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How Much Per Hour!! (What is you shop rate)..


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@Charles R. Stevens I do agree with 15.00 not being enough in the USA..  But 15.00 USD in San Salvador can be a full days wages or at least it used to be.. Again location plays in..

This IFI site is global so input from other lands would be fitting as well..

All your points are right on the money..

This thread was started really as way to share otherwise private information..  I myself am not a full time blacksmith, won't ever be again at least not a production smith like I used to be.

.. The Money in the Farrier business is just to good and besides that every horse I touch is helped..  And Money even in the horse business is as much as a problem until the person has had enough bad farrier experiences that they become willing to look for alternatives..  3 new customers this past week..  

What has allowed for me to come back to blacksmithing is the fact I do it for fun and don't care  about rate per say..   this is only partially true as I firmly believe everybody should be paid what they are worth, but also understand the ratio of retail cost (purchase costs) to production cost for running a blacksmith shop and then market desireability..   You make something that is not in demand or needed and its only good if you are able to create a market..

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10 hours ago, rockstar.esq said:

If you wanted a comparable measure of business viability, annual net profit margin is about as good as it gets.  It's my considered opinion that very few entrepreneurs actively monitor their net profit margins. 

Just for comparison's sake I've heard the national average net profit margin for general contractors reported at 1.4%.  If you can consistently make $1.41 free and clear on a sale of $100, you'd be beating the average net profit margins of an industry producing roughly 6.5% of the US gross domestic product.

Your arguments certainly are ponient and if I were running a factory or doing market research and product viability or working for a firm where they used to the same books you quoted for starting market pricing..  Then yes.. It' would maybe work..  But again also these are for items produced and then averaged together..

If I were a MFG plant instead of a blacksmith or perhaps If the shop was ran as a piece work (with pennies on the dollar) or if mass producing using closed die hammers I would agree.. 

The variation in pay or shop rate is demographically driven as is desirability of product, as is material costs, as is etc, etc, etc.. :) 

 

Sorry... I took a blacksmithing business class back in the 90's as well as a MFG's class on cost analysis as well as a few small business classes..

They all stated the same information as you and they came up with these formula for business concepts and marketability vs profitability.. 

 

What all of those classes did was take me as the person doing the forging  and replaced me with a machine..  (human or mechanical you pick)..   

Number crunchers  love to crunch numbers and one guy I had talked with said for me to be even more profitable I would have to stamp the stuff out.. And if I wanted to be really successful I should import all the items from China  or some other 3rd world country... 

What every single one of these people and professors failed to recognize was it was a hand forged product by me...  Not a machine, I wasn't looking to produce more for pennies per piece and maintain a 1500% mark up..   

Again please try to remember this thread is not ideally about just being profitable..  As mentioned some of the guys all ready have a full time income (retired)..  Some are looking to get into smithing and need a ball park figure to start with..  

Back in the day at 65.00 per hour in the 90's it was a decent wage and yes if you figured out what electric, insurance, retirement, etc, etc it became about how frugal I could be or How fast I could forge something to remain profitable..  

I personally don't believe a full time smith can live on 65.00 per hour unless they own all the shop, equipment, land, etc, etc. as the pay rate hasn't gone up in years..     I know welders that are making 2500.00 a week but are working 50hrs a week..      What kind of living is that...       Do you want to work to live? Or live to work?

So, back to pricing...   If you make a premium product and have a name you can get a premium price..    If you are looking to get more than average.... Your work needs to be better than average and/ or be in an area of high demand...    

@rockstar.esq What is you shop rate for most of the items produce?  Or what is you ideal per hour rate.. 

Different items can have drastically different pricing structures which again most people figure out over a year or so in business..

Back in the day I was also told that I should have a shop rate and then a personal rate for personal pay..     The shop and labor are billed separately..

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Greetings all,

      Just a funny experience..   I had a rather influential wealthy lady call my shop and requested a price for some custom interior railing pricing by the foot.  She was obviously phone shopping fence company’s.  I tried to explain the veritables but she was quite insistent to lock in a price by the foot.. After her third call I finally told her that I would consider doing her work for the same rate as her husband charges for his service..  She said “ well my husband is a doctor “ I replied well mam I am a doctor of metal. She didn’t recall . I called the other smiths in the area , Friends not competion, and give them a heads up . No iron for you.. 

Forge on and make beautiful things 

Jim

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I once complained about an excessive wait at a Dr's office and the Office Manager told me that the Dr's time was worth more than mine since he had spent so many years in college, I asked the details and it turned out that I had spent more years in college than the Dr had---but suddenly there was a different reason instead of paying me the difference based on college years ratio...

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This thread is very eye opening and making me consider more costs then my limited mind usually thinks of. I'm forging small stuff like trinkets, doodads and whatever I feel like at the moment. Also making sculptures. This is a hobby at the moment but I would like to make it more. I currently have a full time job that supports me so any sales offset my hobby. 

I will say I'm horrible when it comes to money and numbers and business so maybe it should just stay a hobby tho I'd love to make it more. 

At the moment I'm charging around $25.hr + a small overhead roughly. Some forged items less until I feel my work is worth more. 

It is certainly not enough to survive on but I feel I'd have to get my name out there first to charge more. I am near a major city that  I can do better pricewise in. I need to get into that market tho and it seems like a chore or expensive to do so. 

 

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So MIT did the math and said that Grady county Oklahoma $9.99 an hour ( they are only quoting $2600 a year in medical expenses when the reality of insurance is $800 a month plus) that’s for one person no kids, $23 for one kid. $16 two adults one working... 

If we compare that to mechanic rates, techs get $18-20 an hour wile the shop charges $90-125  plus 10% for shop supplies and labor (with a 30-100% mark up depending on the part). Hmm, not a living wage if your a single parent... 

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There is a reason why a lot of tradesman and artists have difficulties with money. Be it charging the right price for their work or being organised with their money. 

The reason is somewhat unpalatable and goes at the root of our own character.

"Money stinks", "money is at the root of all evil", "talking about money is rude", and a million more stereotypes of this nature are engrained in many cultures.

Somehow we have absorbed this idea that interest in money making, profits and prosperity is akin to greed and is evil and should be avoided. May be not in those words, may be not even consciously but it is there at every turn. I used to like the series of the detective "Columbo". The murderer was always the one dressed in a suit, respectful and with lots of money. 

The artist and the tradesman who sell their product or time generally to others who have more money than themselves (although not always so), fall for this stereotype without knowing it most time than not.

I used to be invited to speak at a personal development course and their target audience was middle class businessman.

Many times I  ask the following question: What is a good sum for a man to earn a year? 

The audience would go around in circles with ... well depends what he does, qualifications etc etc. I let them run with that for a while.

Then I would say ... So if a person earns $50k a year, is that OK?

Sure, yes, of course, nothing wrong was the invariable answer. (Note, I did not say what this person supposedly did)

I would up this sum at 50k intervals and lose supporters in droves with every 50K. By the time I was at $200k only a few would find the sum palatable.

At that point I would jump to $500k only to hear murmurations all around, and when I said $1mil, the room would explode in protest. No one is worth that much! outrageous! .. that is pure greed! and so on.

What happened? 

The "anti values", that is alleged values that actually work against you ...  in each of the members of the audience kicked in, at different intervals, but they invariably did in time. It is evil to earn "too much money", and it is extremely easy to tease this anti values out of anyone.

We grow up in a home where money is not a topic of discussion, go to a school that does not teach how to make money, may even have a university degree yet no one told you how to make money. Money is dirty. I once asked a preacher after a fierce sermon against all those rich people, and I asked him ... How did God bless Salomon? With prosperity and riches right? If that is so bad, why didn't God make him poor and destitute? There are scores of misinterpretations in everyday life and even in religion that have created generations of money illiterate, that somehow think that not knowing anything about money is cool and the way to be, and that the opposite is a demonstration of greed, perhaps a sick obsession of sort. 

And so when it comes to charge for you hard earned artistic talent and your sweat for those hours of work, you don't know what is the right price. You wouldn't hesitate to pay for a welding course yet a business strategy is not on the cards. 

And it is not your fault. To find those pesky anti-values, understand them and replace them with some that actually serve you is not easy. Yet the first step is acknowledging that something is wrong if we consider money evil yet need an ever increasing amount of this evil to have a decent and prosperous life. 

Homework: Read "As a man thinketh" by James Allen. ... :)

 

 

 

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Very interesting take on it! 

I think another factor in people deciding what their time is worth is down to how much they invested in their own training. 

People tend to be most critical of their own work, and as such don't value their own time spend on practicing and learning a craft, particularly an artistic one such as blacksmithing. 

Flip to another profession where the only entry to it is via education, you can put a direct cost of investment based on university and professional membership fees. 

That person may have gone into debt over the cost of X years of study. 

The cost isn't against the time, but the tuition fees. 

They feel like there is a tangible figure they can justify charging for their services based on what they have invested to get that set of skills. 

 

I blacksmith as a hobby, only started recently. I'd give away things or charge very little for anything I make. Definitely operating at a loss, but hope to make a small amount back to pay for consumables down the line. 

Flip to my profession of software development, my daily rate to customers is billed at over $1000

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16 hours ago, Jim Coke said:

After her third call I finally told her that I would consider doing her work for the same rate as her husband charges for his service..  She said “ well my husband is a doctor “ I replied well mam I am a doctor of metal. She didn’t recall . I called the other smiths in the area , Friends not competion, and give them a heads up . No iron for you.. 

I used to get some of these peeps as well..   Tire kickers is what I used to call them..Even had a few I made samples for and then never heard back.. Never collected the hardware samples back either..   I get a few of these in the Farrier business as well. . I person calls me monthly to talk about her horses..

15 hours ago, ThomasPowers said:

I once complained about an excessive wait at a Dr's office and the Office Manager told me that the Dr's time was worth more than mine since he had spent so many years in college, I asked the details and it turned out that I had spent more years in college than the Dr had---but suddenly there was a different reason instead of paying me the difference based on college years ratio...

Someone who makes big dollars per hour always looks (not always though it feels that way) down on others as the other person does not deserve the same pay rate or is as deserving..

14 hours ago, Charles R. Stevens said:

So MIT did the math and said that Grady county Oklahoma $9.99 an hour ( they are only quoting $2600 a year in medical expenses when the reality of insurance is $800 a month plus) that’s for one person no kids, $23 for one kid. $16 two adults one working... 

If we compare that to mechanic rates, techs get $18-20 an hour wile the shop charges $90-125  plus 10% for shop supplies and labor (with a 30-100% mark up depending on the part). Hmm, not a living wage if your a single parent... 

So, with this in mind you can see that the shop is really making all the profit on the backs of the workers...     It's one of the problems that plagues a single person shop or even I there is more than one smith in the shop..    There is no way technically to make something by hand and produce enough to lower the price to produce more and make up the difference in quantity and sales volume..  

Making a lot of something and then charging less to make more money..   It's one of the reasons I always ask..    did getting that power hammer increase your profit margins?

Hand forging a strap hinge takes about 1hr..     Doing in on the hammer takes about 30min..   Do I charge less because I now can do it in half the time? Or do I charge the same and add that to the profit margin?

8 hours ago, JustAnotherViking said:

Very interesting take on it! 

I think another factor in people deciding what their time is worth is down to how much they invested in their own training. 

People tend to be most critical of their own work, and as such don't value their own time spend on practicing and learning a craft, particularly an artistic one such as blacksmithing. 

Flip to another profession where the only entry to it is via education, you can put a direct cost of investment based on university and professional membership fees. 

That person may have gone into debt over the cost of X years of study. 

The cost isn't against the time, but the tuition fees. 

They feel like there is a tangible figure they can justify charging for their services based on what they have invested to get that set of skills. 

What I have really seen in the last 15 or 20 years  is the fact that people are still looking at the 1990 wages and calling today as if it were the 1990..  In other words the dollar now is devalued, every thing is much more expensive.. Yet they have been brain washed in beliving all the corporations and businesses have gone out because of to high a labor cost..  

Corps don't care about people.. they only care about profit margins..    Anyhow, most in the USA think 50.00 per hour is good pay... It's because they have been brain washed into believing it.. They are told again and again by all concerned that it's unreasonable..   and 20.00 is plenty.. LOL..   

Look at the minimum wage and how much corps are making...     There is very little trickle down effect, so it becomes what value you place on the work you do..   If more people placed a higher value on the money they made per hour and if everybody agreed then the pay rate would have to go up at the expense of the corp..  

NO one wants this and a small business owner definetly doesn't want this...  But we are talking about owning a blacksmithing shop and running it as such..  Not global economics or a forging juggernaut with mass production.. 

People have to start seeing value in what they do..           As an artist the goal is the art..  Not money management..  It is the problem and why most don't get famous till they die..

Thanks for posting..

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The people that puzzle me are the ones that think custom designed and custom made items, hand made by people who have spent decades learning the craft should be cheaper than WallyWorld ripoffs made in 3rd world countries with disposable labour.   I used to demo/sell at a big art/craft event, The Festival of the Cranes.  I started noticing that most of my sales were done during set up and tear down---I was selling to the other artists/crafters rather than the general public.  They thought my work was good value.

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Greetings Again, last time,

     In the winter months I mentor at the local trade school in the automotive department .  High school students mostly farm folk, The subject of money comes up often and I am surprised at the answers I get when I ask them what money really is.  I go on to explain to them that money is nothing more than a certificate of work hours.  For example if you work at a job and make 10.00 per hour and when you take your girlfriend out to lunch at McDonald’s and spend 10.00 you have actually traded 1 hour of your life or time to eat.  I go a little further and explain that the credit card is nothing more than a obligation of work time to be paid in the future.. Just for fun ask your kids what money is to them you will be surprised at the answers you get.

Forge on and make beautiful things 

Jim

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58 minutes ago, jlpservicesinc said:

can see that the shop is really making all the profit on the backs of the workers...

I would counter this, in that the shop owner is covering all the overheads... yes they'll be making more than the workers do after all expenses are paid, but they are also taking on the risk.
If the number of paying customers is down for a few months in a row, the owner still has the same rent, rates, and wages to pay. The worker has a fixed income and none of the stress.

 

1 hour ago, jlpservicesinc said:

Do I charge less because I now can do it in half the time? Or do I charge the same and add that to the profit margin?

In that example, I would charge the same. You have already established a piece rate for a specific item. Assuming the quality remains, so should the price.
You have personally absorbed the cost of the power hammer, and the extra half hour is now paying the hammers wages.

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Well not necessarily here in the USA where workers can be laid off or let go easily.  My Father once warned me that it's not a good idea to work for a multinational company in America when it's based in Europe.  If they need to dump people to make their financials look good; it's the Americans that tend to get the axe! (He was a VP in one of those companies and told me they had to pay about 2 years of the workers salary to get rid of a worker in the home country and it took weeks of paperwork.  In the USA you can walk into the employee's office and say; "good-bye, security will walk you to the door!"  (Happened to me during the dot com implosion, 14+ years with the company and I was one of the lucky ones as they had shed about 100K people from the company before they got to me.)

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I would agree with Viking on the power hammer, as I estimate my labor on a “the twentieth one I forge should take me this long” rate, and coming from a mechanic background, investing in specialty tools and experience alowerd me to beat “book” rate. Hourly rate in mechanics take the “ he is not as good a tech” out of the equation. The customer pays  the same regardless if one guy takes 8 hours to do a job that takes me 4, and I get paid for the fact I know what I’m doing and have the tools and training to do it right. 

Electrical was one of my specialties, with a wiring diagram and a DVOM I could diagnose almost any problem in less than an hour, repairs generally took 1-2 an hour, plus anything I had to r&r to get at the wiring. Many shops want to charge acual clock time as they don’t know what they are doing ( and manufactures are getting bad about not giving us access to full wiring schematics just what they think you need. Some times you have cross shorts or a malfunction in a “black box” that needs a full diagram to figure out) this hurts bothe the customer and the better techs. The good techs won’t take the job and the customer gets stuck paying the bad tech to learn on the job. 

Same here, shop rate is not always about acual hours spent on a job, but about how many hours it should take. Not unlike estimates bidding to build a house. Small jobs that take you just 10mim May acualy have a higher margin than jobs that take you two weeks because you have made so many of those 15 min bottle openers than you can do it in 10 with out breaking a sweat. 

I think that’s the disconnect between the hourly rate you charge and the hours acualy worked. I can shoe a horse in an hour with out rushing the job and have time to chit chat, but when I started out it took me about 2. The customer still gets charged the same. 

Estimate your labor at that 20th piece. As Glenn and others have said, forge 20 and sell one. Starting out a lot of jobs end up on the scrap pile, you don’t charge for the 19 you made learning how to do the job, just the one you sold. But you make sure you get paid the same rate as any other tradesman to do it. Next time you do the same job you will forge 3 and sell one, and the one after that will be spot on. It will still be the same $20 bottle opener..

 

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Large corporations are sociopathic my nature. “Do your job, keep your job” is corrupted buy “make profit for the share holder”. Making a profit keeps the doors open of any business, and employees who understand this are valuable and should share in the profits either through competitive wages or bonuses, but the nature of the beast takes the humanity out of it. We see the same thing in politics as well. Reelection becomes the motivator, and campaign contributions fund reelection’s, even your local prosecutor and Judge fall victim to this perversion of purpose.

As a blacksmith in the age of mass production we are selling a value added product, if you want a $1.98 bottle opener go to wall mart. If you want a unique, customer hand forged one, your going to pay 5x that. 

When I was a kid, The power company still had a smith in the weld shop. Steel prices being such and many parts of the older power plants being unabtainium it was cost effective for him to forge blanks that the machinists could turn into parts than it was for the machinists to machine them from billets. When steel prices tanked  and he retired they didn’t replace him. I imagine they regret that on occasion. 

Of corse one of my welder buddies has became a smith and knife maker, wile the other has dabbled in knives teases me about taking longer to forge somthing than he can weld it. Truth be he can beat me on some things, but I can beat him on others. It’s all perspective.

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19 minutes ago, Charles R. Stevens said:

As a blacksmith in the age of mass production we are selling a value added product, if you want a $1.98 bottle opener go to wall mart. If you want a unique, customer hand forged one, your going to pay 5x that

So much this. Completely different target markets. 

If people are complaining you're charging too much, it's likely the wrong person you are presenting your goods too. 

I wouldn't seek out a talented artist to get the nails and hidden hardware I need to build my shed, but I would be happy paying a fair price for a one off door handle that's prominently on display. 

It's about adapting to the market, and in this day and age, your target customers could be on another continent, so we need to adapt to the new global market place and not worry about what Frank across the street is charging. 

Living wages in different parts of the world will obviously have a bearing on this, but that just means working harder to find your niche and marketing yourself better 

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When twitted by weldors I like to take a billet starter of band saw blade and pallet strapping and hand it to them and then show them the forge welded  one ground and etched to show the discrete layering and then ask them to weld the one in their hand to match...

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For Me this is a constant source of frustration I charge $60 plus GST at 15% (goods and services tax) there are other names for this but it would get me banned, plus consumables, vehicle charged out at $1.20 per Km, Mig welder  $1.00/min Oxy/acet $1.00/min unless its a large heating tip them its more, Stick welding rods $1.00 each some of the special rods are up to $7.50 each. When I purchase any items steel or any other items I add 40% markup All of these are plus GST. As I get older I have become a lot less tolerant of people wanting stuff done right now but do not want to pay much for it I am very blunt and to the point Cheers Beaver

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4 hours ago, Jim Coke said:

Greetings Again, last time,

     In the winter months I mentor at the local trade school in the automotive department .  High school students mostly farm folk, The subject of money comes up often and I am surprised at the answers I get when I ask them what money really is.  I go on to explain to them that money is nothing more than a certificate of work hours.  For example if you work at a job and make 10.00 per hour and when you take your girlfriend out to lunch at McDonald’s and spend 10.00 you have actually traded 1 hour of your life or time to eat.  I go a little further and explain that the credit card is nothing more than a obligation of work time to be paid in the future.. Just for fun ask your kids what money is to them you will be surprised at the answers you get.

Forge on and make beautiful things 

Jim

I like a different definition for money ... it is the means by which a clever person invoices another. :)

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23 minutes ago, Marc1 said:

I like a different definition for money ... it is the means by which a clever person invoices another. :)

I personally do not believe in the money system and I certainly don't place any value in gold other than fillings or for making eating utensils out of..  Otherwise as for metals it's useless. Oh, gold leaf is nice also.. 

it was explained to me back when I was 16 by my therapist  as a way to barter goods with people who have no interest in the goods I make, but do with another person..  A "dollar" is just a written  barter exchange..    This was at least acceptable to my disillusionment of the way money works..

As for taxes..  There is no tax on services here only the items made and then sold..   There is  ST1 form which  is an exempt sales use form... This allows for me to buy materials or coal or shoes, or equipment for the business with no tax charged at time of purchase..  

The sales tax for any items made with the bought items is then collected and submitted at a rate of 6.25%...       For the work around I pay the tax at time of purchase thus not needing to collect the tax at the other side as I am billing it as a service and as the tax code now is written it's acceptable.. '

 

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2 hours ago, BeaverNZ said:

For Me this is a constant source of frustration I charge $60 plus GST at 15% (goods and services tax

This is per hour I forgot to put, I was having a conversation with the manager of one of the largest engineering businesses in Invercagill and we got onto the subject of margins on materails, I mentioned my 40% and he said really I am happy with 10% admitally he is often dealing in 100000 of dollars and much more but does that mean that because it a larger sum of money you are not allowed to make as much profit on your money invested?. I told him i wouldnt even bother for 10% and yet people are perfectly happy to buy clothing or stuff they dont really need and the margin is 300%. Or go to your so called profestional (Laywer, Dentist etc or any other of the expensive parsites) and they just except it. I sometimes barter but you have to be carfull here as you are trading with things that may have differing values for the parties involved so you need to know exactly what each party expects and be sure both will deliver

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"Sociopathic corporations" ...  "Don't believe in money system" ... "Buying stuff they don't need" ... "So called professionals, expensive parasites"  ... this and many other of your thoughts in the thread, are but the manifestation of what you believe sets you apart from those bad rich. Nothing wrong with believing anything you wish, not a value judgement.

However ... and this is the bit that matters, if you adopt that line of thought, you can not at the same time price your work or steer your business in a way that will make you prosper. You can not because your values will stop you. Your belief system will stop you or you will turn into what you believe to be bad. Rich are bad and I don't want to turn into one of those bad parasitic sociopathic people I hate. 

A natural and popular train of thought, result of lifelong conditioning.  Clearly a set of values that is working against you ... generally speaking of course :)

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I personally base my prices on the quality of the work I do. If it's a custom piece I will give them a price and send them photos of updates once they hit that budget if they don't like it they can either pay more or lose there deposit( I have had customers not happy and want it changed after I consider it done) I will never make anyone pay(aside from the deposit) for something they are not happy with. I also wont make them pay more if i get the hours wrong. I know its not a set rate but it works for me. 

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