Pricing my work makes me uneasy

[George N. M.]

As background, I am a hobby smith and have usually had an outside income to support the hobby.  However, many years ago when I was between being a geologist and going to law school I supported myself with my blacksmithing.  I didn't make much more than unemployment paid but it felt a lot better.

I have said this before but I will repeat it here that I believe that at the end of the day all we really have to sell is our time and expertise (plus overhead in fuel, metal, utilities, etc.).  So, overhead aside, I price my work by how much time I have in it.  I set my hourly rate based on what I feel my level of expertise is and then assign a price to an item based on how long it takes me to make it once I have gotten a reasonable level of expertise and efficiency in making the item.  For example, if I were to decide my time is worth $60/hour and a bottle opener takes me 15 minutes to make the price is $15.

This is an approximation and subject to adjustment depending on circumstances.  Sometimes I will bump the price up if I feel that the market will bear it and sometimes I reduce it if I don't think something will sell at a strict time price.

This scheme has worked for me for many years and I am happy with it.  However, different approaches will work for different folk.  A hobbyist will want to pay for the expenses of the craft plus some more but a person who is paying a mortgage and supporting his or her family with their craft may have to use a more rigorous approach.

BTW, one way of looking at what to charge per hour is to multiply by 2,080.  That is the number of working hours in a year assuming a 40 hour work week.  So, $25/hour equals $52,000/year.  Whether that looks good or fair to anyone depends on their circumstances.  To some, it will look like LOTS of money, to others, not so much.  There are lots of assumptions in that equation and it does not account for any time that is not actually making things that will sell.

The main reason I use this technique is that time is the only thing which we have a finite amount of in this life.  Once it is gone it is never coming back.  Every minute or hour of time represents a fraction of our lives and IMO that is the most valuable thing we have.

"By hammer and hand all arts do stand."

[jlpservicesinc]

JHCC thanks for the clarification.. 

So to culminate the difference. 
I considewr what you are describing  as a "friendly wage" ..  Basically taking on the thought process of kindness and it's a wash or maybe a few scheckles in the coffers.. 

A person feels good about what they are doing/charging and the perception is the customer is happy.. 
I feel in a perfect world..  Money should be a secondary thought..   Helping should be the first and in a perfect world that would be the case. 

George,  from that business perspective one has to account for busy time where the forge is not lit and booked as shop time..   Travel time for job quotes and such..  

This whole thread is about what to charge..  

Your formula is a good one taking into consideration what it breaks down to hourly rate based on that 40hrs a week.. 

Simple..  How much per hour does one want to make? 

Having started out as a hobby smith and charging 10.00 per hour myself, It was a learning progression as to how much I should charge.. 

"Should" being the key word..    

"Value" or "Worth" are all perspectives.. Nothing more.. 

Time as pointed out really is the only thing that we give up/out no matter what we are doing..  I can sit here and the time is still going by..  

I work on someone's order the time is still going by.. 

Both are exactly the same value wise..    At some point on the money side of things the "Balancing of the budget" becomes the factor.. 

With this..   There is no such thing as "balance"..   Each aspect of money is  just  "Have it or don't have it".. 

One minute it's there, the next it's gone.. 

No matter what gets said..  It becomes only up to the individual about how they feel about what is "the right rate".. 

Personally, I charge what I charge in every facet of work I do..  I learned a long time ago, no one is in control of this but me..   I'd rather produce quality work at a premium price vs lesser work to try to meet the lower price.. 

"I have to feel good about what I am selling the item for or else its not work making it".. 

If I make 1 thumb latch per hour at X dollars..  Why would I want to make 3 in that same hour as now I am only making 1/3rd the amount for those 3 items.. Not only that but now it becomes a pressure  aspect because if there is a problem now if I only get 1 item made, I'm still only making 1/3rd.. 

Thanks JHCC and George for clarifying..  

[JHCC]

13 hours ago, JHCC said:

an interesting article in The Anvil's Ring about pricing

Correction: it was Hammer's Blow. I've now created another article in this section that reviews that HB article.

[anvil]

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

If I were doing this for a living

First off, JHCC, you ARE doing this for a living. You have made it quite clear that your work is part of your household income. 

Second, your post, even before your rebuttal to jen is right on the money for anyone who wants to make a profit on their work. Your responses to her clarify and strengthen all you have stated above. 

Third, Jen, your outlook on pricing, step by step is absolutely the road to failure. 

These points are not specific to a hobbyist, a part timer, or a full time professional. They apply to anyone in the craft field who wants to make money for any reason.

1: JHCC is correct. The customers budget sets the price point of the job. Its up to the smith to design something within this budget that will satisfy both the client and the smith. If you as the smith cant do this, its the fault of the smith, or because of his decision to refuse the job straightaway.

2: Without a doubt, this point is critical. This is the bottom of the line for making a profit. For what its worth, I charge a set 10% for design. If my client accepts my bid, its included. If not, Ive already informed the client of this and he gets a bill for my design time. 

3: JHCC, you clarified this very well, and George put it very diplomatically. Jen, you are leaving out the most important bit of info that an individual must be able to recognize within himself. And this is what most people who pontificate on making money as a smith, or why not, ignore. Whats Your Experience Level? To elaborate on George's example, If it takes you an hour to make an "S" hook, and an experienced smith can make 4 an hour, no matter where he or she sells them, do you really believe that smith should charge the same $60/hr? Do you really think the pathway to success is to sell his for $60 each while the other guy sells his for$15 each and makes a profit? 

4: JHCC, you clarified it well. Jen, your statement here is basic bookkeeping. However Tools always dictate what one is capable of. Francis Whitaker was fond of saying there are 2 things needed for a successful job. Proper setup, proper tools, proper job. I always consider my tooling during the design phase. From a flower that needs a special chisel to, in one case, a treadle hammer. Id been looking into treadle hammers and bid a job that by my design, a treadle hammer would make it possible. The bid would enable me to purchase it. If he didnt accept the bid, I had another design and bid that did not require this tool. They went for the bid and I got enough money in the down payment to purchase the now needed hammer. The rest is history. Did I include the client on how I was going to spend my money made on his job? Nope, unless Im asking him to finance the tool, its none of his affair. You must consider your tools before starting a job.

5: If you have a production item you are certainly doing something right. If you are not making a profit. you have already failed. The amount of that profit is certainly the prerogative of the smith and no one else. Having a production job is a great thing. It teaches a lot. For instance, it teaches how to match your work . You can always improve your routine to increase your profit. Refer to Whitaker above.

6: Refer to 4 above

7:

18 hours ago, jlpservicesinc said:

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). 

Basically when I get a potential customer like this, I price my product out of his range. This type of client will many times cost you more in headaches during the job and bad cess after the job than its worth. I have far more sense than to do a job for someone who believes hand made means sloppy. 

You always charge more money per piece when doing a limited production run than a one off piece? And here we truly differ. If you cant match your work, then you will most likely not be able to succeed. You see, If you can match your work, then you can make everything the same or different. If you cant, all you can do is not match your work and look for ways to justify your not having that very necessary skill set.

No quotes like above, but Im going to deal with the rest of your statements. 

I started matching things as a farrier. Every shoe was turned to absolutely match that hoof.  8 to 10 horses a day  four shoes per horse for 10 or 12 years makes you pretty good at this. It took me a few years to realize I have this skill. When i did, my blacking efficiency matching anything became second nature. Havent you acquired this skill from your farrier work?

You actually charge 10-20-30 more per item verses a one off piece? This is a pathway to failure. I cant even comprehend this belief. I look forwards to limited production because I know that at the end of the run my skills will have improved and any one off piece done in the future will benefit. Im curious, does that mean you charge less per foot for a one legged horse?  Couldnt resist. 

"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"

Contrary to this, because I care about matching everything and I can efficiently match my work, I can bid a whole house full of doors or cabinetry and just bang them all out and make really good money easy peasy. And they match. There just isnt enough work out there doing one off hardware to succeed. However, there is plenty of work out there to do a "housefull" of iron, make good money and stay really busy if you have the skillset to do the work. 

"stupid low price" Basically if you are truly a full time working smith,then 10 years later You should be able to charge that -price- and actually make pretty good money,,, Or charge less and still make better money. 

When you check prices of others if you are lucky, all you may know is how he made it, how long it took him to make it and the price. What more do you need?

" 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. " You cant possibly do this and get a premium price without a bit of deep personal introspection on just what your skill level truly is. If you do this, you will never undervalue yourself. And you will continue to improve your skill set. The road to failure is paved with the belief that you "deserve" a premium price without the skill set to back it up. If you have the skill set, then you will get what you have earned,,, not deserve.. 

"accounted for 3 hrs and it taking you 6". Experience overcomes this. Learning should never be charged to a client. They are paying for competent work done in an efficient manner depending on your skill level.. Most clients know they want "Forged Iron", but they have no real knowledge of our craft. They in fact trust us to make an appropriate product for their money. The choice we, as craftsmen have is to finish that project no matter the time and charge for 3 hours, or rip them off. And be tickled silly at the 3 hours of learning that you bought. I always bid my jobs Time and Material, not to Exceed $X. Time is the time to do the job as I bid it. Material is everything from rent to rivets, and the not to exceed lets my client know that no matter the reason, thats all they will pay for the agreed upon project.. Any extra time becomes "learning time". Somebody's got to pay for it,,, might as well be me. Who knows, with a little do diligence and  using your example, hopefully it shouldnt take too many learnings to get your time down to 3, and who knows, perhaps, with enough repetition, you can cut your time to 1.5 hrs and really make good money. And, hopefully make them match.

"what if you take a loss on 30 openers? " Refer to the above. I look at it this way on a first limited production run. Thats how much money I made on that run, I should be able to do far better on the next. If you cant, perhaps you are in the wrong business. 

"Auto shops get what per hour?"  The new guy works for minimum wage, The shop foreman makes good money and the owner makes profit on how he manages the business.  When you run a single man shop, you are all three,,, apprentice, journeyman, and master. Your profit is dependent on the skill level of all three.  If the apprentice doesnt have the skill set, the journeyman is lazy as all getout and the Master cant bid a job,, well,, theres your answer.

"It's amazing how expensive it really is" As a traditional smith, its amazing just how inexpensive it really is compared to so many other businesses.  You see, my cup is always half full. It really helps to look at it that way when that learning time seems to be overwhelming.

 

[JHCC]

55 minutes ago, anvil said:

First off, JHCC, you ARE doing this for a living. You have made it quite clear that your work is part of your household income. 

Part of the household budget, not the household income. It's fairly rare that money from one of my paid projects ends up paying for something not blacksmithing-related, but I do try not to be too much of a drag on the family economy.

58 minutes ago, anvil said:

your rebuttal to jen

I don't see this as a rebuttal, but more of a response. One advantage of being a hobbyist is that I don't have to account for every cost when pricing a job, so my original questions and subsequent amplification are about how I go about making what I consider good pricing decisions in that hobbyist context.

(Side note: special circumstances sometimes come into play. The beer tap handle job is for a friend who's opening a brew pub, and if he balks at my full price, I'm prepared to suggest my taking the difference in store credit!)

[anvil]

Response works, and no matter how you call what you are, your 7 points are right on considerations for anyone wanting to make a little money.

Jen, I dont understand your logic. If you make something in one hour, Why make 3 in an hour. My answer is if you can make 3 in an hour, why does it take you an hour to make one? Charge the same price and now you are making 3 times the money.

 

 

 

[George N. M.]

A few more thoughts  about how much to charge:

1.  As I said earlier time is your one consumable that cannot be replaced.  So, you need to consider how much that resource is worth to you.  A younger person may feel that they have a nearly unlimited balance in their time account.  Us older folk know that the account is limited and that sooner or later it will be exhausted.

2.  Ultimately, we are doing this because it results in something that we like.  For some people smithing is the means to the end of acquiring money.  Money enables you to do things you like, such as eating or supporting your family or buying things you desire (beer, art, fast cars, chocolate, etc.).  Or, it may be the satisfaction of creating something beautiful or useful.  In that case the money is a secondary benefit.  Or, producing something unique and transferring it to someone who appreciates it can be a real ego boost.

I will admit that have people appreciate my work is something that makes me feel good and can be a real motivator.  Along those lines, if I am at a craft fair, say, and I sell 10 $15 items it will give me more pleasure to get things into 10 different hands than selling 1 $150 item.  I always try to have some nice, but inexpensive, for folk (often kids) who have a limited budget.  I suppose it has something to do with contributing to the net happiness in the world.  The 10 $15 items have given pleasure to 10 people and the 1 $150 item has given that pleasure to only 1 individual.  I don't think the more expensive item has given 10 times as much pleasure to either the buyer or me.

3.  Something to factor in is how much pleasure or satisfaction the smith will get out of making a particular object or multiples of an object.  I have a fairly low boredom threshold and don't like making a large number of the same item.  Years ago I took and filled an order for 500 hand forged nails and I still hate making nails and only do them when I have to.  It paid acceptably well but the aggravation factor was very high by the end of the job.  I can't think of another job with which I was happier to be done.

The same can be true at the high end of the craft when you may be doing a big job for a difficult customer.  I know smiths who will put a jerk surcharge on any job for certain customers.

4. You need to feel that you have neither taken advantage of someone nor have been taken advantage of yourself.  A fair price for a fair job benefits everyone.  If you feel like you have taken more money for an item and do that regularly it will corrode your soul.  Similarly, if you feel you have been taken advantage of or have sold yourself short it is not a good feeling and you have no satisfaction.

So, at the end of the day you need to charge and receive what makes you happy, money, satisfaction, or any other reward that comes from the craft and balance all those out so that it stays fun and you want to get up tomorrow and do it again.  Keep in mind that money is only one possible reward.  Everyone has their own balance of costs and benefits and neither the costs nor the benefits can all be reduced to a balance sheet.

"By hammer and hand all arts do stand."

[anvil]

Your last paragraph pretty well sums it up, no matter if you are full time, part time, or a hobbyist.

[ThomasPowers]

My Father had a couple of factories he was in charge of.  He told me that the price of a thing had little to do with how much it cost to make;  unless you were in a very competitive market where other manufacturers would try to undercut you.

Very nicely demonstrated by drug prices in the USA:  my research shows that it costs around US$25 to produce a vial of insulin that is retailed for over US$250.  Of course Insulin dependent diabetics can't not buy it.

In blacksmithing; current profit margins seem to be high for bottle openers *IFF* you are an experienced smith and can turn out a lot of them quickly and easily---they can all be unique and nicely done but your abilities and tooling are reflected in the time per item required.

[jlpservicesinc]

30+ years ago when I was involved with trying to make the business better I went and took a bunch of courses and spoke with many people from industry and services with the SBA. 

I met with 10 different people and they always said the same thing..   The same business model and the same way to success.. 

2 of the only factors was this..      Charge enough for a given volume of work.. 

And  make products faster and then have employee's so every person whom works for you, you can make 3.00 to 5.00 dollars off of each person per hour. 

I would then say my business is hand forging, and they would start down the road of automation and power presses and closed dies.. 

I was and still am about hand work..  

The blacksmithing business was very successful..  I had plenty of work and charged a premium price even back in the 80-90's 60.00 per hour..  When I finally closed up shop it wasn't because I didn't have ample work..  It's because I started to see how easy it was to make money as a farrier and could work 1/2 a day and make 400-500 per day without trying to sell the work..  (research, presentation, education of customer, samples, meetings, etc, etc).. 

Some people don't really care about what time they have into the odds and ends and not get paid..  LOL.. Well at first they feel that way.. But eventually they start to notice the trend.. 

The formula was what I keep repeating with time and what do charge goes by what it costs doing all business + the needs of the person..   (health insurance, retirement, vacations, sick time, etc, etc).. 

I personally don't care what others charge just the same as I don't really care what others have done in the past.. 

It's what goes on today that I am truly interested in..     

I'm not a pro any longer.. I just have a bunch of information and can forge all right..  

With this..   People really have to understand, they are in charge of their own destiny and how they price their work.. 

I know/knew 5 smiths who are excellent smiths and back in the 90's I was charging 2X what they were getting and I was swamped.. 

Today I still charge a premium over what others charge and still get that kind of money because I set the pricing standard and my work backs up that pricing point.. 

Is it fair..  Fair to who?  That is for the seller and buyer to decide.. 

Last 2 thumb latches I sold were just over 1000.00..  I felt like they got a bargain yet was priced well, and the customers were elated..  



 

I was told this by a successful farmer..   Really smart guy..   Owns all his own equipment, never buys something that won't be paid off within a year or 2.. 

He said to me..  "As a hobby and having extra income buy what ever you want and know it won't ever pay you back"..   That ok since it's a hobby and hobbies cost money..  Be it motorcycles, cars, boats, stained glass, pottery.. etc, etc.. 

But, anytime you decide to buy a piece of equipment that is no longer a hobby type item, then its business and that item or tool needs to pay itself off from use within a year..  2 tops..   

If that tool is not going to earn it's own keep then rent 1 or lease 1 for when you need it but do not buy it..   

I keep that in mind with every purchase..,  

I look at all cash exchanges as business..  If it wasn't business there would be not cash, trade or barter to do.. 

[jlpservicesinc]

Something I think that happens when I post something like this is that people take it "as my story only".. 

It's just ideas that should be taken away..  Not stone, nor this is what you should charge.. 

Information and ideas are all there really is..  That is what I'm trying to share.. 

Any given situation can be anything you want it to be.. But, you as the center has to decide.. 

Its not very often people fee badly about finding money on the side of the road or that 10.00 spot they find in their pocket after laundry day.. 

With this. when it comes time to buy something it becomes how much money does 1 have to do it with..  What is it worth is solely the persons own decision.   With every thing there is a value to cost assessment and the value or cost is totally the judgement of the person. 

[teenylittlemetalguy]

6 hours ago, jlpservicesinc said:

 With every thing there is a value to cost assessment and the value or cost is totally the judgement of the person. 

Really like your post, thank you.

My boss always says-" Don't think with someone else's checkbook" It has made a big difference to me in my day job. 

[SinDoc]

One day while I was out banging on things making a couple different items at the same time, the neighbors were having a party before their wedding and I had people watching me. After I made a couple items I had a few ask me how much I wanted for the hooks I had hanging in the shop plus the stuff I just made. I had no clue what to technically ask for them, but I had watched Black Bear Forges video on the general idea. Told them "technically" I think they would be around $20 or so accounting for the material and time it took to make them but all I would ask would be around $10 just to cover the metal itself.

Since I am just starting out and am very much a hobbyist, my skill set is very limited. I told them upfront if they wanted more, I could not promise whatsoever that they would be identical. They would vary in length along with the twist, curl and hook being slightly different from hook to hook since I don't have a bending jig to keep things consistent. I really want to get into making more decorative items than just hooks. My next project is a curtain hanger, which should be fun.

JHCC, I really like the idea of a tap handle. I will have to find a video on how they are made and see if its within my skillset to try and make one. If I could get those down, I could make enough off those around here to help cover the cost of the propane lol.

[JHCC]

The only standard thing about a tap handle (technically a "faucet handle", apparently) is that it have a 3/8"-16 UNC internal thread. Beyond that, the sky is the limit. 

For example, here is one of my plasticine sketches for a simple model:

[SinDoc]

Doing a "faucet" handle would finally give me a reason to try out the dragon tail twist.

[ThomasPowers]

They are traditionally smooth for a reason!   Don't give your waitstaff sore hands---or avoid them if you do..."Try our *special*? We made it just for *you*!"

Now if you cast it in clear resin....

[SinDoc]

Yeah that is what I was thinking Thomas. Obviously a Dragon tail twist would not be very kind to the hands!