Estimating Costs to Price a Wooden Bowl

The original title of this blog was ‘why pricing a wooden bowl by costs alone is virtually impossible’. I’ve always struggled to calculate costs of a bowl and hence the minimum price it should be. As I’ve worked through this blogpost I feel like I’ve come close to the impossible though, hence the title change. The one thing I can say with certainty is that my pricing has been too low.

My pricing strategy has always been based around what price I thought customers would be willing to pay (and being scared to raise it too high in case they felt it was too much), and what other more experienced makers around me had priced their work at. This was the gist of my recent blogpost on how to price a 6″ bowl. For a long time I have felt it was too little though, but I have wanted to keep my wooden bowls at a price which I felt was accessible to more people. In effect what I have achieved is to devalue myself and my business, and I feel that many of my customers would have bought the bowl if it was the higher price if it meant I had a viable business. So, this blog aims to prove that is the case! So without further ado, onto the assumptions and then the maths! (Sorry if it is a little wordy, I’ve tried to keep it as simple and concise as possible)

[DISCLAIMER: I have never seen anyone else share this information, so if I have made what you perceive to be mistakes, please gently point them out. Thanks 🙂 ]

In my previous post I priced a 6” bowl at £34. So how do I calculate my costs for this particular object? The problem is that I turn lots of different types of object each year, but a lot of my costs are annual (e.g. ground rent). My theory is to choose one object (a 6” wooden bowl) and figure out how many I can easily make in a year, then to figure out my costs and then to find out what my income is if it was priced at £34.

Assumptions:

– I will assume I work 250 days a year.
[Based on (365 – (52×2 weekend days) – 11 holiday days = 250 days]

– I will assume I am making for the morning each day (4hours).
[Based on the regularly supported fact that 40% of your working time is admin (e.g. selling, getting wood, visiting clients etc]

– I believe I can currently make 3 bowls a morning comfortably.
[Obviously some days I’ll make 6 or 7, some will be 0]

– Therefore I would be turning 750 bowls a year on the pole lathe.
[So far this year I have made 280 items of varying sizes, but I have also been teaching (and learning about lathe ergonomics!). So, I think this is a fairly accurate suggestion, and it is more to see if my pricing is in the right ballpark, rather than be spot on]

– Minimum wage is about £12/hour. This is what I want to receive for standing on a market stall or oiling.

– Making wage I want is for argument’s sake triple that, so £36/hour. (I think this is reasonable for a skilled craftsman)

– I will sell 25% of my 750 bowls in shops and galleries, and 75% myself at markets and in my online shop.

What follows is a summary of the costs in making and selling 750, 6″ wooden bowls. My working and more details/assumptions are in the appendix at the end if you want an in-depth breakdown of these figures:

– Material Costs (Wood and Finishes): £2400.
[(Wood blanks + Finishes (Oils etc)) : (750 x 3) +150 = £2400]

– Annual Costs (Workshop, Insurance, first aid, website etc): £2900.
[(Workshop+Insurance+FirstAid+Website+Tools) : 2400 + 100 +100 +100 +200 = £2900]

– Time Costs: £22575
[(Designing+Preparing+Turning+Finishing) : (0.1+9+18+3) x 750 = £22575

– Total so far: £27875
(22575+2900+2400) = £27875.

– Selling costs for 25% sold in galleries and shops: £6968
[(0.25 x 27875 = £6968)

– Selling costs for 75% online and F2F at markets: £3786
[(Postage+Market Fees+Packaging+Marketing): (505+2400+281+600 = £3786)]

– Selling Time Costs for 75% online and F2F at markets: £7104
[((Markets+Online+Marketing) x 12): (384 + 108 + 100) x 12 = £7104]

– Total so far: £45733
(27875+6968+3786+7104) = £45733

– Add Profit margin:
[45733 + (45733 x 0.1) = £50306.30

Income as a proportion of costs:

So total costs of making 750 bowls is £50,306.
Of that, £16,054 goes to other people and £34,252 is what I would like to receive based on the time I put in.
[Other people = 2400+2900+5575+3186 = £16054]
[Me = 22575+7104+4573 = £34252]

Summary:

If my bowls were priced at £34 each, I would receive £9,446 per year.
[(750 x 34) – 16054 = £9446]
The minimum wage is currently: £12.21 (or £23,809 per year).

So… I am putting up the price of my bowls as my costs mean I do not even reach half the minimum wage. So to achieve an income above that at £34,252, that means from now on a 6” bowl should be £67.
[50306 / 750 = £67]

*I’m ignoring tax considerations in this blog!
**I’m also aware that successfully selling all 750 bowls each year might be hopeful thinking, but Hey, you gotta dream big 😉

I am fully aware that there are many assumptions in this calculation, but I have tried to be fair and based on my current practice. For sure you could sell these bowls cheaper or indeed more expensive. A great example would be to own a forest to get ‘free wood’ or to use a power lathe, (but as discussed in a previous blog post, that is not my intention). For now, I am happy to have raised my price to this and will re-assess as we go forward. You’ll notice the prices in my online shop have been adjusted accordingly.

I am however not totally happy that our craft comes down to numbers like this, and that our time is summarised by an hourly wage. I will still continue to wiggle prices where I can, and establish wholesale prices etc. I am forever in love with George Lailey’s quote when told that he could make a lot of money from his bowls and skill: “I like making bowls better than I like making money”. However the economic system we now live in decrees otherwise.

At this point, I want to make it clear that I do not judge other makers whose prices are now lower than mine. However, those that have bowl sales as a large proportion of their income may want to translate my maths into their situation and potentially re-assess.

This is of course all fantastic timing, given it is two weeks before I learn all about pricing on my Cockpit Arts Business course I am doing currently, but I am keen that makers have a chance to potentially adjust their prices for this Christmas period, hence the early release.

I’m sure some of you will wonder how I’ve managed to make a living out of craft these past six years, well perhaps that can be another post, but a good summary is diversifying from just making bowls. The teaching helps a lot, and courses for next year are now available to book here!

I do hope this helps some makers out there (whether you are bowl turners or potters or blacksmiths). If you have any constructive comments, good or bad, I’d love to hear them. Thanks for reading and don’t forget to subscribe to the mailing list if you want to stay in the loop.

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Appendix

Material Costs:

– Oil cost – 750 bowls is around 3 x 1 litre tins of treatex (£120) and 3 brushes (£6) plus kitchen roll (£20) and white spirit (£5) = £151 /750 = £0.20p

– A seemingly easy one here is wood cost, but of course even that is complex depending on how you source your wood. A 6” x 3” blank costs about £6.75 from Axminster, but two 3ft long logs (capable of say 16 bowls (with wastage)) costs say £60, including delivery. So £4 per bowl seems closer to the mark, and can be even less if bought in bulk. Alternatively you could source it yourself, but this brings with it extra costs like chainsaw gear, and trailers, plus of course the time and money to go get it. Let’s say I get two 3ft logs from a farm 15miles south of me. These are free to me as I’m friendly with the ranger, but it takes 40minutes to drive there, plus 40minutes to extract and load them up. So 2 hours in total. The maths is as follows:

45p per mile, so 30 x 0.45 = £13.50

2 hours at minimum wage £12/hr = £24

Total = 37.50 which is equivalent to £2.50 per bowl (ignoring chainsaw gear costs).

Therefore I’m going to go down the middle at £3 a bowl. Note how this is exactly half the selling cost of Axminster… as per my selling cost estimate.

Increasingly I want the best wood, so getting it from forestry people is more efficient for me charging round the district in my Ford Mondeo on tips and leads of a ‘fallen cherry’ here or there (that turns out to be twisted and with heart-rot). So as you can see from above, please try not to assume in your calculation that your wood is free because you didn’t pay anything for it. Even if it is from much closer to home, it is better to just stick to a formula rather than dropping the price of your bowl. If anything local bowls can be sold for a higher price to local customers because they can relate to its provenance.

Annual Costs:

– Workshop costs: I built my own workshop which has its own complex costs, and I’m not going to give exact numbers here on my rent, but let’s say it is £200/month including electricity and gas. So workshop costs would be 750*200 = £2400/year.

– Insurance, that’s around £100/year.

– First aid supplies and course £100/year.

– Website: I made this myself and hence costs are low (likely to be higher for other makers): £100/year.

– Tools. I forge a lot of my own tools, but like with going to pick up my own wood this also comes with a cost. I might get through a couple of hooks making 750 bowls, plus sharpening supplies, so let’s say it is about £200/year. Luckily I don’t have sanding supplies! 😉

Timing Costs:

– The design phase. If I’m making 750 identical bowls I’m gonna design it and they are going to be the shape they are for a reason. This time is worth obviously worth something. If I want to design a product it is worth including this in any calculation you make. I spend maybe 2 hours sketching and designing the bowl I want, plus about 3 prototypes. This is skilled work, so £36/hr:

(2 x £36)/750 = £0.10 per bowl.

– The sawing and axing. I can axe out a 6” blank in around 5minutes regardless of the wood. If it was a soft wood like alder, it may be 3minutes. However, what I cannot do is keep that up all day. 12minutes is more realistic, plus 3minutes for sawing (including putting on chainsaw gear etc). So that is quarter hour of skilled labour:

(0.25 x £36) = £9.

– Turning the bowl, this takes me about 30minutes on average across a range of woods. Alder could be as low as 10minutes, but a denser wood such as holly or a drier wood such as ash could be an hour. that is 30mins at a skilled wage: ½ x £24 = £12.

(0.5 x £36) = £18.

– Cleaning the stubs top and bottom is another minute, drying is about a minute of work (weighing it etc), then oiling it is about 10minutes per bowl, so let’s say 15 more minutes, but this time just at minimum wage:

(0.25 x 12) = £3.

So Total time wage per bowl is £30.10

Selling costs

25% of sales estimated to be in shops or galleries. They take 50% (including the effort to arrange and deliver etc).

75% of sales are then online or F2F at markets. For this I have costs, plus of course my own time.

Selling costs if I do it myself, not including time (for 750 x 0.75 = 562bowls):

Postage – Say 100 bowls. Within UK, first class for a small parcel is £5.05 (keeps going up) = 5.05 x 100 = £505

Market Fees – Estimate at £300 per market including petrol , say 8 per year. = 8 x 300 = £2400

Packaging – Say 50p per bowl = 562 x 0.5 = £281

Adverts – Say £100 per advert x 6 = £600

Selling Time Costs

8 markets = 3 days at market, plus 2 prep, plus 1 drive = 6 days = 48 days at 8 hours per day = 384hours

Online = 100 sales, but probably listed 300, so 300 pics and descriptions (15mins each), then 100 packaging and walking to the post office (20mins each). So (300 x 0.25) + (100 x 0.33) = 108hours.

Marketing on instagram etc = 100 hours

Profit Margin

Important to have this as 10% of your costs to account for sudden changes in the market etc.