Author Topic: Your design fee is %@$#% per hour?!!!!!  (Read 5078 times)

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TwoWayTrauma

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Your design fee is %@$#% per hour?!!!!!
« on: August 24, 2015, 10:33:58 PM »
I have a few questions here and am looking for some feedback.

First a little background:  When I started making gear, it was for coworkers and friends.  I usually charged materials plus a little extra.  I went commercial advertising products I designed, but also advertised myself as a custom gear maker: a skill I was and am still confident in.  I got some simple requests (an HK clip connected to 3 inches of webbing connected to a QD swivel) which required practically no design time, and some more complicated ones (custom leather shotgun shell bandoleer belt)  Pics below of the third prototype (not the final product) to make this post look a little better looking.  That's not the final one, just one to test for fit and functionality.  I told the guy I would do it for free, and I would just gouge his friends when they wanted one.





Back to the post...

So recently, I had a coworker refer his friend to me for a tent zipper replacement.  He asked me the cost.  Being it was my first time doing a major repair for a non-friend, I picked a an hourly rate I thought was fair, gave it to him, and he didn't buck.

I'm looking at developing an hourly rate for custom gear design time.  I have a fee in mind.  My question isn't so much "how much do you charge per hour?", but how do you explain to your clients that what you charge per hour is reasonable?
How did you develop your design fee?
Have you had any problems with convincing people it is reasonable?
How didi you work through those problems?

All feedback is welcomed and appreciated. 

I know this post touches on a lot of points that are tangential to original idea, and I'm interested in hearing your thoughts on those too.

Thanks,

Chuck
« Last Edit: August 24, 2015, 10:40:17 PM by TwoWayTrauma »
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Green Ant

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #1 on: August 25, 2015, 01:27:54 AM »
When I do some custom work for non-friends, what usually happens is that they come with a very rough idea.

My first response after they explain the idea (usually in 2 or 3 emails going back and forth) is to point out that the idea itself is of course not ready to be sewn. I.e., I tell them that I definitely need to figure out together with them, what they will use the piece of kit for, where there may be secondary functionality which can or should be built in along the way, exact sizes, exact colors, exact type of fabric and so on.

And that the final price is made up of three factors: design time, sewing time and material.

That has never been a problem ever since (I have done a two-digit number of custom things).

However (si vis pacem para bellum :) ) I've prepared a few counter arguments in case someone ever turns up and tries to attack me on my pricing model:
  • "Can't be that expensive! You can buy gear similar to what I want for 2 US$ from Alibaba!" -> "Ok, no problem, then go there and buy it over there."
  • "Which hourly rate do you charge so that you come to this price?" -> "Roughly the same as a tailor." -> "But you are not a professional tailor." -> "That's right but I make up that disadvantage with (a) my knowledge about tactical/outdoor requirements and (b) I have a stack of material over here you can select from. At a real tailor you'd have to bring your own material which you usually would have to buy by the yard somewhere in advance."
But - up to now - I didn't have to use these.
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thewolf

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #2 on: August 25, 2015, 03:11:42 AM »
This is the advise I received from another gear maker. The numbers can change based on what you think is reasonable. Everyone is different.

Custom project by the hour and material charge. This could be rolled into a "one-time" fee also, like a start-up fee, and charge $150 non-refundable, or whatever.
Labor @ 30.00 /hr
Material is 12.00 yard (no increments, round up to nearest yard)
Overhead 6.50 /hr

Shipping - USPS, UPS, etc...or use a flat rate.

So if the project uses 1/2 yard material and 4 hours of time -
120 + 26 + 12 = $158

OR

You could charge people a 55.00 flat rate for in stock material then its cost +20% for non stocked

For friends you could drop to 44.00 which translates to 20% off

TwoWayTrauma

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #3 on: August 25, 2015, 09:21:33 AM »
All good info.  Thanks for sharing your perspective.

Chuck
Two Way Trauma: Providing equipment for those trained in the judicious application and relief of trauma.

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essal

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #4 on: August 25, 2015, 10:03:55 AM »
I think I charged somewhere between $25 and $30/hour no matter what I do. As an example, I'm going to be paid $20 (CAD) as a R&D intern starting next week for a clothing company, so $30/hour as a company cost is pretty much nothing...
It all depends on the project though, sometimes I would design for free, make a couple of free protos and then charge for the finished product.

However, $30/hour means that if you are building mag pouches, you need to be able to cut and sew them up in less than an hour per pouch if you want to be able to compete with every other pouch out there, that might be hard. But a $120 custom chestrig seems more doable.

I use my calculator posted in another thread just recently to figure out what the total cost is, and I give an estimate based on other projects before I start. Usually I would tell them "this is between 4 and 6 hours + materials, so you're looking at somewhere between X and XX" and they'll confirm it before I start.

Gear Dynamics

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #5 on: August 25, 2015, 10:16:11 AM »
For custom work, I currently charge an hourly rate of $50 CAD/hour. This mostly covers time and accounts for a diversion of efforts, but also pays for some resources used. It generally starts with the customer presenting an idea. Then together we refine the idea on paper and compile a materials list. After that we do a first draft prototype and make however many revisions are required. Lastly we sew a finished design. All inventory materials are billed at cost. The customer can also provide materials. It's pretty simple and has worked well so far.

Alex

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #6 on: August 25, 2015, 03:53:04 PM »
Wow, you guys need to charge more! You are all hurting every other designer by significantly under charging.

When I was freelancing it was $150 per hour for technical pattern and design work. If I had to price it per project, then this was factored into it. 25%-50% down and the balance per milestone and I owned all IP until the balance was paid. Other industry pros like Kathleen Fasanella, writer of entrepreneurs guide to cut and sew manufacturing/fashionincubator.com charges $900+ for an 8 hour day (for technical pattern and sample making). None of that includes materials or extra labor for additional sewers, etc. look through some of my other posts for further info on this.

pro companies that do pattern making charge $$75+ an hour for just the technical pattern drafting and that does not include design or sample making (all that's extra). see patternworks price list here: http://www.patternworksinc.com/PriceList.pdf

I also have friends in the industry that charged $75 or less an hour and they couldn't support themselves, and had to end up getting day jobs in the industry. A very wise person (Kathleen) told me to charge more if I ever wanted to be taken seriously. She also said to charge more then she does because of the complexity of tactical nylon gear. After I raised my rates, I never had a problem getting real clients to agree to it.

I ended up taking an industry job not because of lack of clients but because I wanted larger access to R&D funding to develop materials, hardware and next gen designs.

 
« Last Edit: August 25, 2015, 04:16:05 PM by Alex »

BOgear

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #7 on: August 25, 2015, 05:32:45 PM »
Wow, you guys need to charge more! You are all hurting every other designer by significantly under charging.

THIS! I could not agree more Alex.

I used to CONSIDERABLY undercharge myself ($30/hr), but now that BOgear has grown can no longer continue to do so. Keeping your rates low essentially means you remain as a backyard business. If you ever want to step out and really take it to the next level you simply cannot due to lack of funds. By undercharging you undercut other businesses, who are forced out of work. And then when you want to grow bigger you have to charge more. Guess what... someone else is charging less, and subsequently undercuts you. It is a vicious cycle. Stop it now, and instead aim for professionalism in a home working environment (this is a secondary topic itself, but part of the reason I charged so little was I didn't think people would pay more when they saw I operated BOgear from under my house)

All that said, I really struggle with pricing of truly custom work (ie not our own product). Although I have a price, I constantly underquote by 10% - 25% due to fear of not getting the client. However we are now at a point where it no longer matters if we get that client or not, and as such will no longer be doing a discount.

The thing to remember is actual dollar price is irrelevant as each country and state has certain standards and living costs. For instance in USA you could pay someone $15/hr. Over here in Australia, a typical machinist would cost the business around $25/hr and upwards (base pay + superannuation + insurance). Big difference!

All that said, the figure I aim for is $150/hr for all sample, prototype and design work. Once we are ready for production it is cheaper although we are reinvestigating this pricing given the ever increasing costs of running a business.

Food for thought.
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SunriseTacticalGear

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #8 on: August 25, 2015, 06:52:14 PM »
Since most of my circle of friends know I build gear, I will get requests to build them a custom piece, I thank them and suggest that if they can buy it from somewhere currently, "go and buy it, because I don't want to reinvent the wheel, nor can I compete with China".
Last week I had a friend ask about building a custom backpack with some features he thought would really sell, he works at a gun store. He pressed me for an estimate and I told him $2,000. for the first one. He about crapped himself, but think about it, could you really build a backpack in 20 hours from scratch? I would probably loose money on that job, thankfully he didn't take me up on that.
When I do custom work, (when the customer will own the rights to the design) I charge $100. per hour plus material. It may sound high at first but, these people are charging the same price for firearms training, and the such. It is a lot of money, but the good customers will pay with out even blinking an eye, and the ones who scream about your pricing aren't real serious.
I'm a one man shop with my family helping out and there is not a free hour in my day for more work, I realize that this won't go on forever, but now I only take on the new jobs that interest me.
The take away is that we all need to keep our pricing Professional or we risk racing to the bottom.
Edit to add, that for friends and family, I do charge around $30-$40 per hour for money that can go right into MY bank.
Scott


« Last Edit: August 25, 2015, 07:38:40 PM by SunriseTacticalGear »

essal

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #9 on: August 25, 2015, 07:02:34 PM »
Alex, you are right. However, most of these guys aren't doing flats, techpacks and other stuff for other companies or on a real contract with a major firm... It's (I assume) mostly just for their small part time/hobby company for an individual who wants some custom gear.

Most of my customers was simply guys who wanted "chestrig with X and Y", which I could just pull out of my ass most of the time. Very little actual design and no innovation. So it becomes more of a production thing where you still hang onto every single right and the customer only gets a finished product. I can't tell my customers that simply because they want some random pouches on a chestrig that it will be $500 instead of $150. It won't work in my experience...

For companies that want to buy finished designs, protos and/or samples, sure I'll charge them way more than $30/hr, but it's not my common individual customer. My last design I sold for $3500 for roughly 10 hours of work. Trust me, not a single sane person on earth would spend $3500 on a product like that (or even $1500). It was all based on their intended production volume that made that price work.
I also charge more for my Gov orders simply because they are willing to spend some serious dough. Again, no sane person would spend that money.

Complexity of tactical gear? I know that Kathleen is kinda a guru, but I think she is way wrong here... Clothing is automatically more complex because of different sizes (grading), not to mention that it's not uncommon for a jacket pattern to have 15+ pieces of fabric and 3+ types of stitch classes and tons of different trims, tags and prints. Hell, I've seen a 70 page tech pack and tons that are 15-20 pages.. Show me anything remotely close to that in tactical gear and I might change my mind.

Martial Concepts

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #10 on: August 25, 2015, 07:59:23 PM »
Pricing is really an individual endeavor.  What are you comfortable charging?  If you feel 'used' after toiling on a project, you probably undercharged or had unrealistic expectations of how it would turn out.  Materials are either provided or charged for according to cost.  The firms I have dealt with are more than willing to source materials for a product, but in addition to the cost of the materials and shipping, they charged hourly for the order and record keeping-which I believe is fair. They are in business to make money, not give it away. 

I used to do things on the cheap for friends or people that had access or exposure to larger user groups.  I have found that more often than not this is a mistake.  When you finally get around to discussing the cost of an item with them, or people they have referred, they are shocked at the price.  The 'I can get it online or at shop X for a lot less' now results in me telling them to do it then. 

Unless someone has an intimate acquaintance with what quality gear, military or civilian, they don't comprehend the difference in materials, the attention to detail, and the pride that goes into custom pieces.  You can purchase a great looking piece of kit that was made in a large shop, by children that will work well, right up until it is needed.  Thread, needle, materials, etc, are all important in the production and durability of a product.  Sketches, patterns and prototypes all take time.

I have a gov't customer who wants a bag for search and rescue.  Mind you the majority of the areas they will deploy are high desert.  They initially wanted Multicam.  I told them that Multicam is made to blend in and blur presences, not present in a manner that one can visually track and assess the location and movement of team members.  I advised against it.  So now they want an earth tone colored custom pack.  I again told them that bright would be better, so rather than go bright they want a high visibility panel that can be deployed on the pack.  Fine, your dime, your time, your desire.

They had no SOP for what they desired in a pack, everyone on various squads wanted a different feature so the XO told me to do a couple of prototypes employing various ideas that had been brought up.  I told them they would be paying actual cost, hourly + materials for the prototypes.  Initially they balked at the idea.  I told them if they would rather by a COTS item to go ahead and do it and I could get back to building gear for people who know what they want. 

He brought up various brands that were cheaper than I estimated the prototypes cost.  I explained the differential between the qualities of materials used, the effort to insure proper seam allowance, additional touches such as binding areas not commonly found on certain bags, etc.  He finally gave approval and then ordered an additional 40 of the design TBD. 

Point being, stand your ground, let the customer know that you charge 'X' an hour and if they feel it is not fair they are free to go elsewhere.  They need to understand that for every design change it cost more as it does not magically appear after a Unicorn wills it into being, it is your effort and attention to detail that will actualize what they envision.

Rant out.
« Last Edit: August 26, 2015, 04:38:11 PM by AtypeEffect »
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TwoWayTrauma

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #11 on: August 25, 2015, 11:13:47 PM »
Thanks again for all the good info.  I'm just glad I'm not getting charged your design rate for the time you put into these posts.

Scott makes a good point about the rate firearms trainers charge in comparison to design rates.  One of the stores I make gear for used to have a guy working there who did private firearms instruction on the side.  His rate was something like $90 per hour with a two hour minimum.  He said there wasn't anyone else within 50 miles teaching what he taught.  He had confidence in his rate, and looking back it kind of raised my esteem of his training in my mind even though I haven't trained with him.  If he would have said $10 per hour, I would have thought that this guy doesn't have any clients because his training is probably junk.

Before I bought a good camera and started taking my own photos, I used to troll craigslist looking for people to do product and model photography.  There were always a few that advertised free work so they could put stuff in their portfolios and I never contacted any of them.

I agree with AtypeEffect that it is an individual endeavor, and it depends on your goals.  I too have had retailers reject my advice.  I was designing a sling for him, and he only wanted QD swivels because that was what he likes and he pinches his fingers when he uses HK clips.  I sold him a bunch of slings with QD swivels, and this last saturday he asked me if I could get him some HK adapters within 24 hours.  I knew from my experience in the industry that people prefer a few different attachment systems, but I didn't try to talk him into it.  I just gave him what he wanted.  I got him the adapters in time for the gun show.

Business is picking up for me, and I think I will gradually raise my design fee and hourly labor rate until people start to buck.

Thanks again for all the great info.

Chuck

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mogensbeck

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #12 on: August 26, 2015, 02:42:29 AM »
Its hard to give a correct answer, it depends on your profile and what you want from your hobby/business.

In the beginning when I started to learn by myself how to sew products it was mostly for collegues and as a hobby. So prices was more like this will cost you a pizza and a coke.
The process was not to earn much money but learn how to make products.

Later it became a officel business, but we have keept the prices low for custom orders, mostly because we are not active in tactical enviroment anymore and would like to see how the market/needs evolves.
The idea is not to earn a lot of money on the custom project but take the ideas from the end-users and make it into standard products where the development cost that we lost on the custom-project would be spreed over of standard products.
Some of the things we have made for SOF have not been giving alot of money but the ideas they have provided with is something that will give us more money in the future.
We are not into making quick cash but building a brand that in many years hopefully could turn into a fulltime job.

This was a custom MAP build for a customer and the price he paid for it would have been 3times as much if he needed to pay for the time spended on it. But the idea was interresting and we will make money on the orders that have been on this model.


Gear Dynamics

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #13 on: August 26, 2015, 07:16:03 PM »
I agree 100% with what mogensbeck has said. I'm building a brand, and for me, offering custom gear is a way to develop ideas/products that I would potentially be spending time doing anyway. For example, our Patrolling Rig was a custom request that has now been developed into a standard product, but dozens were sold as custom builds. Every time someone requested one, we used the opportunity to further improve the design.

As far as the price you charge for your work, I feel it's an entirely goal oriented decision. On one hand, if you charge more money ($100+/hour) you might get a few customers willing to pay that, but you definitely risk loosing a lot of business, just because that price scares people. On the other hand, if you charge less, you'll likely do more business and have more opportunities that you might not have otherwise been exposed to.

SR Tactical

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Re: Your design fee is %@$#% per hour?!!!!!
« Reply #14 on: August 31, 2015, 04:26:00 AM »
I absolutely agree with that, Gear Dynamics. I way undercharged the product I made for my first government contract, just to get that contract.

A good customer of mine referred me to the agency that is willing to buy several bags  from me and I wanted to get onto that boat.

On the other hand: If some civilian comes up with an idea he wants to have produced, I charge 100/h including standard materials. I consider this fair, with that rate a not so special utility pouch would roughly cost 50. If friends need something, i usually offer a trade, because most of my friends run their own business in the tactical industry or work with a government agency. That way I usually get free gear, firearms, ammo or just a few training lessons with a great firearms instructor.

To resume that: I usually take the money I feel confident in taking, as I still want to have fun sewing stuff.