When I constructed my first repair & design price book I bought a
$165 time clock at office depot for each jeweler. Had them click on
the back of envelopes when they began and stopped a job. Yes, they do
2-3 jobs at a time, but I had a good idea of time. Here’ what I
found:
A. They don’t work 25% of the day because of numerous
interruptions. So we increased the time we “thought” it would be by
25%.
B. We added into the cost pr hour another 25% for matching taxes,
vacation, benefits.
If you do manufacturing, try setting aside a day or half day just to
make many pieces of what you are doing. So if you’re making a
bracelet, don’t make just one. Make 6. Start at 9 am and make the
bracelets. Clock out only for lunch. Once done (assuming there’s no
casting-fabrication) and polished, stop the clock. This will include
your interruptions and will give you a fair outlook to time. Then
divide the time by 6 bracelets.
OK, that’s time, not money.
The bigger question is “how many units do you make in 8 hours?” You
might find that you worked from 9 until 3:30 and got no manufacturing
done the rest of the day, just paperwork, answering the phone. That’s
business.
So now we know we can only produce 6 units in a day (simplified).
Your expenses are figured on 8 hours, not 9-3:30.
So if it costs you $500 a day for salary, rent, lights, and supplies
(not the metal for the bracelets, but buffs, rouge, solder) averages
$100 a day, you might find that EXPENSES to run the company $600 a
day, then the 6 bracelets have an overhead cost of $200 each. Add to
that the cost of the metal (let’s say $125 each). Then on the average
each bracelet costs, with your salary and such $325.
This $325 is absolute cost, everything. So this doesn’t get marked
up like you might think because we now know our overhead. But do add
25% for profit.
So $235 marked up 25% makes it sell for $406.00
This is a simplified overview but is how you should look at
manufacturing. Because of competition you should do everything you
can to lower the cost of manufacture by doing what you can to make
many items at once. (I’m speaking to those who make things for resale
in a case or gallery).
Hope this helps
David Gellerwww.JewelerProfit.com
PS version 4.0 of the price book is out. See our web site