods, etc? What do you pay for overhead. This is where I have an advantage over most in my area. I have a 2200 square foot metal building that has been paid for for years. Now here is an good example of what I spoke of earlier. I have no rent, power bills run about 45.00 a month and I have no employees. I could use that to really under cut the prices of others but I don't. I charge close to what others charge. I know of folks that blacksmith for a hobbie and practically give their stuff away when they sale it. They are not only hurting themselves but those of us trying to make a living at blacksmithing. I am not talking bad about anyone, I don't believe many look at it like that. They enjoy the craft and want to share it with others, many times by practically giving away their products. I will stop rambling now, wait no I won't. One more thing. I have figured that if I cant make about 50 dollars an hour I don't mess with it unless I absolutely have no work which is never a problem. SO, figure out what it cost you to operate your business buy adding up all of the associated costs, rent, insurance, utilities etc. Then figure out based on a 40 work week what it cost per hour to run the shop. Then add to that what you think you time is worth, as one mentioned above, 20 dollars an hour, what about 30 dollars? That is something that only YOU can answer. Your clients will help you with that one too sometimes. Remember this, do whatever it is you know how to do to make money to keep those doors OPEN. I am moving towards blacksmithing FAST thanks to Hofi. But, I have been doing ornamental iron since I was 12, I am now 43. I can do hand rails, security doors and windows, columns, mailboxes etc. I do all of that, whatever the customer needs. I have read where some refused to do a security door or window guard because it was not what THEY wanted to do. That is fine, nothing wrong with it if you can afford to turn the work down. I want to do nothing but blacksmithing but there are certain security window and door jobs where I make nearly a 1000.00 a day. I do not turn that down. The point here is if you can be diversified do it until you can afford to be more selective. Another thing that I like is working by myself. Not only is the overhead lower I get a lot done and if it is wrong I know who to blame. I almost fired myself twice last year but after a "come to the meeting" with me, I have been a pretty good employee the last several months. Later

[Viggen]

I have a friend who is a wood turner, he does show and sell some of what he makes. He says that the general practice for his stuff is materials cost X10. So if he has $30 worth of materials into a project he will charge and get $300 for the piece and factor in additional time if necessary. This may or may not translate to metals. But like Firebug mentioned, you have to understand your own costs.

In talking with Smith's locally, the ones who make a living at it are very selective about what economic level they will work with....they want to make sure the get paid for what they do.
If you " give it away" you hurt yourself and every other Blacksmith around.

[Finnr]

With my wood turning I do almost exclusively face plate work. I price height times dia. in inches x $1.10 plus twice what the replacement cost of the wood would be.
Finnr

[triw]

I know this is something I struggle with. What do you charge for a good knife that has 20 plus hours in its creation while going against the price of a mass produced one.