Pricing stuff?

[TobyB]

This may come to nothing ... but ...

I'm completely new to this game as a hobby turner - but totally unexpected, a bit of gossip in a local cafe/deli as a customer led to them asking me if I could make some small pieces that they could try to sell as an extra bit of the business, especially in the run up to Xmas. They've not much space and are looking for cheapish impulse purchases ... small spinning tops, tea-light or candle holders, light-pulls, etc ... not big bowls etc that I like making ... but ... worth a try ... he reckoned "if the samples look good we'd like about £150-worth of stock initially" ...

How do you price your stuff? They have ideas of what they reckon they can sell some of whatever stuff I make for(£5 - £10 ideas). I have no idea what I sell my stuff to them for however. If I make a really simple spinning top in quick time that they want to sell for £2-3 out of dirt-cheap off-cut wood ... what do I charge them? What sort or mark-up or percentage should I be taking, or looking at it the other way, if he wants to charge that, what can I expect to get and then I can reckon if it's worth spending the time/materials to deliver ...

Guess what ... I know nothing about this sort of business ... any clues/pointers/warnings etc would be much appreciated!

 

[nev]

i would suggest that you probably wont be able to turn a profit :roll:

lets say for example it takes you an hour to make a widget.
at minimum wage thats a £5.93, plus your lectric, any materials and finishes you may apply, even with 'free' wood lets say 50p, and delivery costs. lets round it up to £6.50.
a relative of mine works as a buyer for a local gift shop and insists that it is the norm for them to have a 100% markup,
so your widget you sell to them at 6.50 they then add the vat at 20% so + 1.30 = 7.80 add markup = x2 =15.60

so your free wood throwaway item must sell for 15.60 for them to make a profit and you to earn the national minimum wage!
unlikely i am guessing. :?
if on the other hand you have a large box of widgets that have accumulated over the months and years and theyre just taking up space, then donate them for the price of a large pint or two???

and sure to follow....

the pro's versus hammerchewers pricing argument.....or.... mortgage v beer money...

take it away

 

[Blister]

Toby

This can be a minefield

If they are going to buy £150 worth of stock they will want a receipt for money paid out

Are you already a registers business ?

If you are not the tax man will want you to declare unearned income on the profits you make

If you are going to set up a company that all cost and accountants fees are not cheap

 

[drillbit]

Hi Toby. No experience of selling wood stuff and i cant speak as a woodturner- but i have freelanced as a programmer for a while and reasonable experience of self employment. My rule is basically charge what the client will pay. That's what you are worth.

You shouldn't need to set up a company. You can trade as a sole trader. You will need to declare your tax, but that is pretty simple. A call to the tax office will get you set up. You do it online once a year..very quick and easy.

Can you make a profit? Well, at the quantities indicated, it's likely to be beer money. But I can't see why not. If they are talking about nicknacks, then hopefully you can make several per hour. A little hand made spinning top could sell for 3 quid. With the retailer's mark up, you could maybe charge 1.50 each. Can you make 10 an hour? Once you've made 20 in a row, I would imagine you could easily do them this quick. 15 quid an hour isn't going to mean giving up you day job, but you will be getting yourself out there, and it always feels good to sell something you have made.



Doesn't sound like you should rule it out. I'd have a think about how to maximise effort to saleability ratio to decide the best things to make. Then produce some samples, and talk to your retailer about financials before making a decision.

From (another) Toby

 

[Wood spoiler]

just as an aside, I took in to my office the Lazy Susan made at the weekend as I was especially proud of it and discussions began concerning the "value" if offered for sale.

Despite various bids of hypothetical value, the highest bid was the cost of the materials only, with most falling below the material cost never mind true cost let alone pay for time to create it in.

To make money from turning you should be aware that it seems unrealistic to make profit unless you have either the ability to source materials at low or no cost or are especially proficient producing lots of widget per hour or you have a gallery outlet where patrons recognise the worth of bespoke hand crafted items.

 

[chrisbaker42]

As you say it seems the only real way to make money is either at the cheap end with tops etc. or at the high end art market. There again it is sometimes a way of clearing out the many practice pieces and getting a bit back to replace materials that would otherwise come out of our own pockets.

 

[TobyB]

I think that's what I'm looking at Chris, getting a bit back to pay for tools/toys. As Toby said, "getting out there" ...

 

[johnny.t.]

Lots of negativeness up the top of this thread :roll: :lol: Its great that someone wants to pay you £150 for bits and bobs, the bonus of them wanting nik nak items is you can make them from off cuts etc with very little layout except your time, being a hobby turner thats the way you like spending a hour or two anyway! LOL Sounds like a win-win situation to me. As you say if it pays for a few tools or materials thats great. Go for it!

 

[stevebuk]

i sell lots of stuff via a cabinet at my place of work (garden centre), i admit most of it is scroll saw stuff Names, Anniversary and bespoke items, some pens and a few bowls, goblets etc, i actually charge what i think i would pay if i wanted to buy said item.
I dont charge for hourly rate even though i am a registered business, and what else would i do with the the items if i didn't sell them, i admit there is only so much money in todays shoppers purse's and charging too much would turn them away.
Go for it, what have you to loose, like you say get your name out there..
:lol: :lol:

EDIT: it would be interesting to see if everyone who sold stuff, even through the BUY/SELL area on this forum declared their earnings to the taxman..

 

[jumps]

EDIT: it would be interesting to see if everyone who sold stuff, even through the BUY/SELL area on this forum declared their earnings to the taxman..

I think this is a bit of a red-herring Steve

Even the best of the Boot-sale/re-sale merchants here (say Jimi43 for example) is unlikely to be making a taxable profit on such items - everything else is being sold at a loss and, unless it's being sold for more than a tax write of value, tax doesn't come into it.

As to the original question - it's sensible to keep a basic set of records showing costs and income; as said it's unlikely that a taxable profit will be generated on material costs alone. In fact it may be a good way of pricing such hobby trading - direct material costs.

 

[gregmcateer]

Toby,
(I'm new to turning, so have no knowledge of the specific market, btu the logic should bear out).
If you're keeping it as a hobby and a bit of beer money, it doesn't matter too much if it just subsidises your hobby.
If you reckon it may develop into a bit more, maybe consider saying to the shop that you will produce them some example pieces at an introductory price, so they can get a feel of their market and if it is mutually beneficial, you can sit down together again after the Christmas period and evaluate prices, products, demand, etc.
Remember - unless you talk right at the beginning about the real cost, and just go in below cost, it is almost impossible to put the prices up later - Price right, then discount forthis place to sample your wares.
Good luck with it - and please let us all know how you get on.
Greg

 

[Lightweeder]

EDIT: it would be interesting to see if everyone who sold stuff, even through the BUY/SELL area on this forum declared their earnings to the taxman..

This is depressing By the time we've worked out the cost of raw materials, petrol to source them, our time to turn them into something, additional materials like abbrasives, finishes, durables, consumables, depreciation on lathes, bandsaws etc etc - the end product is hardly likely to 'turn' much of a profit. Then you have to nicely ask the IR to take a bit of what's left - it's a good think we're all totally besotted by this turning business.

 

[johnny.t.]

When you are declaring money earned through turning(I have to as I'm self employed) you do get the little bonus of offsetting all those tools and materials against your profits, so its not all doom and gloom! (hammer) :mrgreen: