There’s a YouTube video out there by a woodcrafter who suggests that the only way to keep yourself from competing with yourself is to price your work in days. His viewpoint is that if you try to price things based on the number of hours it takes to make then you’re a worker. If you price it by the piece you’re an artist. And artists in his mind get paid more. The other reason is that it is hard to factor in lots of costs - how long did it take you to drive to the store to buy the wood you’re going to use? How much of that piece of wood are you using vs recovering for another project vs throwing away? How much of that cost gets applied to this project? How much time does it take to put on a coat of varnish? And then do it 3 times? And sand in between? Etc. etc. etc. Point is you’ll bleed away massive amounts of time if you try to build up to a price based on figuring out how much time it takes to make one of something.
His method is to make a day rate (yeah, it’s an awful lot like charging by the hour ) and figure your work in days. So if your day rate is $500 or $1000 that’s where you start. Now you can’t charge $500 for a clock face but you take that and divide it by the number of clock faces you could make in a day - maybe 20, or engraving that chopping board - maybe 10. So your clock faces would cost $25 each and your chopping boards $50. You then have to see if they’ll sell at that price. If they won’t you either figure out how to make more of them in a day or you don’t make them because you can’t sell them at a fair price for your time & effort. It’s a fair approach and helps keep you from doing things you can’t really do profitably or that you end up doing custom one-off artistic work for minimum wage.
Good point - he is thinking of economies of scale. Which is good for mass production of 1 design ordered by customers. Like wedding favours for 100 guests… etc…
The per piece method is in my opinion a safer/conservative option since one is not making a bunch of the same thing and hope they sell. It’s make when an order comes.
So much to think about! Loving all the ideas/opinions here!
I think the philosophy would be the same, whether you make it to order or keep it in inventory.
For example, a couple items you offer designs for -
Assuming you have a day rate of $500
Item A. You can make 8 in an 8 hour day, between cutting/assembling/packaging, materials are $10/per. That would be $72.50 between time and materials.
Item B. You can make 20 in an hour day. Materials are 2.50 per. Thats $27.50 per.
Item C. Custom Request. Takes you 8 hours. That’s your day rate plus materials.
Regardless of whether you make them in advance and store them in inventory, your time is your time. Basically, it’s just an easier/another method of breaking stuff into a realistic hourly figure.
Like most artisan/craftsman endeavors, the biggest part of you cost will always be your time. While we certainly have to factor in the cost of materials, wear and tear on equipment, a round number usually works well because next to your time it’s usually a rather small fraction of the total cost (unless you’re doing large scale manufacturing and wholesaling, then it’s a whole different ballgame, which I doubt anyone will be playing with their Glowforge, but then I may just be short-sighted.
I had a small photo gallery until they re-purposed the building. My prints were priced “as an artist” and not based on materials.
One day I had somebody asking about a print that I think was listed at $240. After explaining both the image and the printing process he said, “You know, if you used a less expensive paper and sold them for $30 you would sell a lot more prints.”
I bet he was right but the paper isn’t what cost $210!
You might also want to read up some articles in The Engravers Journal; laser engraving is featured often; digital editions available here. I believe it is a business publication and often has pricing articles.
For things to work out well, the day rate has to have a fair amount of slop in it to account for dead time. On the one hand, it may seem unfair to effectively charge people for the time you’re sitting around waiting for work, but on the other hand there’s a certain price they pay for the fact that your enterprise exists to serve you. (And marketing and research and testing and maintenance and all the other things that don’t hyper-directly lead to product for sale.) One freelance guide I saw suggests setting rates assuming you’ll be billing about 50% of your working day.
I am a Contractor in a niche sector (Marketing in the main but I also Code-on-Call). I pretty much work with @jbmanning5 's method.
I work out what i am ‘worth’ yearly and then break that down into Monthly, Weekly and thence Hourly slots.
I modify those costs based on the complexity of the job and especially the time-frame (since i am most-often called in to ‘fight fires’).
Over the past 7 years my actual earnings have matched the projected earning with less than 10% variance
Were i to apply this to Glowforge or physical production then my ‘yearly worth’ would be modified by Maintenance and Material Costs.
Ha! Like one of my favorite quotes: “Most SME (Small to Medium Enterprises) undervalue their time and expertise”
The rule of thumb presented was $50/hr when you’re starting off and if you’re good or have been doing it for a bit and artistry (vs simply making) is required, then you ought to be figuring $100/hr or $1,000/day’s production.
In my cake shop we go by complexity and serving for our over the top cakes for the higher end clients. We also have set prices for budget clients. Mark up in custom cake industry is pretty high. I need to do some research on laser crafts.
When I was being taught screen printing, the professional that was teaching was asked this by the students, and his reply was " if you have no other idea, try multiplying your total materials costs by ten ".
This was about 30 years ago, and every so often since then, I’ve remembered his advice, and checked it against my current quotes, and was surprised how often it was pretty close.
I totally agree with @markevans36301, it sounds silly but is so true. Trying to figure a bare minimum price will always burn you. @lairdknox, I owned an art gallery and the most common question from artists was always “what should I charge” and they would always be trying to figure time and materials. I would tell them that its art, if someone doesn’t like it they won’t pay a $1 for it. If they love it they will pay almost anything.
And of course there was always the people who woulds say, “I could make that for a fraction of that price” I would politely tell them “yes, but you didn’t”
) and figure your work in days. So if your day rate is $500 or $1000 that’s where you start. Now you can’t charge $500 for a clock face but you take that and divide it by the number of clock faces you could make in a day - maybe 20, or engraving that chopping board - maybe 10. So your clock faces would cost $25 each and your chopping boards $50. You then have to see if they’ll sell at that price. If they won’t you either figure out how to make more of them in a day or you don’t make them because you can’t sell them at a fair price for your time & effort. It’s a fair approach and helps keep you from doing things you can’t really do profitably or that you end up doing custom one-off artistic work for minimum wage.
