There's a lot that goes into being a custom bowyer aside from taking $100.00 worth of materials and turning it into an $800.00 bow for a fabulous profit. I'd recommend anyone who wants to get rich doing that to go ahead and give it a whirl. This is the American Dream. The American Dream, however, is usually a bit more complicated than it seems at first glance and costs a bit more than we often think. How much does it cost to turn $100.00 bow into an $800.00 paycheck? Just a little time and money.... let's think about exactly what kind of time and money we might be talking about. I'll list some of the things that determine how much, if any profit is made off that $800.00 bow.
* Raw Material costs
* Time spent answering phones, responding to
* Office supplies (printer, paper, business cards, invoice forms, receipts, etc.)
* questions, customer service
* Time spent purchasing, research and development
* Shop space
* Electricity
* Phone Bill
* Insurance
* Disposables like abrasives, drill bits, etc,
* glues, finishes, shop towels, etc.
* Accepting credit cards takes 3% off the top
* Equipment depreciation
* Marketing and advertising, show fees, etc.
* Website and hosting fees
* Waste
* Deals that go south (writing off bad debt from non-paying customers)
etc.
etc.
etc.
etc.
etc.
And to make things all the more interesting..... there's never a sure paycheck and you can lose everything at any given time due to circumstances beyond your control.
Most people think in terms of dollars an hour, but in business it just doesn't work that way. You don't have an assured minimum paycheck. You are accepting all the risk. You pay all your own social security. There's no pension plan, no dental, no medical, no 401K. And if sales suddenly drop off, you are still stuck with all the same bills - you just have no income.
So a guy has $100.00 in materials into a bow. And we think it's insane that he sells it for $800.00 making what we think of as a $700.00 profit. We don't think about the time invested in that bow or figure in the waste or depreciation of equipment or elecricity or insurance or any of the rest of the stuff that is necessary to keep a business alive.
Some of the costs are elastic, increasing and decreasing with sales and production. Some are fixed, regardless of sales or production. You have to be able to make AND sell enough to meet costs, including what you can afford to pay yourself but you have limits to how much you can make, too, so you have to price accordingly. If you could make and sell a thousand bows a month, you might do very well with a net profit of $10.00 per bow. If, however, you can only make and sell 10 bows a month, you'll need a lot more than a $10.00 net profit per bow if you want to eat something that month.
I don't know any rich bowyers. There are a lot of bowyers, but it's tough for all of them. There are only so many customers and, frankly, I don't think there are enough to go around and I'll bet the number of bowyers closing doors in 2008 will be close to the number of bowyers opening doors in 2007.
And if we don't support them, - they won't be there because the market won't support their enterprises and they'll move on to more profitable things, (just about anything else they can do would be more profitable).
Topic: What makes a $800.00 bow better than a $200.00 bow? (Read 3142 times)
