How to price items?

[Steel_Island671]

Hi everyone! I just wanted to ask how I can price items. I recently forged some stuff and people liked my work and asked if I can make more and sell them. I made some of the items but have no idea how to price it. How do I calculate labor charges/materials and such in order to make a decent profit? Any help would be greatly appreciated. Thanks!

[Glenn]

Read up on the business section of the site. It has information you should consider.

[Steel_Island671]

On 2/17/2016 at 8:05 PM, Glenn said:

Read up on the business section of the site. It has information you should consider.

Ok thanks

[Glenn]

The direct answer would be to itemize each cost, metal, gas and wear and tear on the car to get the metal, consumables such as saw blades, fuel, etc etc. Now add in rent, water, heat, phone, etc. Do not forget the cost of equipment, the anvil, saw, hammer, chisel, chair you use to rest on, etc etc. ANYTHING that goes into making that product, including the sandpaper and rattle can of paint.

Keep very detailed records of your time, from the time you open the doot to the shop to the time the lights go out and the door is closed. McDonalds pays $X.xx per hour and your skill as a blacksmith is well above that rate.

Do not forget to add in taxes on everything, license fees, property taxes, business tax, county tax, license for the car, etc etc.

Add together all of the above add a percentage more because most likely you missed something alone the way.

This is the CODB (cost of doing business).

Next figure out what you want to make as PROFIT and add that in. THAT is the true cost of the item.

Too much you say, then give the client $20 and walk away. You will still be money ahead at the end of the day.

 

[BIGGUNDOCTOR]

There already is a good thread on pricing your work, a little searching should pull it up.

[yves]

Here is the way I price items that are to be repeated. Pricing a one time job like a handrail is another matter. But for items, here's how I do it and there's a guy in a vid that makes a clear exposé of this way of pricing but I cant find the link.

1.  How much are you worth per hour?
2. How many hours do you work per day or would work per day?
3. How many items can you make during that day.
   Remember that you  will not be pounding iron all day. You'll have to come in, get the forge ready, prepare the material to be forged, have a coffee sometime, pee probably, etc. Now, how many of these items can you forge in a day?
   Also, if you are just beginning forging, you may take more time than you ought to. You cannot charge people for you apprenticeship and you have to factor that in.
4. What is your cost for iron, per item ... read what Glenn posted up here.

Finaly,

On 18/2/2016 at 4:09 PM, BIGGUNDOCTOR said:

There already is a good thread on pricing your work, a little searching should pull it up.

Good luck.

[Forging Carver]

This is how I priced the few things I sold. I calculated how much I wanted to make per hour. Say $20 per hour. I figure out how many hours, or fraction of an hour, it took me and multiply by 20. I then added in material costs such as coal/gas, forge lining, wax, sanding belts, saw blades, etc. You then also have to consider time to package your item, or gas to drive to the craft fair. Hope this helps you out some

[yesteryearforge]

[Daswulf]

1 hour ago, yesteryearforge said:

Lol. Awe  I liked his answer.  

 I just spend all the time calculating the price then sell stuff for a fraction of what I should.  I'll fix that one day. 

 

[yesteryearforge]

My original response to this was deleted

I just stated what I think is how the average smith goes about pricing their work.

I guess the post police don't have a sense of humor

That's what the smiley face was in response to.

 

[Glenn]

You post as deleted because it was not suitable for a family forum.

[Steel_Island671]

Thanks everyone for the great advice! I read up on everything and learned a lot. Happy forging!

[Bowland]

One should consider people's expectation of cost. Sometimes it's lower than it aught to be ( I find this with railings) ,  sometimes higher ( I find this with stairs and stair rails)  

You obviously need to take the rough with the smooth if it's important to close all the deals you can.

If you price all jobs exactly the same your going to be too dear on those with a low perceived value and likely not land the job leaving precisely nil profit. Being well priced on something with a higher perceived value might appear your not of the quality required or loose you margin  that the client was very happy to pay for your work 

It's not all about costing basically but non the less  it's were you should start 

Experiance is a great tutor 

[rockstar.esq]

Bowland's making a good point about perceived value.  Taking it one step further, you should understand that market prices are often confined between competition on one side and your business needs on the other.  Experienced competitors will make sure it's really hard to make money charging less than they do.  This works both ways.  If there is no competition, you're free to charge whatever your customer will pay.

It's a weird quirk of thinking but people are willing to pay princely sums for custom work that aligns with their perceptions of value.  Yet when a company builds itself to deliver the best value on the market, they're often accused of cutting corners to be "the lowest bidder".

My post on "Why overhead should not be figured as a percentage" has a lot of pertinent information on this topic.  Most of the sneaky stuff that gets overlooked in pricing is there.  The thread has a lot of member comments that illustrate how staying on top of your overhead can make or break a business.