This is probably the most level-headed thread on its subject I've read so far. Thanks for everyone for their valued input. Emre, particular thanks to you for practicing and voicing an ethic that it seems to me knifemakers embody better than many other trades - fairness. It's one of the things that makes me proud to be a member of the knifemaking community. Gold Star day my friend. :thumbup:
In his advice to new makers, the late, great Bob Engath suggested charging 3-4 times the cost of materials. When I made my first knives, there was no way I was willing to charge that much! But I worked up to it. The following is going to be long-winded, so you can stop reading here if you want. The rest is purely a description how I approach this subject. I think Tracy's approach is spot-on too; the closest I've ever heard to how I try to do it.
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I've always looked at prices of the knives selling here and locally in those occasional venues where handmade knives are available, to help set the value of my own knives. Critically comparing the quality of my work with that of others has gone a long way toward helping me get better, and I constantly see more areas for improvement. The prices of those knives set a baseline for my own pricing.
I'm by no means an experienced maker; I work very slowly in very few hours per week. I've made a few over 100 knives and probably sold 80 of them. The only knives I've sold were those that exhibited the best work I could produce at the time. There are a number of those unsold knives still lurking around here because they included mistakes I should not have made - bolsters out of alignment, etc. Those become my test knives.
Recently I've had occasion to price several knives at once for an upcoming knife show (first one). But some background. My paying job is building spreadsheets for evaluating loan portfolios and pricing individual loans. I'm analytical by nature and training, and it should come as no surprise that I do most of my "thinking" in spreadsheets.
When I want to organize some information, I fire up a spreadsheet to do it.
I keep a logbook of my shop time. Hours worked, what I was doing, materials used, new belts, saw blades, etc. I generally don't log design time, because I do that during all the hours I'm
not in my shop.
When new material comes in, for example bolster stock, I record the per-inch cost on the stock itself, and use that information to build up the cost of a project. Most of my inventory of material has its original cost written on it.
So when it came time to try to put prices on these knives, I built a spreadsheet listing all the direct costs of the knives - steel, handle material, pin/bolster stock, belts used, cost of leather, etc. One of the knives used 4 1/2
feet of pin stock!
I did not include any depreciation on tools or cost for my space, insurance, etc. I'd have that anyway.
Then I made a section recording as best I could (because I usually work on several projects at a time, all in different stages of completion) the time spent on each knife. In my logbook I sometimes record parenthetically the time spent on a particular aspect of a certain knife, for example the time fitting the guard on that knife. That helped, but there was still some grey area for dividing up my hours. In the end, the total time for each knife "looked" about right.
I added up the direct costs, which gave me a minimum charge. Then I totaled the hours I'd spent on each knife, including the time making a sheath. Basically all the time from scribing the pattern on the steel to sharpening the knife before it went in the sheath for the last time.
That is an eye-opener!
From the experience of charging what I think my knives are worth compared to other's work, I've learned that I usually make between $7 and $10 per hour for my shop time. So I made three rows in my spreadsheet, for $7, $10 and $12 per hour, that calculated what my price would be at that wage including the cost of materials and supplies for each knife. (All that may sound ridiculous to most of you guys, but for me analyzing data in a spreadsheet is almost as much fun as making a knife.
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That was my guideline for setting prices. None of them earned $12 per hour; most are in the $10 range but a couple did not seem like they were worth that much; one of them is only a small multiple of the direct cost. Note that I
did not use my time to set a price; I only tried to learn what my time was worth for a particular knife. That's information for the future too.
Now, I've always recognized the rule of thumb that if your knives sell too fast you're underpriced and if too slow overpriced. I've never been able to keep any unsold knives, but I would be uncomfortable charging more than I have. I set my prices for these (based on direct cost, considering my workmanship for each knife, and with an eye toward time invested) according to what I've sold similar knives for in the past. Yet I look at those prices and feel a great deal of uncertainty whether they're worth it in the actual knife market. That's what this show is going to tell me. Honestly, I'm really nervous about this whole thing. Maybe I'll just stay home.
(Just kidding!
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But pricing is a very hard thing to do, because it's so subjective - regardless how I try to make it objective for guidance/informational purposes. Even so, using some rigor to know my investment in each knife helped me to set my prices.
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Jeremy I agree with others, I think your knife might sell between $30-$60 if you include a sheath. By my reckoning, that should net you between $2-$5 per hour. Better than flipping burgers, since you pay no taxes and enjoyed the work.
