Ken L Russell on thu 2 jan 97
>>Could anybody tell me what I should estimate the average cost of each
piece >>to be... 20%, 30%, 50% etc.?
To:Robert Acton
Bob,
My wife and I have been in start-up for our pottery for two years. It has
been the sole source of income fo two years. The first year my cost for
each piece was around 80%. This year it's around 60%. Keep in mind it
will be lower each year. I followed my business plan until I could no
longer balance wholesale and retail. Wholesale won out simply because
I'm greedy, want to eliminate all rain forests, wood fire only on foggy
or muggy days and destroy the planet as fast as I possibly can...JUST
KIDDING! Actually for my wife and I, wholesale at this time is the best
way for us to go, for cashflow reasons, during the initial five years of
trying to make a go of this clay thing. The initial expense was/is higher
but the exposure to several marketplaces/retail shops around the country
seems to be more economically sound for us. I figured the cost of each
piece at around 35% initially but reallistically that looks like it's a
target right now. The average cost after five years may end up being
around 50%. Hopefully more small studio folks can give you a lot better
figure than I. I'm still a babe in the woods and learning each day how
much I don't know, but still have a blast. Good luck.
Ken Russell
The Arlington Pottery
gone2pot@juno.com
Dave and Pat Eitel on fri 3 jan 97
This discussion about how much it costs to make a particular piece of
pottery really has me curious. Other than knowing how much a given weight
of clay costs, and estimating the few pennies worth of glaze on the pot, I
wouldn't know how to begin figuring out how much it costs to make a mug.
How would one assign a percentage of all one's expenses to one particular
pot. I don't even know how many pots I make in a given firing, much less
in a year. Could someone send the formula for figuring this out? It's an
issue I've pondered off and on for 20 years and have never been able to
come up with an answer.
Sometimes I wonder why I even want to know. Either I sell enough pots or I
don't. I guess I do, because I'm still in business.
Later...Dave
Dave Eitel
Cedar Creek Pottery
Cedarburg, WI
pots@cedarcreekpottery.com
http://www.cedarcreekpottery.com
Wendy Hampton on sat 4 jan 97
I have recently had a wholesale customer that is out of state request that I
give them NET 30. (They want to pay within 30 days after receipt of goods).
This is the second time I have sold to them. The last time was a year ago
and was COD.
What are your feelings on this? I am having mixed feeling and would like to
know others opinions.
Thanks
Wendy from Bainbridge Island WA
Paul Monaghan on sat 4 jan 97
Dave and Pat Eitel wrote:
>
> ----------------------------Original message----------------------------
> This discussion about how much it costs to make a particular piece of
> pottery really has me curious. Other than knowing how much a given weight
> of clay costs, and estimating the few pennies worth of glaze on the pot, I
> wouldn't know how to begin figuring out how much it costs to make a mug.
> How would one assign a percentage of all one's expenses to one particular
> pot. I don't even know how many pots I make in a given firing, much less
> in a year. Could someone send the formula for figuring this out? It's an
> issue I've pondered off and on for 20 years and have never been able to
> come up with an answer.
>
> Sometimes I wonder why I even want to know. Either I sell enough pots or I
> don't. I guess I do, because I'm still in business.
>
> Later...Dave
>
> Dave Eitel
> Cedar Creek Pottery
> Cedarburg, WI
> pots@cedarcreekpottery.com
> http://www.cedarcreekpottery.com
Dave,
It's pretty easy if you make some "SWAGS" (Scientific Wild Ass
Guesses). It will only be as accurate as your estimates or measurements
but here goes. The raw materials are easy. Weight of clay in an item
before firing. You have the price per pound of clay so you can get a
good estimate on each item you make. Then estimate the quantity of
glaze on each item such as 1/10 oz or whatever and than the price per
unit (oz) of glaze. Other fixed costs will be the kiln firing and will
be an estimate. Say you fire with electric and it costs $0.08/kwhr in
your region. Now these are only examples I'm giving and not actual
values. If your kiln draws 10 kilowatts and you run it for 20 hours at
full power than you have used 200 kilowatt hours of power. At a cost of
$0.08/kwhr that will cost you $16.00. If you were able to "bake" 100
mugs in this batch than the electricity cost $0.16/mug. These are your
fixed costs and you can do the same thing with storage space for each
item, lights, heat, power, insurance, etc. The other expense and the one
which can eat you alive is labor. You must estimate how much time you
spend on each particular process to make an item and than multiply it
times your labor rate. If you have employees don't forget to use total
labor rates which include things like workman's comp, etc. If you
really want to get sophisticated you can even crank in skill levels.
These are estimates. Suppose a high skilled potter throws a mug in 10
minutes and you pay her $15/hr. If she throws nonstop 6 mugs an hour
they just cost you $2.50 each for labor.
So Dave now here's how to figure the cost. Figure out all your overhead
costs such as rent, heat, power, etc. This can be expressed as a
percentage of you raw material costs say 40% or whatever. Then add the
raw material costs, add the labor costs and then add you profit which
can be expressed as a percentage of all the other costs lumped
together. This will be your selling price. It's simple but a real pain
to do all this but you only have to do it once. From then on you have a
number for mugs which includes all costs, a number for plates or
whatever you make. The only difference will be labor if it takes longer
to make, etc.
Now this was simplified but it will get you in the ballpark. Now you
have some numbers to work with to improve your bottom line. For example
you may find that buying clay, glazes, etc in larger quantities will
reduce some raw material costs. You may also discover that if you fire
kiln loads of the same item you will be able to get more in the kiln and
lower that cost per item. Here's nother nifty little trick. Raise the
price - very slightly - on the highest best selling items and you'll
increase your profit. Some people think Jes I only make a few of this
item so I must charge more. Sorry but would you rather make an extra
nickel on 100 items in a year or 2 or 3 cents on a 1000 items in a
year. It adds up and I think you get the point.
Happy number crunching.
Paul
--
Paul J. Monaghan email: paul@web2u.com
WEB2U Productions --- http://www.web2u.com
The "COOLEST" Site on the WEB
Emily Pearlman on sun 5 jan 97
>----------------------------Original message----------------------------
>I have recently had a wholesale customer that is out of state request that I
>give them NET 30. (They want to pay within 30 days after receipt of goods).
> This is the second time I have sold to them. The last time was a year ago
>and was COD.
>What are your feelings on this? I am having mixed feeling and would like to
>know others opinions.
>Thanks
>Wendy from Bainbridge Island WA
Hi Wendy:
My first order woth a customer (wholesale) is COD unless tjey have credit
references. Then its net 30. After the ist order its always net 30,
(which is often net 45 plus, by the time I get the check) However, this
hasnt been a problem for me and I often "work" with those customers who are
having hard times, by asking for post dated checks or partial payment.
I've had very few dead beat customers over the years.
Emily
Emily Pearlman-Pottery (clayfeat@echonyc.com)
http://humanarts.com/emilypearlman
http://www.craftweb.com/org/pearlman/pearlman.htm
(in NYC)
ZALT@aol.com on sun 5 jan 97
Finding out how much it cost to make something is an exercise that will give
you the necessary information to make choices. It does not guarantee a
profit nor does it guarantee financial success. All it does is to let you
know where you are going wrong and allow you to change direction. It gives
you options.
Terrance F. Lazaroff
St Hubert, Quebec, Canada
Talbott on sun 5 jan 97
Wendy...Forget that!!!....You are not a bank...if they need to borrow money
then let them see a loan officer at a bank.... Studio potters are not
typically financially able to extend loans....And That is my 2 cents
worth.... Marshall
>----------------------------Original message----------------------------
>I have recently had a wholesale customer that is out of state request that I
>give them NET 30. (They want to pay within 30 days after receipt of goods).
> This is the second time I have sold to them. The last time was a year ago
>and was COD.
>What are your feelings on this? I am having mixed feeling and would like to
>know others opinions.
>Thanks
>Wendy from Bainbridge Island WA
1ST ANNUAL CLAYARTERS' GALLERY-NAPLES, ME (Summmer 1997) {contact me
directly for more information}
Celia & Marshall Talbott
Pottery By Celia
Route 114
P.O. Box 4116
Naples, Maine 04055-4116
(207)693-6100 voice and fax
clupus@ime.net
LINDA BLOSSOM on sun 5 jan 97
Dear Wendy,
Perhaps you could point out to these folks that they have not bought enough
from you, or regularly enough, to establish the relationship that would
allow you to feel at ease with the 30 day net. You could suggest a
compromise. Maybe 50% down and the rest in 30 days. After 6 months, or
whatever time frame you choose, if they have always paid on time and their
business is regular enough, you would then agree to go to the 30 day thing.
They don't appear to have earned the trust for a 30 day net account. We
all have to earn our credit the hard way.
Linda Blossom
2366 Slaterville Rd.
Ithaca, NY 14850
blossom@lightlink.com
http://www.artscape.com
607-539-7912
Marshia Hall on mon 6 jan 97
If you are a professional, and they are a professional outlet,
it is customary to extend terms.
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