How to Calculate The Price For Your Leatherwork
Our calculator is designed to be simple and easy to use. It covers:
- your base costs of time
It also allows you to input a desired profit margin on top.
We hope this calculator helps you make more money for your leather business.
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Learn more about starting a leather business:
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More Tips On Pricing Your Leatherwork
How To Price Your Leatherwork
One of the most challenging aspects to starting a leather business is determining how much to charge for your leatherwork.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your leatherwork, it's critical that you first identify all of your costs and consequently mark up your leatherwork so you can factor in a profit.
The actual cost of your leatherwork may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your leatherwork, you'll want to create goals for revenue + how much profit you want your leather business to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your leatherwork is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your leatherwork fits best in the marketplace.
All of these factors play an equal part in pricing your leatherwork, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:
I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.
The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.
Examples of a successful leather business
8. Popov Leather ($900K/year)
Ryan Popoff (from Nelson, Nelson, New Zealand) started Popov Leather almost 11 years ago.
My name is Ryan Popoff and I am the owner and maker at Popov Leather. We are a Canadian company that makes and sells small leather goods online. The majority of our sales are focused on direct-to-consumer and almost entirely in the USA.
Our top selling products are (you probably guessed) wallets. People love a great quality wallet backed by our amazing customer service.
9. Galen Leather ($480K/year)
Zeynep Prens (from Istanbul, Turkey) started Galen Leather over 11 years ago.
Merhaba! (that’s hello in Turkish). My name is Zeynep and along with my brother Yusuf, we run Galen Leather from our workshop in Istanbul. Combining our love for stationery items and skills in leather-making, we design and handcraft our own line of handmade leather travel journals, notebook covers, personal accessories and now, so much more!
In the last year, we’ve broken sales records, experiencing a 138% increase in revenue to hit an average of around $40,000 in sales each month. Most of our products are made to order, and as a small team of four, we believe what we’ve been able to achieve so far is no small feat!
10. The Populess Company ($132K/year)
Brad Gadd (from Alberta, Canada) started The Populess Company almost 11 years ago.
My name is Brad Gadd I am the owner and operator of The Populess Co. Handcrafted Leather Goods and Apparel.
We have been growing the business at a gradual sustainable rate of about 25% in revenue year after. And we just launched our first flagship store this April.
11. Jamie Clawson ($48K/year)
Jamie Clawson (from New York, USA) started Jamie Clawson almost 13 years ago.
Hi I’m Jamie Clawson, and I run Jamie Clawson - a small business designing and producing leather products and accessories. I do everything from designing, testing, manufacturing, shipping etc. All operations are done in house.
I started this business with an idea from a friend after I lost my job. A friend of a friend of a friend was working at a shop with a laser cutter and I was able to go in and learn to to use it to make samples. I working out of my girlfriend/now wife’s living room. Things slowly grew and I now own my own laser cutter and work in a really cool shop with other designers/makers.
12. JAQET ($12K/year)
Jacques Flynn (from Kawartha Lakes, Ontario, Canada) started JAQET almost 12 years ago.
Hello! My name is Jacques Flynn.I am the founder and owner of the leather goods company JAQET.
We now consist of a small team based in Long Beach, California where all our products are hand made under one roof. We currently sell our products in boutiques across the globe as well as through our website.
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