Labor caluclations Some, but not all
Categories: Instruction and information; Commerce and business
Word count/read time: 607 words; 3 minutes
Part three of this three-parter deals with labor.
The simple way to clock labor is from
beginning to end of manufacturing. There's
also the non-billables like phone
conversations, signing up for shows, going to seminars and workshops, ordering and
stocking, research, documentation, website maintenance, etc.
For basic situations:
- Ordering, unpacking, and organizing supplies
- Set-up and clean-up
- Assembly
- Quality control
- Documentation: pictures, literature, etc.
- Customer interaction
- Packaging and shipping
For professionals:
- Website maintenance
- Shows: searching, applying, booth set-up and tear-down, etc.
- Travel time
- Making findings, clasps, wire, jump rings, etc.
Other factors (at least to me):
- Search for and buy (scrap) metals
- Document and separate sellable and meltable items
- Prepare scrap
- Melting, 1st round (dore bars)
- Ingot time: pouring, cleaning, prepping
- Refiner: harvesting, set-up, manning, cleaning, storing
- Melting, 2nd round (ingots)
- Make raw materials: hammer forging, rolling mill, wire drawing
- Make solder and filler wire
- Populate and analyze spreadsheet
- Manufacture custom presentation cases
- Tool maintenance
Those buying pre-made parts will never appreciate what is required to
manufacture them. It's convenient, necessary for many, and by no means shameful (but it
means your item is not legally handmade).
Being at the mercy of the supplier
severely limits the selection, variety, and quality.
Advanced chainmaking techniques
like welding and soldering become a different matter. It might take 100 elapsed
minutes to add 20 links. Time is wasted on failed welds and melted links so it might
only take 60 actual minutes. In other words, lost labor.
Every metric is important, especially failures
and wasted time, to know how long it should take for accurate pricing but also
how long it really takes for time budgeting.
I time up to 100 links to calculate average, expected, and actual time with best- and
worst-case scenarios, standard deviations, and more. I might track 20 separate
processes.
It's an incentive to improve efficiency. Less wasted time results in higher
production numbers and better prices.
A detailed record and lots of trial and error uncover the fastest way to complete
a procedure. When there are 1000 rings, a few seconds per ring add up to nearly two hours.
Save another few moments here and there and that could be a full workday!
My pricing spreadsheet has a minimum of 75
fields and continually evolves. There are formulas for wholesale and retail
pricing, rush orders, discounts, and more.
If costs aren't quantified then it will cause inaccurate numbers. A business is
guaranteed to fail if it can't control costs, identify the bottom line, or establish a
break-even number.
Hobbyists who charge little or nothing for their labor ruin it for everyone!
They don't take it seriously and implicitly state their time is worthless.
Some people rely on income from their products; hobbyists' ignorance
and selfishness deprive professionals of their livelihood.
Lowballing devalues the entire market.
Here's a breakdown of expenses for a typical craft fair
(there will be additional expenses and labor so this is just a start):
Hours *: 2 (driving) + 4 (loading, unloading, etc.) + 8 (craft fair) = 14
Gross sales: $600
Cost of good sold: $300
Mileage cost: 120 miles @ $0.65/mile = $75
Craft fair booth cost: $75
Profit: $600 - $75 - $75 - $300 = $150
Taxes on profits: $50
Hourly rate: $100/14 = $7.14 (egads!)
* Any labor required to manufacture the items will need to be added
Remember, labor turns
$5 of steel into $300,000 of precision watch components. Customers will value your
time and effort only if you price your items accordingly.
Posted by M: May 20, 2020
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