Pricing my work makes me uneasy

[jwilson645]

I have recently had requests for commissioned work and it scares me to death. I have been blacksmithing for 5 or 6 yrs but only really serious since March 2019. It's what I want but the pricing part of it turns my stomach because I feel like there are other smiths that can make things much better than me and so I don't know how to price my labor. I don't want to put it too low and take away from other smiths but I also don't want to put it too high and lose out on a sale.  

 

How do you quote a price for something when you have never made it and don't know how long it will take you to make it? My current delimma is that i was asked to quote a build on a fire place grate with specific dimensions/stock size and scroll work. I took a wild guess and on the time and am crossing my fingers. 

[ThomasPowers]

There are a number of threads here that discusses that and various methods of coming up with a price.  Reviewing those may cover what you want to know.

One thing to remember is that you are doing Custom/Bespoke work and so that is not priced  at Fab shop prices.  I once had a mechanic who was surprised that custom work would be more expensive than Big Box Store stuff. I asked him if he would build me a car engine from the ground up cheaper than I could by one in a crate? He started to get the idea.

If the job zips through easily and fast you could always throw in a matching fire poker as boot...

[Pzkw108]

As a welder people ask me all the time to quote em on a project from a picture found online..... My answer is always: If you want to see if I will quote for less than what you found online don't waste your time ( And mine..) 

Custom work is really hard to quote !  All you can do is to compare with an other project you've done before. Other thing to take in consideration, sometime you quote a little low because you feel it will be a returning consumer. If you just starting you can always tell yourself that you are learning.

Quoting a job is like telling a girl "I love you" you never know what's gonna happen next lol !

[pnut]

I would give an estimate not a quote. 

Pnut

[lyuv]

I asume the problem is COMITING you and the client to the deal. Perhaps there are ways around that comitment. Like:

1. If the grate may fit other clients, you can make it first (or several), and then price it. Let the client decide if he wants it.

2. Make part of it, so you get better estimation of the work ahead. Then price it and see if the client agrees. Worst case - you lost some work. Perhaps it's reusable.

[ThomasPowers]

One thing about custom work is that the price needs to include all your overhead for the time as well; so shop rent/mortgage payment, insurance, here in the US retirement, yup everything that it costs you to be doing what it is you do.  A major mistake is people factor in their material costs and time and forget about the roof, electricity, finishing, delivery, etc. costs.

[jwilson645]

4 hours ago, lyuv said:

I asume the problem is COMITING you and the client to the deal. Perhaps there are ways around that comitment. Like:

1. If the grate may fit other clients, you can make it first (or several), and then price it. Let the client decide if he wants it.

2. Make part of it, so you get better estimation of the work ahead. Then price it and see if the client agrees. Worst case - you lost some work. Perhaps it's reusable.

Being a standard size fire place, I decided to go ahead and build it then we will discuss pricing once I know how much time I put in it. If he doesn't take it, I'm ok with that. I am pretty sure it will sell to someone else and if it doesn't, it was a good practice and I can repurpose it or chop it up to make other things. 

 

22 minutes ago, ThomasPowers said:

One thing about custom work is that the price needs to include all your overhead for the time as well; so shop rent/mortgage payment, insurance, here in the US retirement, yup everything that it costs you to be doing what it is you do.  A major mistake is people factor in their material costs and time and forget about the roof, electricity, finishing, delivery, etc. costs.

You make a good point, Thomas. I got my material costs and added 25% to that and then estimated my hours based on my hourly rate. I never considered the electricity, finishing, mortgage.  I'm still new to selling so I appreciate the input.

[ThomasPowers]

On the other side:  I am not a commercial smith; I run my shop at a dead loss off of my allowance and if I sell something it is a "windfall".  However I have friends who support themselves with their craft. I remember how surprised I was when one of them told me that how they depreciated their tools on their US taxes sometimes made the difference between making a profit in a year or not making a profit.   It emphasized that running your own business was a business and had better be on top of that part of it!

This is why when we get the "I don't want to go to college, I want to be a knifemaker."  My reply is generally on the order of "Great, now go to college and take all the business and accounting classes you can!" Far easier to learn the art and craft on your own than to lean the part that manages all the inputs and outputs.  (The other thing I commonly advise is to move to a country with socialized medicine or marry a spouse with a good job and benefits.  Most small craft people are *one* accident or health incident away from bankruptcy!)

[jwilson645]

1 hour ago, ThomasPowers said:

On the other side:  I am not a commercial smith; I run my shop at a dead loss off of my allowance and if I sell something it is a "windfall".  

This is actually just a side gig for me and I work a fulltime job in accounting. However, like blacksmithing, there are specialized areas and neither taxes nor job costing are mine. LOL

Once I retire in 10 more years, I want to be a fulltime blacksmith so I am setting the ground work now. 

[BIGGUNDOCTOR]

When it comes to estimating time, double what you think it will take, and even then you may come up short

I never really charged what I could when I had my machine and fab shop. I found out how much I was losing when I was working at the Jelly Belly Candy Co. and saw what they were paying for items. I would have felt guilty charging what other shops did. The clincher was when our parts guy found out I used to have a shop, and asked how much I would have charged to make a plate for an imprinter. Roughly 4"x4"x 5/8" thick aluminum, beveled edges, 7 drilled and tapped, holes and 3 rectangular slots 3/16"x 1" in a shallow pocket. I asked how many and he said 20. I looked it over, and estimated 1 hour each doing them as a batch a step at a time. Everything was quick set ups, and fairly loose tolerances. I said I would have a hard time charging $100 each, and more like $60-$80 each (this was back in the late 90's). He said they just paid $300 each, and the manufacturer wanted $1,000 each. DOH!  I am seeing this again where I work now. We pay stupid prices for simple items.

I also learned that with some jobs you are better off not doing at all, as they end up costing you instead of making you money.

 In the thread pricing your work, the point is brought up that the hardest part to estimate is the perceived value to the customer. That is hardest, because everyone has a different pain level. One of my gunsmithing books has a way to determine this. The example was putting a recoil pad on a shotgun. Give a price and watch the customer's face closely. The pad was $30 - no reaction, then start adding on. Trimming the stock $5 - nothing, touching up the finish $20 - eye twitch - STOP, because you just hit their pain level. I was talking with a guy who did gunstock fitting, and his price started at $2,500, and he had more work than he could handle. He told me about sending one of his customers to the gunsmith I worked for to have a screw replaced in his shotgun. Eldon told him $20, and the guy called Eddie to see if Eldon was any good, because he charged so little. Eddie called Eldon and told him he should have told him $120 because the shotgun was worth something like $20,000 and he was used to paying big money for work. That guy equated price with value. You could do this too. Start with a basic materials price, then start adding things like labor, consumables, finishing options, tax,etc until you see a reaction.  Also take into account what your customer does for a living. Basic blue collar working man driving an old Dodge pickup , or highly paid executive with a $700,000+ home, and driving a big Mercedes S-Class  You can actually loose work by not charging some customers enough.

Good luck on the project, and keep notes on total time (running around getting materials, supplies, actual labor on the project, designing, dealing with the customer, etc), all materials used, problems encountered, and so on.

[Frosty]

I just had to delete a LONG post about how I used to bid work. I tend to be long winded on a good day and this subject trips my trigger. I tend to start talking about projects, how I estimated and bid them. Just too much writing and reading for limited utility.

However I do have a broad example and shortish Frosty story. For a (NOT brief enough) period I was associated with  bladesmith in Anchorage. I won't go into how much it cost me to learn to be VERY careful of who you trust. Anyway, he had a booth at the Alaska State Fair. If you search for the blacksmith doing demos at the fair you'll see a good friend of mine, the fair seems to have lost the records on the Other guy. Anyway, it was NOT Mark.

He offered to let me demo at the fair in his booth and I jumped at the chance. Had a really good time, I love smithing to an audience. Anyway, Otherguy kept telling me I was charging too much for leaf hooks. They make a good demo, the way I do them they involve a number of different processes and are quick. When I was practiced up on them I could forge a leaf finial coat hook in about 6 minutes while describing what I was doing, why, answering questions and telling jokes. I approach demos as theater, folk learn faster and remember more if they're entertained by the lesson, make them laugh and they never forget.

Anyway, I was selling finished hooks for $9.95 and $34.95 sets of four.  I always had enough hooks on my table to let folk look touch, etc. while I talked and hammered. The Otherguy kept talking about how he'd sell my hooks for $$6. each if he were making them. Never saw hi make a hook though I'm sure he could. So, middle of day two he and his wife head out to get some fair food lunch. I'm sick of hearing I'm too expensive so I flip the price card over and write. "$19.95 ea. Set of four $74.95.

When they returned, maybe 45 minutes or so I didn't have a hook on the table and people were waiting for me to finish one so they could buy it. I had to put my foot down so I could have ONE finished hook on the table. People were actually bidding till I told the to stop, the price was the price. 

Under $20 and fits in a pocket is golden at demos. Oh and nobody asked for their nickle change and the order I got for a 4 hook rack refused the $5.05 change. 

You have to CHARGE ENOUGH. Folks buying hand forged products are looking for bragging rights unless it's some specialty tool but specials cost too. Nobody shows off a painting and brags about how cheap it was. I've never heard anybody mention let alone brag about a Sears, porch railing. Hand forged is another thing, folk are paying in excess of $300/ft. locally for pretty basic forged railings, say simple twist pickets and scrolled cap rail finial. 

All the business of owning a business applies of course but that's been laid out better than I can or know. The old saw about "how a blacksmith goes to the devil"  isn't just a saying, it's as true as it gets.

Dang, I THOUGHT I could condense that story. Oh well.

Frosty The Lucky.

[Kozzy]

Others have given lots of good advise on the subject..and probably made it even more scary.  The reality is, sometimes you have to plonk down a number and live it it whether good or bad.  There will be jobs you do really well on and jobs that you end up losing on.  In the long run, you want more of the first than the second  It's not much more complicated than that.

And..when doing your estimates, it's the million little things that usually come back to bite you.  Underestimating the labor for a hole by 20% when you have a hundred to do.  Forgetting that the bit of grinding/sanding in finish work always takes longer than you think.  Even screws add up.  With my stuff, crating adds $ 200 to $ 500 a job so that's a HUGE money-suck not to forget.  

ALWAYS err toward more labor than you calculate.  I often calculate what I think are "accurate" hours (doing fabrication) and multiply by 4.  In practice, I've come out close to that 4 multiplier MANY more times than I've landed close to my "accurate" estimate.  Better to sit in your Barcalounger sucking down coffee while watching Judge Judy than to be losing money on a job you cut to the bone due to either thinking you needed to just to play or via underestimating your worth.  Let the hungry fools take the really bad and low/no profit stuff.  There are plenty of those guys and you don't need to mess yourself in that swamp..even when starting out:  That's a race to the bottom, not the top.

[George N. M.]

Another way of pricing a large project is by the hour rather than by the total project.  You can say "I charge $X per hour and I THINK that this will take me Y hours but that is only an estimate."  Then, you get a partial payment up front and the remainder on delivery.  This is how many other professionals charge for their time and skill, lawyers, architects, engineers, etc..  The lawyer may say that he/she will do a divorce for $Z per hour and that you have to put up a $Y retainer and after the retainer is 80% used up at the $Z/hour rate he/she will start billing you. 

Your overhead of soft costs is rolled into your hourly rate just as it is for the hypothetical lawyer who has to pay the secretary, pay professional fees, pay the rent or mortgage on the office, etc..  The rule of thumb for private practice attorneys is that half of the hourly rate goes for overhead and half goes into your pocket.  Your hourly rate is also determined by how many hours you think you can realistically bill in a year.

Also, if the project cost is over a certain amount, say $1000, you want to have a written contract.  This minimizes the possibility of you putting a lot of time and materials into a project and have the customer, at the end, say that he or she has changed their mind and don't want it.  A written contract makes it much easier to take legal action.  It doesn't have to be complex but just set out what you both agree on.

Again, for large projects you can bill periodically, perhaps monthly, for the time and materials you have put into the project that month.  This helps keep a long term project in both your and the customer's minds.

You will bust it a few times, we all have.  If you over estimate too much you can always accept less as your final payment.  If you underestimate you have just paid tuition on experience and hopefully have learned how to be more accurate for the next project/customer.

"By hammer and hand all arts do stand."

[Ohio]

Lots of great points here (I'm with Kozzy and Frosty in both outlook and experience, FYI), but I'd like to add something...

It's okay if you mess up your asking price the first time. Estimating is hard. It's a skill and you have to learn how to do it. The good part for you is that you're confident you can sell what you make whether this deal falls through or not. Over time you'll learn how to do it. And honestly, while you should know your costs (time+materials+overhead) you may then want to consider that your quote should be based on what the market will bear.

If your customer wants wants wants they are asking you to make and is willing to pay considerably more than your costs to get it---and feel good about it---that's near where your quote should be. It may cost $14 to make the thing but your customer maybe ready to shell out a hundred times that because the experience of commissioning a piece is worth it to them. This is another one of those areas where you'll have to learn what that dollar amount is. A lot of it is based on demand, brand, and all that crap, but it's also based on who your customer is and what they want out of the deal. A fire grate, sure, but obviously they're looking for something else, something intangible or they'd be going to the fireplace store to buy. They're coming to you for a reason and once you figure out that reason, it will help you price out your work.

In the meantime, good for you---feels good to have your work in demand. And worry less about screwing up your first estimate. If you screw up your fifth estimate, well, maybe then you should start worrying. 

YMMV

[George N. M.]

One more thought:  If you accept a large project/order make sure that it is something that can keep your own interest and motivation.  You don't want to get burned out on it/bored halfway through a project.  I once accepted and delivered an order for 500 hand forged nails.  It has been 35 years and I still hate making nails and only do so when necessary for another project such as a wall hanger.

"By hammer and hand all arts do stand."

[Kozzy]

23 minutes ago, George N. M. said:

 I once accepted and delivered an order for 500 hand forged nails. 

I have a couple of friends who own their CNC machine shops and have the same outlook.  They could both be making a ton of good money on thousand+ part runs but it bores them so deeply that it makes them hate living by the end of the job.  Hiring someone to handle it for you only works for a short while and that person also tends to go crazy.   I had a CNC project myself recently where even with an 8 part fixture, I had to reload the machine every 5 minutes (only 4 parts finished each time).  The run was 1200 pieces and I wanted to stick a fork in my brain from needing to tend the machine like I was chained to it.

Weigh those kinds of jobs carefully.  Your sanity depends on it.

[Marc1]

On 12/10/2019 at 9:08 AM, jwilson645 said:

I have recently had requests for commissioned work and it scares me to death. I have been blacksmithing for 5 or 6 yrs but only really serious since March 2019. It's what I want but the pricing part of it turns my stomach because I feel like there are other smiths that can make things much better than me and so I don't know how to price my labor. I don't want to put it too low and take away from other smiths but I also don't want to put it too high and lose out on a sale.  

There are many strategies to put a price to a custom job, all have their potential pitfalls. Basically it is a mixture of experience, confidence, research and gamble. 

However what you must address is the reason it makes you so uneasy as to 'turn your stomach' 

The price you charge is your estimation of cost of manufacturing, plus intellectual value, plus profit. You must first of all appreciate and value your work in order not to undersell yourself.  

Instead of calling it a price, call it a "request for appreciation"

[ThomasPowers]

Kozzy; sounds like a job for a retiree or several who want to work a limited amount for Christmas money.  The infamous "Gig" economy type of job.

[jwilson645]

Great advice from everyone. Thanks all!

I decided that I am going to build it, figure out the hours I have in it, price and then show the customer. They were ok with that. If they want it, fine and if they don't, that's fine too. It gives me more experience and another project to add to my gallery. 

 

[ThomasPowers]

I've done that for a few commissions; unfortunately the customers always did want it---I think because I did it such that I would like being stuck with it if they didn't.

[SLAG]

Mr. George N. M.'s,

suggestion is excellent and very legally effective.

For smaller jobs, another contractual vehicle comes to mind.  It is a contract clause that is inserted in a contract for goods and services, that is used by freelance writers.*

The clause goes under the name "kill fee". That clause concerns the situation where an 'interested' recipient evaluates the article and approves it or rejects it. Such a clause prevents them from sitting on the decision for a long time, and then saying no.

(the article is, usually,   exclusive to them while they are considering it.)

The clause obliges the publisher to pay an agreed amount upon rejection.

Such kill fees also come into play where the customer,  (publisher),  commissions the writer to research and write up a requested article.

Such contracts with those kill clauses can be found at freelance writer web sites, for example the Writers Digest,  etc.

SLAG.

* yes, I have done that too.

[George N. M.]

Slag,

Excellent suggestion.  This is particularly valuable if the smith is charging by the hour and the client has 2d thoughts and doesn't want the project.  The client only has to pay for the time the smith has put into the project up to the date of termination.

Also, if a smith is doing a project for an organization or even a couple a single point of contact clause is a good idea so that the smith is not getting conflicting instructions from more than one person.

"By hammer and hand all arts do stand."

[anvil]

Here's your choice. Want the sweet answer or the true answer. 

You already got the sweet. Here's the truth. You cant possibly "make" money on it. Compare say a master plumber installing a new sink vs a neighbor who has just learned to sweat  two pieces of copper pipe and a sleeve. There you are.

So here's the good news. Do a full size drawing. Break it down into its component parts. Can you drill holes? Can you set a rivet? Drill a couple holes in the same size stock you are going to use. Rivet them together. Made any scrolls? Make a sample from your drawing. Do this with all details you don't know, or have no experience making. Add up your times. 

Now when you realize that even far below minimum wage, it's going to cost thousands for this $100 item made by a master craftsman, throw all these figures away and figure out how much your materials are going to cost and use this as your bid.

Now charge all the time you put into this project under the heading of "learning" and just plane have a ball doing this project.

Never charge a client for your learning time. 

Enjoy! And I hope you recognize my attempt at humor and realize the absolute logic of how to bid this job.  Trust me,,,  once you have done a half dozen years of bidding jobs like this,,if you survive, you will actually be on the road to becoming a pretty good smith who can, in fact bid a job that will make you some profit.

Contrary to what some may believe,,, learning just ain't cheap!  But it's worth it. 

I call this a "time and material" bid. This means I'm only going to charge you for material and I plan on taking all the danged amount of time it may take to get her done.  

[jlpservicesinc]

there is a lot of great information here.   

Thomas's points about running a regular business applies big time and there is a formula that takes all these things and more into consideration, Overhead, tools, time, vacation, retirement.. etc,etc.   For those looking to run it as a business with no other income all these facets have to be looked at.   Retired persons have a lot of advantages which many full timers do not.  Steady income for starters and many will have their homes/shops paid off.   

there is a basic formula that many business use to come up with a wage or hourly rate.. 

Anvils: don't charge for learning. Is a good one if you don't need the income and just starting out..,  Because you should not be getting educated on the backs of others figuring it out. In other words no production in a manner that is fitting of a paid smith.  (quality, quantity)

If you do need the income his "don't charge for learning can be applied as learning sessions done on your own vs on the clock. Riveting, transitions, tooling, etc, etc can be fun shop learning time.  Once you get to a point you will come to understand that if it is all custom, it is always a learning game and so for each job there will be something you learn and is part of the job and will get paid as such.  Understanding this means building upon the information you all ready have and applying it in a timely fashion so you are not learning the whole process or learning it again at the expense of the customer.    (hobbiyist vs pro).. 

If you have income coming in and just getting started and not proficient nor fast then these can be wise words as it will keep you item priced  for sale.. 

With this in mind..  charging to much is better than not charging enough..   Always strive to charge to much.  Vs NOT ENOUGH.. 

Don't compare what you charge to anyone else.. this is a bad way to set price and to do business..   Charge what you feel you are worth and be brutely honest with yourself.  When someone buys something or another smith whom you respect tells you what a good deal it is or how'd you make that for so little money.. HINT, HINT.... 

When it comes to JOBS:  If you get the job so be it. If you don't get the job you don't need the  the job..     

A hungry smith can not, not work for money..  But having a choice can offer you some emotional freedom as well as a desire to keep going.  Once you get burnt out anything previous to this won't matter. 

Most everybody was brain washed back in the late 80's to think that 25.00 per hour is good money..  Today that same 25.00 is only worth 10.00 in buying power compared to 1990. 

Today it takes 50.00 per hour to have the same buying power of 25.00 in 1990's dollars.   But somehow everyone has been convinced except the people pulling in more per hour.. 

I don't care what others charge per hour and set my rate based on what I feel the work is worth to "ME"..   I get 125.00 for general forge work.  150.00 for tools and such. and 175.00 for wrought iron work..   I have the luxury of having a full time job that pays well enough so am not a starving smith and back in 1990 I was getting 60.00 per hour plus materials, and misc (coal, nuts bolts, taps, dies.. etc, etc) used for the job.  i had worked backlogged when I quit and was getting 70.00 in 2004 when I closed the doors. 

[rockstar.esq]

I've written quite a bit about estimating both here on IFI, and on my blog.  Reading through what's been posted, I'm reminded of why I spend a lot of time discussing perspective.  

I would suggest that you ask your client to name their budget .  Their answer may save you a lot of time.