Pricing my work makes me uneasy

[anvil]

On 1/13/2020 at 5:16 PM, rockstar.esq said:

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

 

This is always my starting point on any major commission.

Given that, and a bit more customer input I do a preliminary design to meet those criteria. I then often choose to add my own details to enhance the design that I want to learn or increase my skill level by doing the needed repetition. This falls under the heading of paying for my learning. This works at any level from the simple to the sublime. Got an order for "S" hooks? Try turning them on the diamond instead of the flat and learn how. It doesn't take any more time to do it either way. It does take a bit more hammer control. Do you usually turn them on a jig? Charge your jig price and invest in developing your eye and hammer control and turn them free handed. 

And thats how I get paid fairly for a job and increase my skill level at my own expense at the same time.

How much "extra" to add? That depends on you, how Hungary you are at the moment vs how dedicated you are to increasing your skills. It's always a trade-off.

Of course, this works best with one off commissions, not production work. Bidding commission work is tough and there are no real guidelines to follow. Production work, on the other hand can and should be set up to follow the wealth of knowledge available for " how to run a business".

Usually, and very generally, if your direction is commission work, following the well established guidelines concerning much of what we speak of here on how to run a blacksmithing business, will lead to failure. I believe it's critical when giving out business advice that it is made clear which are you dealing with.

As far as which course should you follow, well it's my opinion that the Advent of the industrial revolution made being a production "village Smith" type smith or to make a line of historical reproduction anything a low income business far better suited for an industrial approach. It can be done, but you are competing with everything from "acorn" type stampings to cheap with poor to no quality Mexican, India, etc type imports.

If you want to make a decent living in our craft, I believe the industrial approach cannot touch the Craftsman and commission work.  With copious amounts of applied experience and dedication, it is an open ended market with very little competetion. 

[Aby31]

It was hard for me to discuss the price when I took my first few remote qa testing jobs, given that it was paid per project and not per hour.

[jlpservicesinc]

Finding out what the budget is now is my first or second question after I let the person tell me all about the project..

Getting an idea of what they think its worth cuts thru so much discussion and time.

Time is what you get paid for.   How you use that time is up to you not the customer who will bleed you dry of paying time if you let them.

I charge for design fees and will ask that they supply all the drawings.  

If they don't want to then I charge for it all. 

My time is valuable to me. I am running a business and no one is going to give me a handout.

I'm not a fan of "if you make it they will come"  

This type of custom work can come back to haunt, because unless it's a perfect fit for someone or a super good deal many times the item will sit on the shelf for a long time.  

This means I have my time and materials and expenses tied into that project.

Unless I can sell it within 3 months it's a waste.  

 

Stock list items are different because there should be a decent turn over of said items. Stock in, stock out.  

3 months from now one can not predict where the prices of steel, electric, taxes, etc, etc will go.  

That 3.00 bar may cost me 7.00 to replace vs 2.75..  thats a huge loss. 

Fabrication work is a little different as the time is pretty consistent.

As mentioned earlier about not charging enough for machine shop work.  This applies everywhere. There are people and corps that have the money to spend and for tax reasons make out better spending it.

 

Frugality based of common sense works for those that don't have much (much being relative).  But the intrinsic value of something has to be established by the purchaser.

 

As an addendum.  Got a call for farrier service yesterday 5 horses.

Had a nice conversation and the woman hesitated with setting up the appointment. 

I said if it helps you make a decision I get 85.00 per trim with and up charge for horses over standard size 1.

She then retorted, but everyone is only getting 50.00 per trim. 

At that moment I had my answer.  Now she may call me to see what's the difference between a 50.00 trim and an 85.00 trim.

She might not. 

 I personally would rather not work for someone who under values the worth of what I do.

[JHCC]

1 hour ago, jlpservicesinc said:

3 months from now one can not predict where the prices of steel, electric, taxes, etc, etc will go.  

That 3.00 bar may cost me 7.00 to replace vs 2.75..  thats a huge loss. 

In other words, if you give a quote, put a time limit on it. Make it long enough for people to make up their minds, but not so long that your risk of getting hurt on price fluctuations gets unreasonable. If you're getting a lot of job turnover, make sure that they know that the longer they take to make up their minds, the greater the risk of getting pushed farther back in the production schedule.

I heard someone say once that the ideal pricing situation is when your expenses are all covered, you're making a reasonable profit, and you're exactly hitting the top of the range that the customer is willing to pay. Estimate that number, add ten percent and quote that. If the customer can stretch, great. If not, you can take ten percent off, the customer feels that they're getting a good deal, and you're not losing out.

1 hour ago, jlpservicesinc said:

Finding out what the budget is now is my first or second question after I let the person tell me all about the project..

Excellent advice. I had a job over the summer making a presentation (non-sharpenable, display-only) sword, where my competition was a mass-produced replica that the prospective customer sent me a photo of, so that I could see what they had in mind. That gave me an idea of what they were initially thinking, and while my price came in at substantially more, I was able to figure out ways to keep my costs down without sacrificing appearance or quality. The quote shook them a bit, but they saw the difference in quality between mass-production and custom, so they went for it. In the end, everyone was happy.

[Aby31]

It was hard for me to discuss the price when I took my first few remote qa testing jobs, given that it was paid per project and not per hour. In the end, I had to spend a bunch of time on these projects, and I was lucky that my employer offered an excellent raise for all my effort. But this is rare, and you have to discuss all the money issues before you start working with someone. If you are good at your job, you should teach yourself to ask for a fair price. Otherwise, you'll lose time for crappy pay. I refused many projects because the money they offered me wasn't good enough.

[Frosty]

12 hours ago, Aby31 said:

I refused many projects because the money they offered me wasn't good enough.

That's the #1 reason I've refused almost all the projects and jobs I've turned down. When I was younger I was willing to do some pretty horrible jobs if the money was good enough. Happily the really horrible jobs didn't pay well enough to be tempting. 

My last retirement job wanted me to run hardface wire inside their drum crusher for $15/hr. When I told them I don't weld for $15/hr and certainly don't hardface. They said that's all they had for me that day so I went home for the day. I called in the next day and they asked if I'd changed my mind. Sure I'll hardface your drum crusher. My shop rate is $150/hr. plus materials, bring it on over. I went back to delivering soil and equipment for them. They had a welder on the payroll and I'd run too much hardface wire already, certainly not doing it for day labor wages. I carried a full boat CDL I was working cheap already.

Would I have hardfaced their drum crusher if they'd brought it over? You bet, I have the welder, wire feeder and supplied air welding helmet. It would've cost them though.

Frosty The Lucky.

[Greebe]

Pricing is an interesting thing. Prices for similar items or work are always all over the board. For the most part it depends on reputation, brand appeal, and quality.  Years ago I moved into a town of about 10,000. I had worked most my life in contracting, and looked for work and jobs. No luck, it was a tight knit small town secluded from the outside world and people didn't want an outsider doing work.

Up to that point while I lived in Alaska, I had gained a reputation for custom trim work and anything that took a detailed oriented person to do. Custom built in cabinets, trim, tile, panic rooms, whatever. Basically I got a lot of custom work that general contractors did not do as well as I did.

After moving out of Alaska, for a short period of time, I got work as a carpenter for a ridiculously low hourly rate for my skill set, but I put in the time to start getting my name out. Then I took a side job for one of the doctors in town who had bad luck with the local contractors. I bid the job nearly 3 times higher then what locals were charging with the idea that in the past my higher prices made people feel like they are getting "better" craftsmanship. He gave me the work and was very happy with what I did for him. With their high profile friends, I began to get tons of work from lawyers, doctors, engineers, CEO's bank owners, etc, all paying 3-4 times the local rate. They knew I wasn't cheap, but that I was timely, did top notch work, and was polite and respectful. I became the "prestigious" craftsman to use that people would brag about when showing off my work in their houses. This lead to a really good situation where I could pick and choose jobs, and make more money working half as many hours as the local guys were.

So all that to go back to pricing for products. Many times the same product priced higher will sell better, because there is a perception that the higher priced item is better. Sometimes it can be hard to remember this though because we think if we price it lower it will make people will buy it. However the psychology of most people tells them that less expensive is "cheap quality" and more expensive is higher quality. There is also a feeling that if you paid more for a product that there is "brand" appeal, or prestige to owning it. So they are more willing to buy it because they will be proud to own it. That last point is a big selling point.

I am getting my blacksmith shop setup again. I am running my machine shop, but have wanted to start blacksmithing again. I used to make a decent side income blacksmithing many years ago. I undersold myself at that point, and do not plan on doing that this time around. I would rather sell one high priced item per week then a ton of the same lower priced items a week. Beside in this day and age with the internet you only have to cater to a faction of a percent of the population that has the money they are willing to spend. If someone does not want to pay the high price for handmade goods, then they can buy from someone else.

If you start by selling low, you risk always being seen as the "cheap" brand, vs just starting out selling higher and build the brand appeal, and be seen as a high quality producer. Think Kia, it took them a long time to shed the cheap Korean tiny wheel car reputation and be taken seriously.

Anyways that was a really long rant.

[Daswulf]

That was a Good rant Greebe.

[Greebe]

Daswulf, thanks!!!

[BeaverNZ]

Greebe that really  hit the nail on the head, sometimes if things are too cheap people wont buy it as it has less value and as I get older and less tollerant of Idiots and time wasters my attitude can get very blunt but it can be very liberating. With stuff made as a crafted item then charge as much as you can get away with and dont feel bad about it.

[Purple Bullet]

I can understand all the above, and it really makes me glad that I made my living other ways. One of my early careers was as a diver. As a teen, I got to hang around with some divers as my dad was in charge of raising a couple of rigs that sank in Hurricane Betsy. My dad didn't know diving, but he knew drilling rigs. He'd been working for Gulf Oil since he was 17. I got a scuba rig and dove whenever I could. I loved it. After a few other jobs I started tending - that's like an apprentice diver, or at least was back then. I broke out as a diver about a year and a half later and was in that business for 12 years (with a few breaks when I welded during slow winter months). By that time I almost wouldn't get in the bath tub unless my wife signed a time ticket. Well, that's a stretch, but my point is, it wasn't fun anymore. 

I started learning blacksmithing while I was still diving. I liked it, maybe too much. I put it aside and pursued things I felt confident I could make a good living at. When I retired I took it up again. I've had people offer me money to make things for them but I almost always refuse. If it is a project that intrigues me I'll do it. If I have to buy major materials I have no problem letting them pay for that. But this is MY HOBBY, darn it! I refuse to ruin it by having deadlines, doing books and otherwise making it WORK. 

Don't get me wrong. I'm not criticizing. In fact I admire y'all for having the guts and skill you have to have to make a living from your forge. It is possible to have a life-long career doing something you love. I talked to a pilot last Saturday who has done just that. My hope for all of you professionals is that you never lose the love of the craft. 

BTW - in the 36 years since I quit diving I think I've been snorkeling twice.

[Ted Ewert]

PB, I hear you about the hobby part. The fun for me is getting a wild hare idea and then trying to build it. I rarely build duplicates of anything. 

I'm a blue collar guy living in a very affluent area. If I had the skills and ambition I could do quite well locally. I've often been tempted, but I'm afraid it would take the joy out of it. Blacksmithing is my escape, as well as a creative outlet. Those two things have more value than money to me. 

[Frosty]

I hear you PB, I've managed to dodge turning smithing into a profession though there have been opportunities. Many. 

Metal spinning is a very visceral art and is at least as satisfying as blacksmithing. Spinning connects the spinner more directly with what's happening in the metal. However, growing up in a metal spinning and machine shop turned spinning into a job as soon as I was tall enough to fit the lathes and strong enough to use the scissors. Starting young thought me subtlety with the tool so I could move it with less effort and greater speed. 

It was just anything but fun. I haven't touched a spinning lathe in more than 50 years and have a couple projects that need to be spun. Maybe it's been long enough.

Frosty The Lucky.

[anvil]

I started blacksmithing when I was 17. I shod my first horse and saw metal move betwixt hammer and anvil for the first time. Ive been a working smith ever since. The primary product from my shop changed from Farrier work to Architectural blacksmithing around 1980. I'm 74 and still get that rush every time i do a forge weld. I can hardly stand the wait from my very detailed shop drawings and notes to, like the Phoenix, arise from fire to become final product. Never hesitate to pursue your dreams,,, all ya gots to lose is that silly dream.

[BIGGUNDOCTOR]

I just turned 56 and I am still trying to figure out what I want to do when I grow up.  Dad and I started smithing around 1977, never got super involved with it as there was always something new to try out. When Dad passed away in 2000 the smithing equipment had not been used for some time. I drug it down to NV when I moved, and it sat in a pile here for a few more years until I set it up again. It came down in 2017 when I had a fight with the county over my place. I really need to get it set back up again. I need some sort of distraction besides the internet.  I have not done any of my hobbies that I used to love to do for several years.... wood carving, leather working, ceramics, shooting, etc..  Too many things weighing me down mentally.

As to the career. When I was little I wanted to be a paleontologist until I learned you need to go to college to dig up dinosaur bones. I went to the local community college and followed Dad's lead of being a machinist. This was in the mid 80's and CNC was just on the horizon. I worked for a few small shops before starting my own machine and fab shop with a friend when I was 22. We went 6.5 years before closing up in 1993. One of the reasons we closed was we never charged enough. Don't get me wrong, we paid our bills on time, but we never made the profits we needed to really take off with the business. Around this time the the machining jobs were starting to be offshored, and were a foreshadowing of what was to come. I went to work at a customers dental metals foundry where I did the custom tooling.  The induction furnace could do 25kg and we did investment castings for the ingots. Left there to go work for an automotive lift service company. From there to plant maintenance at the Jelly Belly Candy co. Moved to NV and working for a machine gun dealer. Off to another machine shop as the tool maker, then to a commercial bakery as maintenance, and now plant maintenance for TH Foods. We make the Blue Diamond brand snack crackers and our house brand is Crunchmaster.  I am making the most money I ever have, yet I long to start another business. There is a building in my community that I can envision being a social hub for my small valley.  Dining, dancing, meetings, a place for the kids to hang out, receptions, game nights, etc..  But is that what I want to do, or go towards a more automotive route? Maybe a second hand store, as I can scrounge deals with the best of them. Maybe set up a maker space with all of my machine tools.  I just don't know which way to go. What I do know is my time here is limited, and I would like to be happier than I am now, so something needs to happen soon. I used to watch a show called Modern Masters, and think to myself how great it would be to make a living as an artist.  But art is a tough way to make a living, and I followed the easier path that was more stable income wise.  All I know is that I am making a ton of money which has allowed me to buy some cool cars, but I just don't have the job satisfaction I am looking for. I don't know if it is full on depression, as I do go out with friends, and socialize, but I have lost a lot of the motivation I used to have. It is more of an existence, than a life.

Apologize for the rambling, so back on the topic of pricing work. There was a good thread awhile back that covered how various people priced their work from industrial smiths, architectural smiths recreating items for restorations, artists, and hobbyists.

[Ted Ewert]

Thanks for sharing that BD. I'm 65 and never did find that job I loved. Like you, I have a good paying job but it bores me to tears. I'm just waiting for retirement. 

I don't think a particular line of work is necessarily the reason we're all here anyway. It helps to love your work, but sometimes our lesson is sacrifice. 

[ThomasPowers]

When I'm less satisfied at work I tend to do more smithing and vice versa.  Be interesting to see how it changes when I retire at the end of the year.

[JHCC]

I am fortunate to have a paying job that I love that provides both decent pay and a strong sense of making a positive difference in the world. I'm also glad that I have the time, space, and resources to pursue smithing as a serious hobby, since that engages a different part of the brain and brings a different kind of satisfaction than my professional career.

I am equally fortunate that I've been able to bring in enough smithing jobs to cover a big chunk of my purchases of tools, stock, fuel, and books. Regarding the pricing question, some of the questions I consider are:

1. What's the customer's budget?
2. What investment will this require from me in design time, forging time, materials, and fuel?
3. What do other smiths charge for comparable articles? (Etsy can be a great resource for this.)
4. Is this something I can produce easily with my current skills and tooling? Or will I need to invest time and money to bring them up to par?
5. When supplying products that I know will be resold, how do I balance getting paid enough myself with the buyer being able to make a sufficient profit (thereby making repeat business more likely)?
6. How badly do I need the money? Is there some piece of equipment or the like that will increase my shop's capacity, whose cost will be covered by this job?
7. If I'm making multiples of an object, are there economies of scale that justify a lower individual price?

If I were doing this for a living, I would probably be a lot more finicky about these and other pricing questions, but for now, these questions have given me a sufficient framework to get me into the proper pricing ballpark. 

[Irondragon Forge ClayWorks]

20 hours ago, BIGGUNDOCTOR said:

what I want to do when I grow up.

There is an old saying. "You will never grow old, if you never grow up". At 79 that applies to me. My wife occasionally will say to me Oh grow up.

[ThomasPowers]

Hey I'm the guy who got Juvenile Diabetes at 44!  (Well, Adult Onset Juvenile Diabetes AKA LADA).

[BIGGUNDOCTOR]

IFCW, the bumper sticker I liked was Growing old is mandatory. Growing up is optional.

2008 hurt my chances of retiring when I wanted too. My retirement funds are building back up, but slowly.

[ThomasPowers]

Only the smart and lucky get to grow old!

[BIGGUNDOCTOR]

There are old pilots and bold pilots, but there are no old bold pilots.

 

[jlpservicesinc]

On 7/22/2021 at 2:03 PM, JHCC said:

I am fortunate to have a paying job that I love that provides both decent pay and a strong sense of making a positive difference in the world. I'm also glad that I have the time, space, and resources to pursue smithing as a serious hobby, since that engages a different part of the brain and brings a different kind of satisfaction than my professional career.

I am equally fortunate that I've been able to bring in enough smithing jobs to cover a big chunk of my purchases of tools, stock, fuel, and books.

So, while this could apply for someone who has it as a hobby and not looking to make bank but maybe cover expenses.. It's a great formula not to succeed.. 

I'm sorry JHCC.. much respect for you..   Has nothing personally to do with you per say. 

1, customers budget sets the tone for what they think the item is worth vs what it actually will take both in resources and in skill/labor.. 
2, This is a pretty good one if you are looking at just balancing the books vs making money. 
3.  Never compare what you charge vs someone else charges for a given item..  they might be doing the same exact thing by checking Etsy and thus locking you into a mind set of "WHAT YOUR TIME IS WORTH"..    Forget the comparisons and sit down and figure out exact what it would take for you to make an item and then figure out per hour what you want to make..    If you want 10.00 per hour they so be it..  They are paying 18.67 at McD's up the street.. So what does that say.. 
4..  Any item purchased to do a job has to be accounted for..   There should be a savings account from the money that is made in the shop after all expenses are added up including overhead of shop, electric, stock, tools, coal, bolts, nuts, etc, etc.  Then what is left over should go into an equipment account..  Say 3% or something like that which is manageable. 

Tools should not dictate what one is capable of until you get into heavy forge work..  Then a power hammer is a need. 

If you need to tool up for a project then this needs to be discussed with the person and ideally the rule of making enough to help pay it off over a few jobs vs 1 person paying for the whole expense..  It does not mean once in awhile the purchaser won't pay for a tool outright as part of the contract.. But, it does not happen everyday. 

5. Repeat business does not mean you are making a fair wage..  What it means is, if you get caught making 10 items under rate, guess what.. You are losing money and it's all because of under valuing what it is you are making. 

I see this all the time with newer smiths that all of a sudden decide to become a pro..    You want to charge what the product and level of work you have into it will pay you..  (AKA  "What is it worth to you".. )

6. If you are making bank then this won't be an issue because you have accounted for this when you decided on the rate.. 
7.  Some people don't care if items match..   Some don't want them to match because they think hand made means sloppy..  (AKA should look hand made). 

I always charge more for items I'm making sets of.. UNLESS, the item is a stock list item.. Any stock list item I make I should be very intimate with and know exactly how much time it will take to forge/make the item and exactly what I have into it on the business end..   With this I'll add on 10, 20, 30.00 each for matching items if the items are custom.  

If someone wants 1 thumb latch it can be made in a few hours I can charge less because I don't care about matching anything so can just bang 1 out.. Easy peasy..   

Problem comes a few years later or when you give them a stupid low price and the next thing they ask you for 10 items at that price. 

The correct price to charge as a hobbyist is what ever you feel, you are worth..    Don't compare to anyone else, it's a very bad comparative.  There are a ton of variables one can not know.. 

I'd rather charge a premium price and get the appreciation of knowing I am getting what I am worth and you'd be surprised just how undervalued we look at ourselves with. 

Charge what you want to..  The jobs that come in at that price point will leave you feeling good about what you made, vs having accounted for 3 hrs and it taking you 6 and now you have X amount of hours into it and the customer bales..  

I wanted to add..  If it's a friend of yours or family and you charge less it's more of a hobby thing that really doesn't matter at all.. Right.. 

Taking a loss on 1 item say a bottle opener..  What that is no biggy.. what if you take a loss on 30 openers? 

Auto shops get what per hour?  Electricians get what per hour?  Dr's get what per hour?  

It's amazing how expensive it really is, when you start to account for everything related to doing business. 

[JHCC]

No offense taken, Jennifer, and Yes, I am speaking from the point of view of a hobbyist who is not trying to make a living at this. If I were, my questions would of necessity be framed differently and my pricing calculations would be a LOT more careful.

I'm certainly not suggesting that my questions are the be-all-and-end-all of pricing considerations. They're just what I've found to be useful in my own situation. If someone else finds them useful -- or even consciously rejects them in favor of a different set of questions -- then so much the better.

That said, a few thoughts in reply to your responses.

1. The customer's budget doesn't set the worth of the product. It determines whether or not it's worth continuing the conversation. If someone wants multiples of some fancy item and their budget is ten bucks, then I'm not going to waste my time and theirs discussing things further. (Although it's worth noting that being clear what handmade products cost can lead to a customer reconsidering their budget. When I made the Viking sword for my school friend to give to her husband on the completion of his cancer treatment, my quote was more than twice what she had been thinking, based on her shopping for a mass-produced piece. However, she decided on further reflection that a custom-made piece was well worth the extra cost, given the special circumstances.)
2. If I were doing this for a living, this would be the place to add a reasonable profit margin.
3. To be clear: doing market research is NOT the same as letting someone else set your prices. Case in point: I'm in discussion with a potential customer about a number of beer tap handles for a brew pub. I have never in my life had occasion to purchase a beer tap handle, so I did some research on the pricing of both mass-market and handcrafted handles. Now I've got a decent idea of what people charge, and interestingly, there's quite a range. I may decide on a price within that range, I may not. Regardless, it's good to know what the range is, especially if its influencing the thinking of a potential customer.
4. Again, in a hobby situation, strict accounting of every cost isn't as important as it is in a commercial operation. Nonetheless, the existing-tools-and-skills question is still relevant. For the beer tap job, I'd have to buy the correct size taps to thread the handles. Not a huge expense, but an element of the calculation.
5. Obviously, getting a fair wage is a sine qua non. The example in this case is a style of knitting bowl that I sell to a local yarn shop owner. If I charged her what she charges her customers, she obviously wouldn't buy any at all because she wouldn't be making any profit. However, because I only take orders for multiples (and there are economies of scale that keep individual price low), I'm happy to charge less per unit than I would for a single piece to an individual customer BUT that lower unit price is still a fair wage.
6. Because smithing is basically part of our household budget, it's a whole lot easier to justify larger purchases when there's some money coming in to cover (or at least offset) the cost. 
7. See #5.

Clearly, the calculations are going to be different for a part-time hobbyist than they are for a full-time professional. For the latter, careful calculation of every expense and profit is essential, and there are many ways to do this. (Side note: I just read an interesting article in The Anvil's Ring about pricing, in which the author talked about a method for factoring in every single bend, twist, punched hole, etc. Though-provoking, but a lot more complicated than I personally feel the need for at present.) In my own personal experience, thinking about these questions helps me come up with what seem to me to be reasonable prices. I have never yet felt like I've undercharged or been taken advantage of, and I have never yet failed to get a job I've quoted a price for. Is this right for everyone ? Of course not. I just hope that seeing how I think about pricing might help others (especially other hobbyists) determine how they should think about pricing.