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The article is a bit thin on two difficult and important factors for makers: How do you decide what your hourly rate is, when it is also unlikely you are making

by medion 5y ago

The article is a bit thin on two difficult and important factors for makers: How do you decide what your hourly rate is, when it is also unlikely you are making something so unique no one else makes something similar - ie. how do you create compelling arguments for differentiation. In the first instance, in a first world country, to cover the high cost of living and to also take retirement and other such things into account, I’d estimate $50/hr is the floor. Where I live a plumber will earn $80-120hr so even then it’s on the low side if you are a skilled maker who has had to develop skills over years. In the compelling differentiation department, I think it comes down to storytelling and materials + workmanship. This trifecta has to be woven into a credible narrative to sell your product. After all that, you need to market it… and we’ll that’s something else entirely…

medion 5y ago
Also, another factor in pricing is ‘brand power’ or in this case ‘artisan power’ - pricing based on materials and time alone is no different than being a tradesmen. In the luxury goods sector much of the price is based on brand power and are almost in no way related to manufacturing costs (although at the high end the goods being made are also being produced by skilled artisans with expensive materials in the first world, ie. Hermes). So a maker must also consider brand building too, and the value in that over time - again connected to storytelling.
quesera 5y ago
> in a first world country ... I’d estimate $50/hr is the floor That's $100K/yr, well above the median. My pricing strategy is to start with your needs. $50/hr might be reasonable, but it varies by person and life circumstances. Figure out how much time it takes to produce the second (or later) work product. Do some hand wavy math over the amortization of research, design, and first product over the quantity you could produce in a few months, if that was your only product. This will be a larger factor in new work than in iterations on previous work. You now have a selling price, which the market may or may not bear. This can be tested, and you can use the results to inform your decision on whether to continue production. Most of this can be estimated early in the design phase. My premise is that starting from anywhere else (COGS, market price) and working backwards to compute valuation of your time is .. well .. backwards. Accepting a temporary, or introductory, devaluation is reasonable. Just know what your targets are, so you know when things are not working.
- rdtwo 5y ago
  At 50$ an hour basically nothing is viable especially in the beginning so do you just do nothing?
  - quesera 5y ago
    No, initial devaluation of your time might make sense, as noted. But my larger point is that $50/hr is more than many people need. And not enough for others. This is important to decide before you start depending on the income.
  - medion 5y ago
    Wrong. You have to start somewhere and usually that will mean months or likely years working as a hobby or making next to nothing. You can't just setup shop and expect people to pay $50 an hour - bringing up the plumber as an example again: could a completely untrained plumber turn up at your doorstep and request $50/hr to do plumbing? You'd laugh. They work for peanuts for 4 years while doing a night class a week until they are qualified.
    - rdtwo 5y ago
      That’s kind of my point. You made it more eloquently than I did. While you are learning you have to work for below your target sometimes just cost it materials to get your skills up. Similar to how we all had to pay for 4 years of college in both time and money to get good paying jobs
      - quesera 5y ago
        I tried to be clear about that in my initial comment -- apologies if not. But it's not because you lack the skills to produce, it's because you lack the market knowledge, marketing savvy, and brand awareness. If you lack the skills to produce, you should not start selling products. All of the learning process is a prerequisite and it is not reasonable to price it in.
- vharuck 5y ago

by medion 5y ago

medion 5y ago

Also, another factor in pricing is ‘brand power’ or in this case ‘artisan power’ - pricing based on materials and time alone is no different than being a tradesmen. In the luxury goods sector much of the price is based on brand power and are almost in no way related to manufacturing costs (although at the high end the goods being made are also being produced by skilled artisans with expensive materials in the first world, ie. Hermes). So a maker must also consider brand building too, and the value in that over time - again connected to storytelling.

quesera 5y ago

> in a first world country ... I’d estimate $50/hr is the floor That's $100K/yr, well above the median. My pricing strategy is to start with your needs. $50/hr might be reasonable, but it varies by person and life circumstances. Figure out how much time it takes to produce the second (or later) work product. Do some hand wavy math over the amortization of research, design, and first product over the quantity you could produce in a few months, if that was your only product. This will be a larger factor in new work than in iterations on previous work. You now have a selling price, which the market may or may not bear. This can be tested, and you can use the results to inform your decision on whether to continue production. Most of this can be estimated early in the design phase. My premise is that starting from anywhere else (COGS, market price) and working backwards to compute valuation of your time is .. well .. backwards. Accepting a temporary, or introductory, devaluation is reasonable. Just know what your targets are, so you know when things are not working.

rdtwo 5y ago
At 50$ an hour basically nothing is viable especially in the beginning so do you just do nothing?
- quesera 5y ago
  No, initial devaluation of your time might make sense, as noted. But my larger point is that $50/hr is more than many people need. And not enough for others. This is important to decide before you start depending on the income.
- medion 5y ago
  Wrong. You have to start somewhere and usually that will mean months or likely years working as a hobby or making next to nothing. You can't just setup shop and expect people to pay $50 an hour - bringing up the plumber as an example again: could a completely untrained plumber turn up at your doorstep and request $50/hr to do plumbing? You'd laugh. They work for peanuts for 4 years while doing a night class a week until they are qualified.
  - rdtwo 5y ago
    That’s kind of my point. You made it more eloquently than I did. While you are learning you have to work for below your target sometimes just cost it materials to get your skills up. Similar to how we all had to pay for 4 years of college in both time and money to get good paying jobs
    - quesera 5y ago
      I tried to be clear about that in my initial comment -- apologies if not. But it's not because you lack the skills to produce, it's because you lack the market knowledge, marketing savvy, and brand awareness. If you lack the skills to produce, you should not start selling products. All of the learning process is a prerequisite and it is not reasonable to price it in.
vharuck 5y ago