Pricing...

the current Quote of the Week: On pricing...“Making the customer slightly uncomfortable about what they have to pay for my work is what I shoot for.â€￾ - Jim Zimmerman

that reminded me of what Red Adair, the world-renowned oil well firefighter, said when asked about his multi-million dollar fees? "I like my customers to be happy, not ecstatic."

Pricing! The bain of my existence. One customer says "Way too high." all my friends say "Way too low." I'll never have it figured out.

People want to spend money on nice things. Especially when buying a gift for a loved one. Price it too low and it appears to be crap.

A business man I knew years ago once said "Charge what you think you are worth".

Oftentimes artists and craftsmen will price themselves way too low for fear of losing a sale.

A student told me a line he sometimes uses with customers he is comfortable with. His line of business is not engraving. It goes something like this. "Rest assured you will get exactly what you want even if it takes every last penney you own".

Pricing is tough. You have to balance between what your time is worth and the customer's perception of value. It has been my experience that customers don't value what they get too cheap. At one of my early knife shows I didn't make a sale until I doubled my prices. On the other hand if you price your work too high you will lose sales. Is it worth making the sale if you have to give your work away? I'd rather lose the sale than devalue my work. I feel that I have a responsibility to my past customers to not lower my prices.

Pricing need not be a mystery to pilgrim or veteran. Many overthink the process and get what I call "Paralysis of analysis." Don't make it hard, because it really isn't.
So what is something really worth? It isn't just what someone is willing to pay for it. That logic will get you killed, financially speaking. It is worth what You need to cover your expenses, and make a little profit. Period.
The problem is that most don't really know what it costs to produce their creation and therefore, have no idea what to charge for it.
If you want to become profitable, make it a part of your business to know exactly what it costs you to produce something. In the engraving business, materials and time are your commodity and very easy to get a handle on. Those are best kept track of with material invoices and a stop watch.
I use 4X6" index cards to track my time on a project. The customer's name is placed at the top along with the date I started working on it. Each day I work on that job, I record the date and how many minutes I worked on it.
(Hint: That's where the stop watch comes in handy)
The actual time you work on a project is two fold:
1. It doesn't lie---you know exactly how long it took you to do the work.
2. It also will tell you how many minutes you really aren't working because you must pause the timer everytime you answer the phone, go get a coffee, check your email,etc.etc.
As long as you are working on the job, the clock is ticking. That is fair to your customer and it makes you hold your own feet to the fire. Customers know when they are getting shafted and I guarantee that if you make it a habit to taking advantage of everyone, you'll soon be out of business.
Every job should be viewed as a "Win-Win" situation. You must get what you need to make on the job or you only end up making yourself miserable because you've lost financially. When you lose enough, you feel like a loser. Your customer is thrilled to get a bargain, but you're miserable because you lost money. Lose enough money and even you can't afford to be in business any longer. Losers end up producing lousy work, because their heart isn't in it....and who wants to deal with an engraver with a losing attitude?
A very good friend of mine once said that "If you want good, fresh, clean and tasty oats, expect to pay a fair price for them. Oats that have been cycled through the horse are a little cheaper."

(Could that be considered for the "Quote of the week"?)

I picked up a cheap time clock for tracking my time.

I write the project at the top of the card and then clock in/out as I go.

Sent from my Droid using Tapatalk

OK Here's on I learned many years ago when I was starting out.......

If you have too big of a backlog, You're too cheap. If you have no backlog, You're too expensive.

FANCYGUN said:

If you have no backlog, You're too expensive.

Click to expand...

:biggrin: Or... a no-talent hack that thinks he/she has talent.

Marty's got the best one so far!

I like the time clock idea. I'm going to have to look for one.

I also break my time log down into different elements of the engraving job. For example.........how long it took to do the frame, how long to do the animal, etc. Also do not forget to include your design and drawing time at the same rate of course.

The clock idea is great, as long as you always remember to start and stop it correctly. I found that on one gun I had 26 hours of work on it when I returned to the shop the next day! :biggrin:

When I started my art fulltime I made a simple page to keep track of work, my total hours per day, hours per project, date, work done etc. if you follow the link I posted here or just put the address in your webbrowser it will take you too it all ready for printing (it is published/saved in my web hosting site but there is not a direct link to it on my site). Is pretty self explanatory and anyone who wishes to use it is more than welcome http://www.rlmagic.com/scrim/scrim hours.htm

...and taking another cue from Marty, documenting those separate elements of the commission will then give you a "Ballpark" idea for generating your next estimate.
Bruce: Using the stopwatch or clock is like any other "Habit". It takes a while to develop it, but becomes second nature.

Back logs can be deceptive. One can be way overbooked for 2 to 3 years and then spend a year wondering why business is soft. I keep a running price list on my computer desk top and edit it every time I charge too little. Knowing what you want to make in a year is the starting point and work backwards from there dividing it into days and hours. I figure an 8 hour day to contain only 4 to 5 billable hours. Accurate estimation of time and pricing is the key, doing the numbers and being realistic about it. When I look at a job I size it up in minutes, hours, days or weeks and find I am usually right using those increments.

Good points, James. I've worked my billing very similar. You're spot on by identifying what you want to make in a year and work backwards.
Many don't know how to decide what they need to make, but here's a basic guideline: Look at what you spent last year and add 5-10%. That will give an idea as to what you must make just to break even this year. Add another 10-20% for a profit margin. (Naturally, you want that number higher, LOL!)
Now take that figure and divide by 12 (months) to get a monthly income. Divide that number by 22 (the number of days most people work in a month) and you get a daily figure. Divide by 8 or 10 (hours in your workday) and get an hourly figure. Divide by 60 (minutes) and you get how much you need to charge per minute.
When you are drawing, cutting, polishing, whatevering, the clock is ticking and you are billing.

Were allowed to take coffee breaks?

Were allowed to take coffee breaks?

Dennis............coffee breaks and "pottie breaks" are refered to as "mental health breaks". It is a contractual item that is highly recomended.