This info isn't just important to makers; people BUYING need to understand these costs. Its so easy (and I see/hear it all the time) for someone to say "psh, that wallet isn't worth $X.xx" and it may not be worth it TO YOU, but how someone feels doesn't negate someone's art, whatever that might be.
People say, hey, just bit of leather and some stitching, what’s so expensive on it? Here it is! I know exactly what he is talking about. And also it is not a mass production, it is custom made. Like this channel.
completely DISAGREE. as a leather crafter, and have been doing this for 20+ years I can say with authority that the vast majority of people out there (especially with the "youtuber leather crafters".....) are EXTREMELY OVERPRICING their goods and products. no joke. this video is giving "costs" but they are not realistic costs.... they are puffed up numbers to try and convince people that its "ok" to be getting gouged by extreme pricing.. the product cost he gives is wayyyy over. I can tell you that amount of leather he used is only about $5 dollars worth of leather, $25 an hour?? for the quality of that wallet... no. that is rough quality and is nowhere close to being good enough to justify a luxury hourly rate of $25 an hour. $15 and hour is more appropriate and also more realistic. **remember folks, I am talking real life, not fantasy youtube life....** That simple wallet that was shown in the video should be priced out at $45 MAXIMUM. anything over that is the seller ripping you off. dont give in to the price gauging folks.
@@orion7741 I wouldn't know as much about the quality of leather, I don't have that knowledge you do, so I appreciate you commenting on that. When it comes to hourly rate $15 is minimum wage where I live and it would be more feasible for me to pay my personal bills and living expenses if it was $25 per hour. That's probably why this didn't seem so inflated to me. Working for a small business and working with many small time artists, the prices seem expensive to some customers that come through because they compare it to mass produced products that are machine made. Him breaking down costs I think is a helpful thing for people to know all the pieces that go into pricing, not necessarily the numbers he gave. A lot goes into running a small business and it isn't cheap, at least where I live. Thanks for giving different input, it's nice to hear someone disagree and share a different experience.
The problem is you won't be making a single wallet, in 2 hrs, you should be making several wallets in 2 hrs. You can still charge $35 an hour, your cutting out 10 or more parts, doing things in steps. Cutting 10 out, gluing the 10, and stitching the 10. You keep your costs down, that way you can sell them at a reasonable price and make said profit.
Success is having your own business, a 9 to 5 will do you nothing... This video is PURE GOLD, not for leather smithing only, but for any business. Thank you so much for this! I found out that I've been working for free for the past 2 years.
yes and no. There are plenty of people from this and previous generations that made their living and were successful with 9-5. Some 9-5 have pensions- handmade products DOES NOT. Some 9-5 have healthcare, handmade products do not.
I tried making my own wallets and selling on etsy and ebay I couldn't even sell them to even break even let alone make a profit! what I been doing now is buying used leather goods as cheap as I can find them and repurpose the leather as Vintage leather save almost 80% on materials and the leather I use has unique patina such as old leather bags amma pouches and people love that! buying wholesale leather at the costs is not possible people wont pay $110 for that wallet when they can get one that looks the same for $15 from china but they will pay $80 for a vintage patina ammo pouched reclaimed leather one.. great upload many thanks cheers from Salt lake city Utah!
This becomes difficult for me as a person. Looking at this, I wouldn't want to ask someone to pay $110 for a wallet. I get how we got there, but for a simple folding card wallet, $110 seems a stretch. Looking at your site, this exact wallet isn't available, but the closest in appearance and structure is listed at $38.00. So where along the way did we change this so drastically? Is it that you've got to a clicker press for all the fiddly cutting/punching bits, have you gotten that much faster at assembly?
Lmao 😂 sorry but that last part was funny. (Clicker press) Anyways, he even said it would have to go for almost $200 if he sold retail. Absolutely insane…
I think one big thing you forget is taxes. If you calculate all of this you get your labor cost and profit before taxes. And taxes can make a big cut into this calculation. It depends also on the corporate form, and profit you make a year etc. But still a very good infomative video. Greetings from a business administration student from Germany.
Maybe Bidenomics math... Accounting/Bookkeeping for Dummies (No pun) Would teach you more. At the end 2 - 2.2% Mark up Is NOT times!!!! 2% of $110 = $2.20 Not $120 or $220? You need to make five at a time. Buy materials in bulk, get your labor cost's down. Assembly line or several at a time. Overhead is different for everyone. Your $25 an hour was already included, @ 1.25 you profited twice.
Great video! Need to remember health insurance, business insurance, cost of driving for business $0.50 mile wear/ tear/gas which does not include your time. Possible warranty issues, accountant/professional costs.... There are a lot of hidden costs running your own business which most people don't consider until they put themselves into the driver seat of a business.
This is super helpful and exactly what I needed. I'm trying to make leathercraft and woodworking my full time job, but I live around a lot of poorer people and I was struggling determining my pricing. I felt like no one would pay that much, but seeing a couple videos of other people breaking down their rough numbers and explaining that somebody out there will pay and does want it helps. I've made things on the side, but never made enough to go full time. I hope to change that this year.
You need to ditch A to B sales and go 100% E-commerce direct to consumer. Geographic location today is no limit for how you can sell or who you can sell to.
Makes perfect sense. On the other hand... something I've always struggled with... Who would be willing to pay that much for something this size and this basic? Maybe I'm cheap. But I really would love to adjust my perceptions based on how the general public perceives things. Being confident in the process and believing that I could make a living on ANY hand crafted items would be nice. Especially since most are considered luxury.
I know quality items cost more. If you're making something out of leather that's inherently worth more than something made out of polyester. Something can be basic but still worth something if it's made well and will last.
Here's how to "justify it" consider it an investment that will last a lifetime of something that is handmade with high quality materials that are not plastic. Ethically, you are not supporting mass consumerism and capitalism that puts people like this out of business. You are supporting a business owner who is passionate about their work and has the skills to produce a precious piece. If this is still too high of in investment, then look for them in the used market to spend less, but still not buy new "cheap" mass produced goods to support circular & sustainable economies. Or ask for one for your birthday or Christmas.
Always find pricing discussions fascinating. I like how you simplify the whole fixed cost thing that simply deriving a simple formula per hour worked (even if one needs to have its schedule full for this value to hold). Minor nitpick. You choose 25% MARKUP (not margin). At 25% margin, the cost of this product would be 89 / (1 - 25%) = 118.67 ! This is important because if one day you decide to do a promotion... You know that 25% margin gives you room for 25% discount... 118.67 * (1-25%) = $89 ...
Excellent point. The way I calculate profit margin (let's say 25%) on a calculator is: $89 / .75 = $118.67. It's just another way of displaying what Guillaume showed above.
I think the point about full schedule should have been highlighted, but it was one thing I noticed as well. This is also where MANY people starting a business mess up. You can't set an hourly rate based on 50 x 40 hours weeks unless you have enough business to be working that many hours. Which you almost certainly don't when starting out. You need to set it by how many actual hours of work you will have and that means guessing at first but you are better to guess low than high.
@Ishbikes i have actually designed and made some fairly complex leather products by hand. $110 for a fully hand made leather wallet is not crazy. Yes you can buy soulless products automatically made in China that will be cheaper and achieve the goal of keeping your cards and notes... But if you prefer a higher quality product that was made by craftsman, no it is cheap.
No, he's not spot on! He did a Mark Up not Profit Margin. It's the single biggest problem people make when they try to start a business and wonder why they aren't making the money they thought they were. I assume no one talks to their CPA either. What I sent him: __________________________________ Appreciate your videos. I wanted to give you a bit of advice on calculating "profit." My experience comes from working with Fortune 500 companies with thousands of retail locations, so I am not just blowing smoke for attention. What you just demonstrated was "Mark Up" not profit. If you multiply your $89 by 25% you get $22.25. Added to your $89 you get $111.25. However, if you want to see what your "profit" was for that $110 sale. . . simply do this: ($110-$89)/$110 and your real profit was 19% not 25% - (Retail-Cost)/Retail. So, to get your real 25% "Profit" you simply do this: Subtract 25% from 100% and you get 75%. Now take your $89 and divide by 75% and your get $118.67. You can prove your "Profit" by using the previous formula: ($118.67-$89)/$118.67 and you get 25.002%. So you either left money on the table and need to raise your prices, or you need to accept a lower profit margin.
This was phenomenally helpful information. I'm a member of a number of crafter groups and the number 1 thing I see everywhere is "what/how much do I charge?" This is also something I have been personally struggling with as a small craft studio as well, especially in the current climate of things with so many small businesses still struggling from the earlier shutdowns this year. Thank you for your continued value to the leathercraft community.
Informative. Something you may wish to include in your fixed costs is accounting fees; tax returns get exponentially more complex and hence expensive if you are running your own business. Secondly consider bookkeeping fees because good makers are not necessarily good bookkeepers and the annals of insolvency are littered with fundamentally sound businesses that failed to make adequate provision for liabilities.
Excellent business lesson. So many businesses fail because of lack of understanding this basic profit/pricing principle. Great job. Also, love your leathercrafting!
I always struggle with pricing my products. I often overlook the smaller elements such as packaging and don't really include them into my pricing. I mainly take into account the materials used and the time it took to make. The worksheet is definitely something that I need to incorporate, so thank you! This was very helpful.. 🙌🏽🙏🏾
A variable cost is the material cost of each wallet. It varies depending on volume. A fixed cost would be something like tools or a workspace, no matter how many wallets you make, the cost is fixed.
this is honestly some of the best financial advice i've ever heard and you gave it while beautifully showing footage of making an excellent wallet. This is very high quality content and I thank you for it good sir.
I wish MORE PEOPLE understood this. I've been a professional bladesmith by profession since roughly 2012. It's been the sole means of support for myself and my three children. "Hobbyists" were always a problem, they would learn the craft, and come in and undercut the pricing because they "didn't need the money" or they didn't value their work at a professional level regardless of actual quality. When Forged in Fire was released, the market was artificially flooded with people wanting to make and sell knives and swords. As you can imagine, this magnified the problem a thousandfold. I used to be one of the few single father bladesmiths in the business...but anymore, unless you have a working wife, or are independently wealthy for whatever reason...this profession is barely sustainable, if it truly is at all. If these people understood the mechanics of how to actually price things, it would be a very different circumstance.
Thank you for the information. I just want to ask how do I get someone to pay so much for a small product? I had to, in order to sell my card wallets, shrink my price from R400($23,60) to R100(5,90) to get just a few people to buy them. I just don't know how to get my business running. :(
When its all said and done the truth is your product is worth what people are willing to pay for it. Which means where i live people aren't willing to pay what i would need to make it a business so it stays a hobby. After shipping taxes and toll costs all leather costs me 50% more then it would in the USA and my country is alot more expensive to live in then America or Canada, so selling online is also not an option. But still love doing it :)
first off thank you, im a new leather crafter this wallet is very popular, i love this videos you do they really help us crafters, ive also purched your pattures, all are really great
I really am enjoying your videos very helpful. I am looking into starting my own Leather business and how to make it work out. I have been looking for as much information about how to market and everything. You are very helpful thank you for making these videos.
Wow...just wow!! To take the time and patience to explain to your views in that depth how to price out your pieces...just Wow & thank you. !! I love your site!! Because of your dedication to your viewers you are definitely my favorite site to visit...oh and I'm a new viewer. What books would you recommend? Cheers
Pro tip. Increase the amount of things they order by selling things in twos or threes at a small discount. Your profit margin will be slightly smaller but sinc the fixed costs are paid for with the bigger order you can have more competitive prices and move more volume. Hope this helps, happy stitching.
Certainly an interesting perspective. I’m curious though, are you actually selling those card holders for $120? A basic non-tooled, non-customized card holder like that goes for way, way less both locally to me and on platforms like Etsy and such. I think the video is well done but in the end everyone needs to keep in mind that something is “worth” only what someone else is willing to pay.
Thank you for taking the time to explain pricing. I really appreciate this video. It was simple and very easy to understand. I am not there yet but I am saving this video for the day I have perfected my skills and can have a small retirement business.
I'm new at the whole business of leather working, so I've been selling my pieces to friends and coworkers for the price of the leather, while I improve. All my patterns are from Corter Leather, too. The funny thing is that I've been selling wallets from this pattern for $20-25 each, LOL. I clearly to need to up my game, though at present, leather working is a hobby and mental health therapy :-) Thank you, as always, for a wonderful and instructive video.
Hobbyists that sell like this kill the market for the professional. You are selling for the price of the leather? That doesn't even cover all the material!! You are just hurting the market, it's not funny. I have been a professional woodworker for forty years and I have fought the garage jockey the whole time....
@@iprint3d710 My quality, pricing and marketing are just fine. It is the hobbyists lack of business understanding that is the issue.. If you can't understand that you are part of the problem.
Stillnapie i have a 3D printing business and sell at whatever I want because I built a large following on Instagram. Gucci isn’t better quality than other products but people pay for the name. Work hard you will get there 👍🏼
I make knifes and i can tell you that i have the same problem. I love leathercraft and i make myself the leather sheath for my knifes. I'ts kinda difficult to set a selling price , often the people says that it can't be that expensive, mostly from people that you know they don't craft nothing at all. handmade stuff is always more expensive that industrial products.
It might be a great way to price products for established brands like Corter or Little King, but there is NO WAY anyone would by buy this wallet by a random maker for $110, let alone $220 in a retail setting. Unfortunately, it comes down to what the client is willing to pay for an item, not what you think or calculated the price of it to be. A good way to balance it out is to make an array of items that each have a different perceived value from customers point of view. For example, you have a card wallet for sale for $50 and a bag for $500. This is a good reference for the customer to compare the two items and to imagine how much more labor and materials go into a bigger item. It makes them more likely to accept the prices as "being set correctly". But the trick here is that what you are actually trying to sell is not the smallest or the biggest item, but everything in between. While the cost of your cheapest item might just about cover the cost to make it, you aim to make up for that by pricing the middle-tier items a bit higher. Also, I think for most small creators "labor" IS your profit. The fact that you are paid an hourly rate to work on something that you like is great. No one paid "profit" money to me on top of my hourly wage in the office, so... In time you will become faster and find other ways to speed up your production of a particular item, so if it took you 2 hours to make that wallet before you are now done in 1 hour. And that one hour that you managed to save thanks to using better template/tools etc is essentially your profit, cause the price of the item stays the same.
This is a great way to do pricing if you know your product is going to sell. However, if for you, it's a concern that you might not sell all your product at that price point, it's worth pricing from the opposite end. Look at what similar products are selling for and see how you can get close to the price. And if you can't match it, do something to make your product higher quality so it's worth the extra $$$. Or sometimes if you charge way more, people perceive it as higher quality and will pay.
I was truly curious to know this answer. I have been considering working this craft but can’t do it for free. If the market is there, then that is encouraging. Not saying this answer alone would make up my mind but would definitely help.
What is the true cost of the product? I made a leather wallet (kit cost was about $35) I have used for close to 15 year's that's about $3/year of usage. I think that is great return on my money. That's a point to make when selling or buying leather goods
I absolutely love this as a newish crafter / side hustle I don’t really think about the packaging..... this really is a great vid and so helpful I’m going to save and watch again
Thank you so much, your videos are always source of informations, and knowledge, and I could, with them explain to my clients, why they pay the real cost of a unique work, individual item, I'm really gratefull to your work, and I'll never be enough thankfullness for that :) Thank you again for your video
Thank you. I sell items that I make blacksmithing and now leather at a shop in a small town. I am taking a beating but for me it's a hobby. I am always watching to insure that whatever I make does not under bid anyone who does this for a living.
This is what I struggle with most in my leather working. I would never pay $100+ for that wallet so I couldn’t see someone paying that for something I made. Then I get stuck in this rough cycle of under charging for what I make so it doesn’t even feel worth it for the time I spent on it. Granted, I’m not a full time leather worker and I just do it on the side but it feels like ever doing it for a career would be out of the question.
Hi, it's been 6 month may I ask have you found solution for your pricing? because I want to start doing this on the side as well for the love of leather products but I am the same regarding you would never buy a wallet that cost 100+ so did find solution to that?
@@ExtraordinaryTK That probably just means you're not the target audience for your own products, which is fine. Try selling it for 100+ anyway. See if there is a market for your product.
I love all your videos but this one especially. I asked about this sort of information a while a go, not sure if it is in response or you have been working on it for a while but it is seriously invaluable to me. so a huge thank you. i purchased your long wallet pattern ( one of the best investments i have made in my business) a few months ago and have been making some variations on it and selling them , so thanks again. both of you do beautiful work, and your narration is so easy to follow.
Great job, great video... I don't do this for a living - I run a country size consulting business to fortune 500 companies and leather is a hobby, but I read the comments/posts and know how much people struggle with this topic. Some people come from the strong "skill" side and lack the business/knowledge, I come from the other side of the scale, where cutting leather is a zen activity for me. Super glad to see some one explain this in an easy/started format. Great job...
Thank so much for sharing. I have only one question. If correctly understood your fixed costs are 5$/h. So why you were calculating only 5$ if you spent 2 hours? Or did I understood it in wrong way?
Free Market equals what people are willing to pay for a product. If two people agree that something is worth a certain price, then its worth that price. The west has become so used to buying cheap rubbish from the east, they do not know what a quality crafted product is. I personally wouldn't pay that much for this product, but I am sure someone else is. All the power to you. Great craftmanship.
That's really an eye opener. Now one question though: Considering the wallet you just took as an example here, would it be realistic to sell it for 110$ in the real life, let alone 250??? I just wonder how would that be possible. Considering this example, I would think it's just impossible to sustain a living by hoping to sell such objects at such prizes. What are your thoughts about this?
I guess no one will ever know, that is why I make the questions and the answer. There is nothing more to say, this is just plain demagogy. Might be good in front of some gullible students or on paper, but real life and fantasy are two different things.
The level of anxiety and panic I had while he was flailing his hands back and forth while he's talking with the finger removal tool lol 4:46. The pricing makes sense but my cost of living is lower than normal and my hourly wage at my part time job at McDonald's here in Houston Texas is $9/hr I'm ecstatic to learn I can charge $20+ and make money off leather working so I'm building up my tool collection and working on some wallets and key chains to sell
Thanks for the lesson and insight. I've been working and selling leather for a few years now. And not being able to make a living at it hurts sometimes. If you could, could you please reference what books it was you read that changed the way you work? Huge fan, thank you for your time.
Great video! Unfortunately, most makers on Etsy do not price correctly and they end up selling something like this wallet for $25 instead of $110. The customer base gets used to thinking "Oh this is just a small $25 wallet. I've seen similar on Esty. Why is it so expensive here!?!" ..... I don't know what the solution is. Any suggestions? (besides leaving Etsy, which I've already done lol)
Basically - it's best to avoid situations where you've got a bunch of people racing to the bottom price to make sales. Etsy gets you immediate traffic and eyes on your product, but it also gets you a lot of competition immediately. Best option is to build your business independently and use your brand to convey the value of your products. That way you can convey the value in what you do properly, it's very difficult to do that on Etsy unless you're simply using it as a cart site from other traffic sources and not depending on Etsy traffic to make sales.
thats because alot of those sellers are actually pricing their products CORRECTLY. the youtube "leather crafters" are trying to rip people off with inflated prices because they think people are stupid and dont know better so they can charge whatever they want. This wallet has ZERO grounds for being sold at such a absurd price of over $100. It is a $45 product at the most. and that is with profit margins built in. could be sold for less even.
@@laurendelosreyes9615 Yeah for the wallet in the video, some of the numbers are not correct imo (material price, time for each wallet. I think it should be a little more than 1/2 sqft with $10 per square foot. Then, labor is closer to 1.5h if u have dies and burnishing / sanding wheel. Also, the wallet on the website is not same but similar enough. One shown here has a little bit more leather. I think 50 is a good price to sell this wallet for. It will probably take up to 2 hr if u want really nice edges. Maybe u could charge more then.
Very informative video. I'm just getting started in leather crafts and do it on the side of my full-time job. Do you do this full time? If so, when did you make the jump from doing it as a "side hustle" to full-time?
Thank you so much for taking the time to share such important information for all us who work with our hands! We're from Northern Alberta, Canada and just starting out in a home-based leather business. This was so appreciated!
Never forget to factor in what the market will pay. If your calculation shows you need to make $110, yet people are willing to pay $150, you should absolutely sell it for the $150. They're paying for the end product, and the customer does not care how much labor/costs went into it. Even if it took 10 minutes to make with the cheapest leather, if they're willing to spend big, charge big. Get it out of your head that you're ripping people off, if you have that feeling anyway. I used to be a detailer for cars and learned this too late and burned myself out. This stopped me from making 5 to 10 times what I charged back then because it "didn't feel right", even though people were out there willing to pay those rates for good work...
Thank you! This was very helpful. I've been selling my stuff for over a year now and I still have anxiety about raising my prices to what I should be charging. I feel like this is a good way to explain it to people who might not understand and want the products for cheeper than the materials alone.
now I understand how products are made in cheaper countries and how volume production helps in controlling prices. Good video, and great products you make.
What about the factor of will it sell for that price?. A wallet like that on Amazon is about 40 bucks. So do you just not sell. Or lower your profit expectations?
Loved the video and cant believe this valuable information was for free :p so thank you. I also have a question: i want to start making and selling wallets. Its not likei dont havemy own designs but i was wondering whats the deal if you take free pdf designs,or even buy design templates off the various available sources and start making andsellingthise designs? Would that come under copyright infringnent and would that be illegal?since my card wallet might overlap with someone elses design partially ir even fully in the case of me having bought or downloaded a template deisgn. So basically how serious is copying and selling in the leathercraft business?
A very interesting video, thanks for making it. One important consideration, which I am sure others will have remarked on is, what will the customer pay for an item? Are there really people prepared to pay over £100 for a wallet? Does this therefore mean if you can't change enough money for a product because the market won't stand it, that it isn't a viable business?
Yep, if you can't sell product at a price that makes you enough revenue to run a sustainable business you can't really run that business. So you'd have to either lower your production costs (die cutting, machine sewing, etc) or design different products that have enough profit margin to keep you sustainable
It is very important to consider the taxing depending on where you live and want to sell your stuff. For example in Germany you would need to add another 19% (multiply by 1.19) on top of the last price on the downright of your sheet, because you get these taxes from your customer but have to pass it through to your tax office.
@@DB-zp9un That is what I mean with: tax systems are very different around the world. When I have a product and I sell it here in Germany for 119 €, I have to pay 19 € directly as taxes. The customer gives me 119 € and I can keep 100 €. So if I calculate my expenses and my profit and everything and it adds up to 100 €, I have to add another 19 € to my tax including price. Sorry, it's late, I hope you understand my rambling ^^
Great content for skilled craftspeople of any kind! And as others have mentioned, important for consumers to understand as well. My only critique is that your calculation of profit margin is inaccurate. Rather than multiplying your cost by 1.XX to get your margin (the way you would calculate tax), you should be dividing your cost by 1 minus the margin you want to make expressed as a decimal (in this case .75 to maintain a 25% margin). It seems like the same thing, but what you calculated as 25% margin actually works out closer to 20% margin (less once you’ve rounded down), which compounds pretty substantially over time.
Labor also includes education, experience and scarcity in skill, and you’re paying for quality construction, not just materials. Most people don’t know what quality means and are too complacent with overseas labor costs and materials. You think a LV wallet takes two hours and uses the same quality material? Sadly branding is more important than anything these days. He can charge $25 an hour because he has the skill and experience to support that. Many workers are underpaid for their work while others are overpaid for relatively simple work. Thank you for breaking this down. While I agree that we need to consider consumer market value of a product, we also need to increase awareness that quality handmade products…AREN’T CHEAP!
I have two issues with this brake down. Is it really going to take two hours to make that simple card wallet and how many people are going to be willing to pay over a hundred dollars for it?
I like nice things. As a result, I am surrounded by nice things. I would never pay $110 for "that" wallet. I did pay over $200 for my wallet, but it holds everything including my passport. Yes it fits comfortably in my back pocket and is 100% tooled with my designs. Just saying.
Very interesting topic. True on every level. As straight up math is concerned, this is accurate 100%.... However, the BIG kicker is marketplace and competition and that is where this all unravels.
No, it's not accurate. . . He demonstrated Mark Up - Not - Profit! People who use Mark Up always leave money on the table or severely overprice their products. What I sent him: __________________________________ Appreciate your videos. I wanted to give you a bit of advice on calculating "profit." My experience comes from working with Fortune 500 companies with thousands of retail locations, so I am not just blowing smoke for attention. What you just demonstrated was "Mark Up" not profit. If you multiply your $89 by 25% you get $22.25. Added to your $89 you get $111.25. However, if you want to see what your "profit" was for that $110 sale. . . simply do this: ($110-$89)/$110 and your real profit was 19% not 25% - (Retail-Cost)/Retail. So, to get your real 25% "Profit" you simply do this: Subtract 25% from 100% and you get 75%. Now take your $89 and divide by 75% and your get $118.67. You can prove your "Profit" by using the previous formula: ($118.67-$89)/$118.67 and you get 25.002%. So you either left money on the table and need to raise your prices, or you need to accept a lower profit margin.
Great video. I just don’t understand how someone is going to pay so much for something I’ve made. I made a card holder and priced it at £15 but looking at your formula it should be 3 or 4 times that.
Very, very few people will pay $110 for two pieces of leather stitched together. Especially in this day and age, where you can buy a decent tri fold leather wallet for $35. Its leather not adamantium. Having said that, undervaluing one's work is a problem in itself.
Taxes? I.E. Federal (Income+Self Employment tax in the U.S), State and local Income? And, Sales Taxes. Also, if you always refer to "Cost" as your costs, and "Price" as the price you sell the product at it helps keep things a whole lot clearer to yourself and your accountant. And yes, it's best to work with a CPA if you run your own business. There can be a whole bunch of tax issues if you don't. I learned this the hard way years ago.
That’s just an amazing video, sooo useful. Maybe you could also make a sort of a video on how to reach first sales and expand? I am personally just starting to get into craftsmanship business, and my major struggle is to understand how to reach my first customers (without spending a fortune on ads) Please thumb up this comment, so it will be noticed
We've made a video called "how to sell your leather goods" that touches on that, we've also made one about how to get your products press (how to get your leather goods in magazines). We'll go further in depth with other products soon as well :)
great video. my question is, you say to sell in store 2 to 2x cost. would that include if you set up an etsy store? would you sell that wallet on etsy for $220? or do you mean you would sell that wallet to lets say a boutique. they pay you the $110 and then they resell it in their store for the $220? looking to hopefully get started and really love your video. you break it down really well. thank you for that
Hey if you dont mind me chiming in, for what I understand is that you will sell it to the boutique for $110, and they would add the x2 to the price, if you are listing it on esty, you will list it at $110, cause you are the one selling it.
Thanks very much for the whole enchilada, ie the information, insight, video and pattern. So to be more competitive in this particular case one would look to maybe have dies made to cut the card wallets and source cheaper materials but without sacrificing quality of course and like you said you would have to factor in the cost n of the dies. Seems by far the greatest cost in this instance is materials.
The "Corter Pounder" came from another video they did a while back. Someone in the comment section had the brilliant observation that it would be hilarious to name a hammer the Corter Pounder and they ran with it.
This info isn't just important to makers; people BUYING need to understand these costs. Its so easy (and I see/hear it all the time) for someone to say "psh, that wallet isn't worth $X.xx" and it may not be worth it TO YOU, but how someone feels doesn't negate someone's art, whatever that might be.
People say, hey, just bit of leather and some stitching, what’s so expensive on it? Here it is! I know exactly what he is talking about. And also it is not a mass production, it is custom made. Like this channel.
Preach!
completely DISAGREE. as a leather crafter, and have been doing this for 20+ years I can say with authority that the vast majority of people out there (especially with the "youtuber leather crafters".....) are EXTREMELY OVERPRICING their goods and products. no joke. this video is giving "costs" but they are not realistic costs.... they are puffed up numbers to try and convince people that its "ok" to be getting gouged by extreme pricing.. the product cost he gives is wayyyy over. I can tell you that amount of leather he used is only about $5 dollars worth of leather, $25 an hour?? for the quality of that wallet... no. that is rough quality and is nowhere close to being good enough to justify a luxury hourly rate of $25 an hour. $15 and hour is more appropriate and also more realistic. **remember folks, I am talking real life, not fantasy youtube life....** That simple wallet that was shown in the video should be priced out at $45 MAXIMUM. anything over that is the seller ripping you off. dont give in to the price gauging folks.
@@orion7741 I wouldn't know as much about the quality of leather, I don't have that knowledge you do, so I appreciate you commenting on that. When it comes to hourly rate $15 is minimum wage where I live and it would be more feasible for me to pay my personal bills and living expenses if it was $25 per hour. That's probably why this didn't seem so inflated to me. Working for a small business and working with many small time artists, the prices seem expensive to some customers that come through because they compare it to mass produced products that are machine made. Him breaking down costs I think is a helpful thing for people to know all the pieces that go into pricing, not necessarily the numbers he gave. A lot goes into running a small business and it isn't cheap, at least where I live. Thanks for giving different input, it's nice to hear someone disagree and share a different experience.
The problem is you won't be making a single wallet, in 2 hrs, you should be making several wallets in 2 hrs.
You can still charge $35 an hour, your cutting out 10 or more parts, doing things in steps. Cutting 10 out, gluing the 10, and stitching the 10. You keep your costs down, that way you can sell them at a reasonable price and make said profit.
Success is having your own business, a 9 to 5 will do you nothing...
This video is PURE GOLD, not for leather smithing only, but for any business.
Thank you so much for this! I found out that I've been working for free for the past 2 years.
yes and no. There are plenty of people from this and previous generations that made their living and were successful with 9-5. Some 9-5 have pensions- handmade products DOES NOT. Some 9-5 have healthcare, handmade products do not.
I was literally googling this last night... Corter YOU ARE THE BEST!!
I tried making my own wallets and selling on etsy and ebay I couldn't even sell them to even break even let alone make a profit! what I been doing now is buying used leather goods as cheap as I can find them and repurpose the leather as Vintage leather save almost 80% on materials and the leather I use has unique patina such as old leather bags amma pouches and people love that! buying wholesale leather at the costs is not possible people wont pay $110 for that wallet when they can get one that looks the same for $15 from china but they will pay $80 for a vintage patina ammo pouched reclaimed leather one.. great upload many thanks cheers from Salt lake city Utah!
Why you charging 110? Dang lol
@@slkknifeloveryou didn’t read what she said, did you?
This becomes difficult for me as a person. Looking at this, I wouldn't want to ask someone to pay $110 for a wallet. I get how we got there, but for a simple folding card wallet, $110 seems a stretch. Looking at your site, this exact wallet isn't available, but the closest in appearance and structure is listed at $38.00. So where along the way did we change this so drastically? Is it that you've got to a clicker press for all the fiddly cutting/punching bits, have you gotten that much faster at assembly?
Lmao 😂 sorry but that last part was funny. (Clicker press) Anyways, he even said it would have to go for almost $200 if he sold retail. Absolutely insane…
I think one big thing you forget is taxes. If you calculate all of this you get your labor cost and profit before taxes. And taxes can make a big cut into this calculation. It depends also on the corporate form, and profit you make a year etc.
But still a very good infomative video.
Greetings from a business administration student from Germany.
And if you have employees ever, THEN you get the company share of payroll taxes etc..
I think you just gave everyone a free semester of Business School in this one video ❤
Maybe Bidenomics math... Accounting/Bookkeeping for Dummies (No pun) Would teach you more. At the end 2 - 2.2% Mark up Is NOT times!!!! 2% of $110 = $2.20 Not $120 or $220? You need to make five at a time. Buy materials in bulk, get your labor cost's down. Assembly line or several at a time. Overhead is different for everyone. Your $25 an hour was already included, @ 1.25 you profited twice.
@@David-v4y4pyour Bidenomics comment was just what we needed to be prepared for the dumb assertions you made right afterwards.
Great video!
Need to remember health insurance, business insurance, cost of driving for business $0.50 mile wear/ tear/gas which does not include your time. Possible warranty issues, accountant/professional costs....
There are a lot of hidden costs running your own business which most people don't consider until they put themselves into the driver seat of a business.
This is super helpful and exactly what I needed. I'm trying to make leathercraft and woodworking my full time job, but I live around a lot of poorer people and I was struggling determining my pricing. I felt like no one would pay that much, but seeing a couple videos of other people breaking down their rough numbers and explaining that somebody out there will pay and does want it helps. I've made things on the side, but never made enough to go full time. I hope to change that this year.
You need to ditch A to B sales and go 100% E-commerce direct to consumer. Geographic location today is no limit for how you can sell or who you can sell to.
TheGreatChrisB: It's a year later now. How did it go?
Hi Chris, how did it go?
Makes perfect sense. On the other hand... something I've always struggled with...
Who would be willing to pay that much for something this size and this basic?
Maybe I'm cheap. But I really would love to adjust my perceptions based on how the general public perceives things. Being confident in the process and believing that I could make a living on ANY hand crafted items would be nice. Especially since most are considered luxury.
I know quality items cost more. If you're making something out of leather that's inherently worth more than something made out of polyester.
Something can be basic but still worth something if it's made well and will last.
Here's how to "justify it" consider it an investment that will last a lifetime of something that is handmade with high quality materials that are not plastic. Ethically, you are not supporting mass consumerism and capitalism that puts people like this out of business. You are supporting a business owner who is passionate about their work and has the skills to produce a precious piece. If this is still too high of in investment, then look for them in the used market to spend less, but still not buy new "cheap" mass produced goods to support circular & sustainable economies. Or ask for one for your birthday or Christmas.
As a Certified Pedorthist, I make Custom Foot Orthotics for $400/pair. When questioned, I basically explain the same to my patients. Good job!
Very informative and detailed like usual. I'm a finance student and this was top notch basic financing. Well done!
Always find pricing discussions fascinating. I like how you simplify the whole fixed cost thing that simply deriving a simple formula per hour worked (even if one needs to have its schedule full for this value to hold). Minor nitpick. You choose 25% MARKUP (not margin). At 25% margin, the cost of this product would be 89 / (1 - 25%) = 118.67 ! This is important because if one day you decide to do a promotion... You know that 25% margin gives you room for 25% discount... 118.67 * (1-25%) = $89 ...
Excellent point. The way I calculate profit margin (let's say 25%) on a calculator is: $89 / .75 = $118.67. It's just another way of displaying what Guillaume showed above.
I think the point about full schedule should have been highlighted, but it was one thing I noticed as well. This is also where MANY people starting a business mess up. You can't set an hourly rate based on 50 x 40 hours weeks unless you have enough business to be working that many hours. Which you almost certainly don't when starting out. You need to set it by how many actual hours of work you will have and that means guessing at first but you are better to guess low than high.
Ok ok… next question. Do you think that’s a $110 wallet?
@Ishbikes i have actually designed and made some fairly complex leather products by hand. $110 for a fully hand made leather wallet is not crazy. Yes you can buy soulless products automatically made in China that will be cheaper and achieve the goal of keeping your cards and notes... But if you prefer a higher quality product that was made by craftsman, no it is cheap.
@@guillaumeproux7877 that’s not what I asked. I asked was this wallet from this video worth $110
I have been an International business consultant for 30+ years and I can tell you that you are spot on.....
No, he's not spot on! He did a Mark Up not Profit Margin. It's the single biggest problem people make when they try to start a business and wonder why they aren't making the money they thought they were. I assume no one talks to their CPA either.
What I sent him:
__________________________________
Appreciate your videos.
I wanted to give you a bit of advice on calculating "profit." My experience comes from working with Fortune 500 companies with thousands of retail locations, so I am not just blowing smoke for attention.
What you just demonstrated was "Mark Up" not profit. If you multiply your $89 by 25% you get $22.25. Added to your $89 you get $111.25.
However, if you want to see what your "profit" was for that $110 sale. . . simply do this: ($110-$89)/$110 and your real profit was 19% not 25% - (Retail-Cost)/Retail.
So, to get your real 25% "Profit" you simply do this: Subtract 25% from 100% and you get 75%. Now take your $89 and divide by 75% and your get $118.67.
You can prove your "Profit" by using the previous formula: ($118.67-$89)/$118.67 and you get 25.002%.
So you either left money on the table and need to raise your prices, or you need to accept a lower profit margin.
I totally respect how leather goods like this can start adding up in price. but it's also why I want to invest in doing it myself so I can save money!
This was phenomenally helpful information. I'm a member of a number of crafter groups and the number 1 thing I see everywhere is "what/how much do I charge?" This is also something I have been personally struggling with as a small craft studio as well, especially in the current climate of things with so many small businesses still struggling from the earlier shutdowns this year. Thank you for your continued value to the leathercraft community.
Informative. Something you may wish to include in your fixed costs is accounting fees; tax returns get exponentially more complex and hence expensive if you are running your own business. Secondly consider bookkeeping fees because good makers are not necessarily good bookkeepers and the annals of insolvency are littered with fundamentally sound businesses that failed to make adequate provision for liabilities.
Excellent business lesson. So many businesses fail because of lack of understanding this basic profit/pricing principle. Great job. Also, love your leathercrafting!
I always struggle with pricing my products. I often overlook the smaller elements such as packaging and don't really include them into my pricing. I mainly take into account the materials used and the time it took to make. The worksheet is definitely something that I need to incorporate, so thank you! This was very helpful.. 🙌🏽🙏🏾
Do u make custom wallets?
@@holdthefunj5787 I have a few standard designs, but do try and make custom ones if the opportunity arises.
@@Luke_cpt me puede mandar el pdf
@@Luke_cpt me puede mandar el pdf
A variable cost is the material cost of each wallet. It varies depending on volume. A fixed cost would be something like tools or a workspace, no matter how many wallets you make, the cost is fixed.
this is honestly some of the best financial advice i've ever heard and you gave it while beautifully showing footage of making an excellent wallet. This is very high quality content and I thank you for it good sir.
Great video and very detailed but if I told a potential customers $110 for a card wallet I do believe I would sell 0
I wish MORE PEOPLE understood this. I've been a professional bladesmith by profession since roughly 2012. It's been the sole means of support for myself and my three children. "Hobbyists" were always a problem, they would learn the craft, and come in and undercut the pricing because they "didn't need the money" or they didn't value their work at a professional level regardless of actual quality. When Forged in Fire was released, the market was artificially flooded with people wanting to make and sell knives and swords. As you can imagine, this magnified the problem a thousandfold. I used to be one of the few single father bladesmiths in the business...but anymore, unless you have a working wife, or are independently wealthy for whatever reason...this profession is barely sustainable, if it truly is at all. If these people understood the mechanics of how to actually price things, it would be a very different circumstance.
Very useful for beginner like me, knowing how to price our crafts is not easy. Thanks you
Thank you for the information. I just want to ask how do I get someone to pay so much for a small product? I had to, in order to sell my card wallets, shrink my price from R400($23,60) to R100(5,90) to get just a few people to buy them. I just don't know how to get my business running. :(
When its all said and done the truth is your product is worth what people are willing to pay for it. Which means where i live people aren't willing to pay what i would need to make it a business so it stays a hobby. After shipping taxes and toll costs all leather costs me 50% more then it would in the USA and my country is alot more expensive to live in then America or Canada, so selling online is also not an option. But still love doing it :)
first off thank you, im a new leather crafter this wallet is very popular, i love this videos you do they really help us crafters, ive also purched your pattures, all are really great
I really am enjoying your videos very helpful.
I am looking into starting my own Leather business and how to make it work out.
I have been looking for as much information about how to market and everything.
You are very helpful thank you for making these videos.
Wow...just wow!! To take the time and patience to explain to your views in that depth how to price out your pieces...just Wow & thank you. !! I love your site!! Because of your dedication to your viewers you are definitely my favorite site to visit...oh and I'm a new viewer. What books would you recommend? Cheers
Pro tip. Increase the amount of things they order by selling things in twos or threes at a small discount. Your profit margin will be slightly smaller but sinc the fixed costs are paid for with the bigger order you can have more competitive prices and move more volume. Hope this helps, happy stitching.
Certainly an interesting perspective. I’m curious though, are you actually selling those card holders for $120? A basic non-tooled, non-customized card holder like that goes for way, way less both locally to me and on platforms like Etsy and such.
I think the video is well done but in the end everyone needs to keep in mind that something is “worth” only what someone else is willing to pay.
Love the Corter Pounder!!
Thank you for taking the time to explain pricing. I really appreciate this video. It was simple and very easy to understand. I am not there yet but I am saving this video for the day I have perfected my skills and can have a small retirement business.
I'm new at the whole business of leather working, so I've been selling my pieces to friends and coworkers for the price of the leather, while I improve. All my patterns are from Corter Leather, too. The funny thing is that I've been selling wallets from this pattern for $20-25 each, LOL. I clearly to need to up my game, though at present, leather working is a hobby and mental health therapy :-) Thank you, as always, for a wonderful and instructive video.
Hobbyists that sell like this kill the market for the professional. You are selling for the price of the leather? That doesn't even cover all the material!! You are just hurting the market, it's not funny. I have been a professional woodworker for forty years and I have fought the garage jockey the whole time....
@@Stillnapie he's selling to friends and co-workers dude. Give him a break.
Stillnapie Maybe you need to upgrade your quality and marketing. Should be a professional product not a hobby grade product.
@@iprint3d710 My quality, pricing and marketing are just fine. It is the hobbyists lack of business understanding that is the issue.. If you can't understand that you are part of the problem.
Stillnapie i have a 3D printing business and sell at whatever I want because I built a large following on Instagram. Gucci isn’t better quality than other products but people pay for the name. Work hard you will get there 👍🏼
I make knifes and i can tell you that i have the same problem. I love leathercraft and i make myself the leather sheath for my knifes. I'ts kinda difficult to set a selling price , often the people says that it can't be that expensive, mostly from people that you know they don't craft nothing at all. handmade stuff is always more expensive that industrial products.
It might be a great way to price products for established brands like Corter or Little King, but there is NO WAY anyone would by buy this wallet by a random maker for $110, let alone $220 in a retail setting. Unfortunately, it comes down to what the client is willing to pay for an item, not what you think or calculated the price of it to be.
A good way to balance it out is to make an array of items that each have a different perceived value from customers point of view. For example, you have a card wallet for sale for $50 and a bag for $500. This is a good reference for the customer to compare the two items and to imagine how much more labor and materials go into a bigger item. It makes them more likely to accept the prices as "being set correctly". But the trick here is that what you are actually trying to sell is not the smallest or the biggest item, but everything in between. While the cost of your cheapest item might just about cover the cost to make it, you aim to make up for that by pricing the middle-tier items a bit higher.
Also, I think for most small creators "labor" IS your profit. The fact that you are paid an hourly rate to work on something that you like is great. No one paid "profit" money to me on top of my hourly wage in the office, so...
In time you will become faster and find other ways to speed up your production of a particular item, so if it took you 2 hours to make that wallet before you are now done in 1 hour. And that one hour that you managed to save thanks to using better template/tools etc is essentially your profit, cause the price of the item stays the same.
I ordered 3 belts and can't wait to recieve them. Thank you
Very good guide. And I lol'd at the "corter pounder".
Thank you so much for explaining how this price making works. It makes all the difference if you want to make things just. Thanks again🙂
This is a great way to do pricing if you know your product is going to sell. However, if for you, it's a concern that you might not sell all your product at that price point, it's worth pricing from the opposite end. Look at what similar products are selling for and see how you can get close to the price. And if you can't match it, do something to make your product higher quality so it's worth the extra $$$. Or sometimes if you charge way more, people perceive it as higher quality and will pay.
Thank you so much for everything you do man this really helpsdoing leather work and blacksmithing I always struggle with figuring out prices
Because its a hobby doesn’t mean you shouldn’t get paid what you’re worth
Just curious, how many of that style wallet have you sold for that price?
I was truly curious to know this answer. I have been considering working this craft but can’t do it for free. If the market is there, then that is encouraging. Not saying this answer alone would make up my mind but would definitely help.
Just checked out their site. Prices look reasonable and acceptable. This was only a demonstration.
"Corter Pounder". LOL. Why have I never noticed that before?
it's new :) coming soon!
I absolutely want one!!
@@Corter it'll be nice to replace my Harbor Freight rubber mallet with a classy Corter Pounder
@@s7bfreeman
A calorie free Corter Pounder!
Very very very useful video. Thanks!
I never noticed the "Corter Pounder" on the hammer. I love it. :D
What is the true cost of the product? I made a leather wallet (kit cost was about $35) I have used for close to 15 year's that's about $3/year of usage. I think that is great return on my money. That's a point to make when selling or buying leather goods
I absolutely love this as a newish crafter / side hustle I don’t really think about the packaging..... this really is a great vid and so helpful I’m going to save and watch again
Thank you so much, your videos are always source of informations, and knowledge, and I could, with them explain to my clients, why they pay the real cost of a unique work, individual item, I'm really gratefull to your work, and I'll never be enough thankfullness for that :) Thank you again for your video
Thank you. I sell items that I make blacksmithing and now leather at a shop in a small town. I am taking a beating but for me it's a hobby.
I am always watching to insure that whatever I make does not under bid anyone who does this for a living.
This is what I struggle with most in my leather working. I would never pay $100+ for that wallet so I couldn’t see someone paying that for something I made. Then I get stuck in this rough cycle of under charging for what I make so it doesn’t even feel worth it for the time I spent on it. Granted, I’m not a full time leather worker and I just do it on the side but it feels like ever doing it for a career would be out of the question.
Hi, it's been 6 month may I ask have you found solution for your pricing? because I want to start doing this on the side as well for the love of leather products but I am the same regarding you would never buy a wallet that cost 100+ so did find solution to that?
@@ExtraordinaryTK That probably just means you're not the target audience for your own products, which is fine. Try selling it for 100+ anyway. See if there is a market for your product.
Very detailed with great explanation, Keep up the nice work.
great video, but i want to know will it sell for $110.00?? i have seen these at $45 - 55.00?
I love all your videos but this one especially. I asked about this sort of information a while a go, not sure if it is in response or you have been working on it for a while but it is seriously invaluable to me. so a huge thank you. i purchased your long wallet pattern ( one of the best investments i have made in my business) a few months ago and have been making some variations on it and selling them , so thanks again. both of you do beautiful work, and your narration is so easy to follow.
Great job, great video... I don't do this for a living - I run a country size consulting business to fortune 500 companies and leather is a hobby, but I read the comments/posts and know how much people struggle with this topic.
Some people come from the strong "skill" side and lack the business/knowledge, I come from the other side of the scale, where cutting leather is a zen activity for me. Super glad to see some one explain this in an easy/started format. Great job...
Thank so much for sharing.
I have only one question. If correctly understood your fixed costs are 5$/h. So why you were calculating only 5$ if you spent 2 hours? Or did I understood it in wrong way?
Free Market equals what people are willing to pay for a product. If two people agree that something is worth a certain price, then its worth that price. The west has become so used to buying cheap rubbish from the east, they do not know what a quality crafted product is. I personally wouldn't pay that much for this product, but I am sure someone else is. All the power to you. Great craftmanship.
That's really an eye opener. Now one question though: Considering the wallet you just took as an example here, would it be realistic to sell it for 110$ in the real life, let alone 250??? I just wonder how would that be possible. Considering this example, I would think it's just impossible to sustain a living by hoping to sell such objects at such prizes. What are your thoughts about this?
I guess no one will ever know, that is why I make the questions and the answer. There is nothing more to say, this is just plain demagogy. Might be good in front of some gullible students or on paper, but real life and fantasy are two different things.
The level of anxiety and panic I had while he was flailing his hands back and forth while he's talking with the finger removal tool lol 4:46. The pricing makes sense but my cost of living is lower than normal and my hourly wage at my part time job at McDonald's here in Houston Texas is $9/hr I'm ecstatic to learn I can charge $20+ and make money off leather working so I'm building up my tool collection and working on some wallets and key chains to sell
Solid gold information here.. as usual. Big thanks for this!! Btw, did anyone else pause the video and go looking for the hammer?
Thanks! That's our own hammer design - it'll be available soon :)
@@Corter If I can stake a claim on one of the first ones, go ahead and mark me down! lol 👍👍
I did indeed pause the video and go looking for it, just like I look to see if there's a new grab bag on the Corter site (hint, hint) :)
Thanks for the lesson and insight. I've been working and selling leather for a few years now. And not being able to make a living at it hurts sometimes. If you could, could you please reference what books it was you read that changed the way you work?
Huge fan, thank you for your time.
Great video! Unfortunately, most makers on Etsy do not price correctly and they end up selling something like this wallet for $25 instead of $110. The customer base gets used to thinking "Oh this is just a small $25 wallet. I've seen similar on Esty. Why is it so expensive here!?!" ..... I don't know what the solution is. Any suggestions? (besides leaving Etsy, which I've already done lol)
Basically - it's best to avoid situations where you've got a bunch of people racing to the bottom price to make sales. Etsy gets you immediate traffic and eyes on your product, but it also gets you a lot of competition immediately. Best option is to build your business independently and use your brand to convey the value of your products. That way you can convey the value in what you do properly, it's very difficult to do that on Etsy unless you're simply using it as a cart site from other traffic sources and not depending on Etsy traffic to make sales.
thats because alot of those sellers are actually pricing their products CORRECTLY. the youtube "leather crafters" are trying to rip people off with inflated prices because they think people are stupid and dont know better so they can charge whatever they want. This wallet has ZERO grounds for being sold at such a absurd price of over $100. It is a $45 product at the most. and that is with profit margins built in. could be sold for less even.
@@orion7741 basically you're saying he should make sweat wages to market this wallet.
@@orion7741 This was for demonstration purposes only. It's $38 on his website.
@@laurendelosreyes9615 Yeah for the wallet in the video, some of the numbers are not correct imo (material price, time for each wallet. I think it should be a little more than 1/2 sqft with $10 per square foot. Then, labor is closer to 1.5h if u have dies and burnishing / sanding wheel. Also, the wallet on the website is not same but similar enough. One shown here has a little bit more leather. I think 50 is a good price to sell this wallet for. It will probably take up to 2 hr if u want really nice edges. Maybe u could charge more then.
Very informative video. I'm just getting started in leather crafts and do it on the side of my full-time job. Do you do this full time? If so, when did you make the jump from doing it as a "side hustle" to full-time?
Yep, been full time for 13 years. Never had another job - started when I was 19 in college and never stopped
Thank you so much for taking the time to share such important information for all us who work with our hands!
We're from Northern Alberta, Canada and just starting out in a home-based leather business.
This was so appreciated!
Really appreciate this. I always struggle with pricing items I make and sell.
Thanks for all the useful information. What types of books did you read?
just discovered recently your channel . compliments for the quality content .
Never forget to factor in what the market will pay. If your calculation shows you need to make $110, yet people are willing to pay $150, you should absolutely sell it for the $150. They're paying for the end product, and the customer does not care how much labor/costs went into it. Even if it took 10 minutes to make with the cheapest leather, if they're willing to spend big, charge big. Get it out of your head that you're ripping people off, if you have that feeling anyway. I used to be a detailer for cars and learned this too late and burned myself out. This stopped me from making 5 to 10 times what I charged back then because it "didn't feel right", even though people were out there willing to pay those rates for good work...
This video was very educational. Thank you.
Thank you! This was very helpful. I've been selling my stuff for over a year now and I still have anxiety about raising my prices to what I should be charging. I feel like this is a good way to explain it to people who might not understand and want the products for cheeper than the materials alone.
now I understand how products are made in cheaper countries and how volume production helps in controlling prices. Good video, and great products you make.
What about the factor of will it sell for that price?. A wallet like that on Amazon is about 40 bucks. So do you just not sell. Or lower your profit expectations?
Ah man thank you for this. This is what ive been struggling with.
Any new items on the website? I would love to purchase that pink purse made in a previous video
Loved the video and cant believe this valuable information was for free :p so thank you. I also have a question: i want to start making and selling wallets. Its not likei dont havemy own designs but i was wondering whats the deal if you take free pdf designs,or even buy design templates off the various available sources and start making andsellingthise designs? Would that come under copyright infringnent and would that be illegal?since my card wallet might overlap with someone elses design partially ir even fully in the case of me having bought or downloaded a template deisgn. So basically how serious is copying and selling in the leathercraft business?
Thank you for sharing and explaining this vital information!!!
This is gold thank you so much ❤
A very interesting video, thanks for making it. One important consideration, which I am sure others will have remarked on is, what will the customer pay for an item? Are there really people prepared to pay over £100 for a wallet? Does this therefore mean if you can't change enough money for a product because the market won't stand it, that it isn't a viable business?
Yep, if you can't sell product at a price that makes you enough revenue to run a sustainable business you can't really run that business. So you'd have to either lower your production costs (die cutting, machine sewing, etc) or design different products that have enough profit margin to keep you sustainable
I want a Corter Pounder!!
It is very important to consider the taxing depending on where you live and want to sell your stuff. For example in Germany you would need to add another 19% (multiply by 1.19) on top of the last price on the downright of your sheet, because you get these taxes from your customer but have to pass it through to your tax office.
That's not an expense if I'm understanding you.. That sounds like sales tax here in the states.. You dont charge for that, you just collect it..
@@DB-zp9un That is what I mean with: tax systems are very different around the world. When I have a product and I sell it here in Germany for 119 €, I have to pay 19 € directly as taxes. The customer gives me 119 € and I can keep 100 €. So if I calculate my expenses and my profit and everything and it adds up to 100 €, I have to add another 19 € to my tax including price. Sorry, it's late, I hope you understand my rambling ^^
Great content for skilled craftspeople of any kind! And as others have mentioned, important for consumers to understand as well.
My only critique is that your calculation of profit margin is inaccurate. Rather than multiplying your cost by 1.XX to get your margin (the way you would calculate tax), you should be dividing your cost by 1 minus the margin you want to make expressed as a decimal (in this case .75 to maintain a 25% margin). It seems like the same thing, but what you calculated as 25% margin actually works out closer to 20% margin (less once you’ve rounded down), which compounds pretty substantially over time.
Labor also includes education, experience and scarcity in skill, and you’re paying for quality construction, not just materials. Most people don’t know what quality means and are too complacent with overseas labor costs and materials. You think a LV wallet takes two hours and uses the same quality material? Sadly branding is more important than anything these days. He can charge $25 an hour because he has the skill and experience to support that. Many workers are underpaid for their work while others are overpaid for relatively simple work.
Thank you for breaking this down. While I agree that we need to consider consumer market value of a product, we also need to increase awareness that quality handmade products…AREN’T CHEAP!
I have two issues with this brake down. Is it really going to take two hours to make that simple card wallet and how many people are going to be willing to pay over a hundred dollars for it?
Wow I didn’t know that. Thanks a lot. You always give out good information!!
This was awesome man thanks so much for you’re time and skills in doing this
I like nice things. As a result, I am surrounded by nice things. I would never pay $110 for "that" wallet. I did pay over $200 for my wallet, but it holds everything including my passport. Yes it fits comfortably in my back pocket and is 100% tooled with my designs.
Just saying.
This explains a lot to me now, especially in the art world as well.
Very interesting topic. True on every level. As straight up math is concerned, this is accurate 100%.... However, the BIG kicker is marketplace and competition and that is where this all unravels.
No, it's not accurate. . . He demonstrated Mark Up - Not - Profit!
People who use Mark Up always leave money on the table or severely overprice their products.
What I sent him:
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Appreciate your videos.
I wanted to give you a bit of advice on calculating "profit." My experience comes from working with Fortune 500 companies with thousands of retail locations, so I am not just blowing smoke for attention.
What you just demonstrated was "Mark Up" not profit. If you multiply your $89 by 25% you get $22.25. Added to your $89 you get $111.25.
However, if you want to see what your "profit" was for that $110 sale. . . simply do this: ($110-$89)/$110 and your real profit was 19% not 25% - (Retail-Cost)/Retail.
So, to get your real 25% "Profit" you simply do this: Subtract 25% from 100% and you get 75%. Now take your $89 and divide by 75% and your get $118.67.
You can prove your "Profit" by using the previous formula: ($118.67-$89)/$118.67 and you get 25.002%.
So you either left money on the table and need to raise your prices, or you need to accept a lower profit margin.
Great video. I just don’t understand how someone is going to pay so much for something I’ve made. I made a card holder and priced it at £15 but looking at your formula it should be 3 or 4 times that.
Very, very few people will pay $110 for two pieces of leather stitched together. Especially in this day and age, where you can buy a decent tri fold leather wallet for $35. Its leather not adamantium.
Having said that, undervaluing one's work is a problem in itself.
If you had someone working with you making products, how would you determine their pay?
What about product photos and description listing for website? Would that be included as part of labor costs?
Taxes? I.E. Federal (Income+Self Employment tax in the U.S), State and local Income? And, Sales Taxes. Also, if you always refer to "Cost" as your costs, and "Price" as the price you sell the product at it helps keep things a whole lot clearer to yourself and your accountant. And yes, it's best to work with a CPA if you run your own business. There can be a whole bunch of tax issues if you don't. I learned this the hard way years ago.
This was great! Thanks for sharing.
That’s just an amazing video, sooo useful. Maybe you could also make a sort of a video on how to reach first sales and expand? I am personally just starting to get into craftsmanship business, and my major struggle is to understand how to reach my first customers (without spending a fortune on ads)
Please thumb up this comment, so it will be noticed
We've made a video called "how to sell your leather goods" that touches on that, we've also made one about how to get your products press (how to get your leather goods in magazines). We'll go further in depth with other products soon as well :)
Corter Leather oh, that’s amazing! I’ll look it up
great video. my question is, you say to sell in store 2 to 2x cost. would that include if you set up an etsy store? would you sell that wallet on etsy for $220? or do you mean you would sell that wallet to lets say a boutique. they pay you the $110 and then they resell it in their store for the $220? looking to hopefully get started and really love your video. you break it down really well. thank you for that
Hey if you dont mind me chiming in, for what I understand is that you will sell it to the boutique for $110, and they would add the x2 to the price, if you are listing it on esty, you will list it at $110, cause you are the one selling it.
Good advice, keeping a healthy profit margin is vital.
Would you consider the cost of making videos as your advertising costs?
Thanks very much for the whole enchilada, ie the information, insight, video and pattern. So to be more competitive in this particular case one would look to maybe have dies made to cut the card wallets and source cheaper materials but without sacrificing quality of course and like you said you would have to factor in the cost n of the dies. Seems by far the greatest cost in this instance is materials.
Corter Pounder - where do I get one?
they're being cast now :)
@@Corter Happy to pre-order!
Thank you for this video! Also the "Corter Pounder" cracked me up 😂😂😂
The "Corter Pounder" came from another video they did a while back. Someone in the comment section had the brilliant observation that it would be hilarious to name a hammer the Corter Pounder and they ran with it.
Hi, what kind of glue are you using?😊