exx1976

Indeed, that's the document I was referring to. You are most welcome, happy to help!

Agreed. And you're mostly right about my target. My target is "musky fishermen who want a QUALITY lure at a (relatively) reasonable price" (or an extremely competitive one, anyway). There are plenty of guys out there with INCREDIBLE looking lures (with screw eyes!) that do limited (<500 units/yr) runs and command $200+ per lure - and get it. I'm fully capable of admitting that my paint skills are not of that caliber (yet, anyway). I've spent $50 for off-the-shelf lures that ended up being total pieces of crap. I've spent $30 for plastic lures that had paint flake off after 10 casts. I've spent $40 for plastic lures that had so much hook rash after one afternoon of trolling that they were filling with water. The failings of these baits, and the poor quality, in general, of what's available off-the-shelf, is the whole reason I started doing this. Then I realized that with the quantity I had to buy parts in, I may as well make some with the leftover parts and sell them to recover some of my costs, and perhaps even that of my equipment (I have another LLC I could have ran that income through). Then I learned about the additional taxes involved, so I quickly decided against that idea. I thought on it for a while, and realized that certainly I could not be the only one dissatisfied with these "off-the-shelf pieces of crap", and started looking further into it. Found out there are thousands of guys who do smaller runs of baits and sell directly to the public. I evaluated their products, compared them to my offering, had several people evaluate my paint work, and have made it as far as test lures in the hands of anglers in 6 states. I formed an LLC specifically for this venture, I'm registered to collect sales tax in my state (and have a plan for how to handle the other states), and I'm registered to remit FET. The lure I plan to enter the market with is an 8" minnow profile with three trebles. With .092" SS screw eyes and Wolverine 3x SS split rings, I had planned to enter the market at $60. However, I've since discovered an incredibly easy and repeatable way to do thru-wire, so I'm presently re-evaluating that price point. There are screw eye lures that regularly sell in excess of $100, and still many "customers" all scream "thru-wire is king". Of course, none of them are actually tackle builders, so they do not realize exactly how sturdy screw eyes are. In any event, the market is yelling thru-wire, so I'll do thru-wire - and charge more for it. I haven't decided how much more yet, but the current thought is somewhere in the $70-75 range. If I can enter the market with an innovative lip made of material nobody else is using (that I can find), an action that is JUST different enough to set me apart (due to the aforementioned innovative lip), and a wooden thru-wire that is priced lower than competitor's more expensive screw eye lures, I think I'll have a solid leg up. The only "complication" to this plan are the recent droves of basement builders who have sprung up, and just build and sell - likely no LLC, likely no FET, and likely aren't declaring the income, etc. Of course, the previous statements are all speculation, and I will not name any of said builders, but - at the prices they are selling, either my speculation is correct, or... They are either independently wealthy and bored, or they are completely OK with making a $2 profit (if they ARE actually paying all the taxes). Can you think of anything I missed, or have any advice to assist me with this new venture? I'm all ears, I promise!

AH! Now THAT may be the way for me! I have several folks around the upper -midwest that are presently testing lures for me, and a couple of big-name guys have agreed to test as well as soon as they are no longer iced-in (those two are in Northern WI and Northern IL). The reason I've yet to sell a bait is I'm working through a few iterations with my testers to ensure the lures behave as desired in real-world conditions, not just the swimming pool I tested them in. I do not want to go to market with a product that is not EXACTLY as I intend it to be. I've already invested too much time and effort to accept money from paying customers for a lure that has a flaw that I overlooked. Better to have multiple sets of eyes (and hands) on the lure. Thank you so much for your persistence in sticking with this discussion, despite my objections to previous responses. My apologies if I came off argumentative, but my innate approach to problem solving is to look at possible solutions and try to identify why they won't work. I've found it to be an easier and faster approach than trying to evaluate the merits of a solution. If I can find one item that checks a box on the "dealbreaker list", then it doesn't matter how fantastic the rest of the solution was. But this - this is gold. It will allow me to get my lures out into the public's hands in MULTIPLE states, rather than only in areas that I fish, and with good reviews from fishermen that the recipients presumably know and trust. Genius!!

An interesting thought, but as I mentioned - the lures are otherwise identical, save for paint. Looking at it from the consumer side, I'm not sure I see how that would be differentiated. Do you happen to have an example of such a lure? Suick comes to mind maybe, but I'm not sure? In any event, the complication of releasing multiple lines of lures is that I'm a small, basement builder, who only plans to build 6-7 months out of the year, with a MAX production volume of MAYBE 1000 units. Adding too many different lines means fewer of each line will be produced, and more SKUs to be stocked, since I'll be selling direct to the public and will NOT be taking backorders. What I have is what I have, and when it's gone, it's gone. Wait until next winter when I resume production again. Now that I'm making lures for sale, the idea is to catch fishermen as WELL as fish - hence the paint jobs. While lure prices may be an issue for smaller items - bass, walleye, jigs, spinnerbaits, etc - I'm making wooden musky lures, and there are no shortage of anglers willing to plunk down what will end up being my asking price. They already do it every day - in droves. There are lures out there that are of arguably poorer construction and with crappier paint, that still move QUITE well at a substantially higher selling price than I will enter the market at. As for construction difficulties, I've worked the best I can to create and use repeatable processes via the creation of jigs and other tools to minimize construction problems. I would simply apply that same logic to any future designs.

You're quoting out of date information. The info I provided is accurate. There is no 75%, nor computation by the IRS, if you as the manufacturer sell directly to retail customers and do NOT sell to wholesalers. If you want to use the actual sale price and light money on fire, hey, that's on you. I suppose you're just helping to "even things out" for all those illegitimate sellers on FB.

This is currently my biggest struggle - "some designs". For me, this means paint. To reiterate, the hope is that the more I paint, the more practice I get, the more efficient I will become. However, some paint schemes are taking me much, much longer than other paint schemes - twice as long, in some cases. I'm not sure how the market would react to two "identical" examples of the same model of lure selling for two different prices based solely on paint alone. I guess I'll find out?

Depending on the number of "grade B" lures I end up with while getting started, there's nothing that says I can't do both. While I like your idea, I was thinking about it and I'm not sure how practical it will be for me. All last season, I can count on one hand the number of other fishermen I ran into at boat launches. I suppose time will tell. I'll be sure to keep some within reach when at the launch.

I understand, and I'm aware you have better lobbyists - I was simply sticking with the example given in the article so that the math was easier to follow, as well as more easily verifiable that it was incorrect in the aforementioned article. However, your pointing that out simply serves to underscore the inaccuracies of that article, since you are absolutely correct - there exists no circumstance in which a rod builder would ever pay more than $10 FET on a single fishing rod. One last item worth noting, however: In your examples of tax due, you used some terminology that may be confusing to new people. Having done considerable research on this topic, "wholesale constructive sales price" isn't mentioned anywhere in the tax instructions I was able to find (not with that language). It is referred to as "Constructive selling price". Further, it is not "as determined by the IRS usually accepted as 60-75% of MSRP". The tax instructions clearly state it is 60% of the actual retail selling price. I had located the original document at one point, but here is a link that contains the same info, from a reputable source: https://www.taxnotes.com/research/federal/irs-private-rulings/letter-rulings-%26-technical-advice/taxable-sale-price-of-lures-sold-to-a-wholesale-distributor/1h4b8

I like that idea as well. Problem is, there aren't many kids that fish Muskie - which are the lures I'm making. I think the premise still applies, though. I'll give it some thought. Thanks!

You've completely missed it. The thin edge makes it MORE DIFFICULT for the water to smooth out, not easier. You don't want the water to smooth out. Turbulence creates vortices, not smooth water. Also, the thickness of the lip doesn't have much to do with inertia at all - unless the lip weighed many pounds. The force you are likely trying to refer to is drag, or resistance, which still would have no effect unless the lip was sticking straight out the front of the lure, perfectly parallel to the angle at which you are pulling the lure forward. However, the lip is in the water at an angle. You are pulling forward, from the front of the lure. The lip is facing at a downward angle. The force you are trying to overcome (Dave's incredibly scientific and correct explanation notwithstanding) is the force being exerted against the flat face of the lip, not the edge of it.

( PART 2 - having trouble posting) $318 * 60% = $190.80 190.80 / 1.1 = 173.4545454545454545 173.46 * 10% = $17.346 As you can plainly see, $17.346 != $18 (which is the correct amount of tax due!) I have the correct formula for you. Only took a minute with some... 6th grade, maybe? math to figure it out: Selling price - ((selling price * 100) / 106) Proof: 318 - ((318 * 100 = 31800) / 106 31800 / 106 = 300 318 - 300 = 18 Viola. Math, it's a wonderful thing. Hopefully no one has been bitten by this, and if you HAVE been bitten by it, hopefully the IRS doesn't give you too much of a hard time when you go to make it right.

DISCLAIMER: I AM NOT AN ACCOUNTANT OR A LAWYER, I'M JUST A STICKLER FOR DETAIL AND AM PRETTY GOOD AT MATH! ( PART 1) For the record - my lure making company is brand shiny new, and I haven't had to report anything yet due to not yet selling any product. HOWEVER: I learned about this tax from this very forum right here. One of the resources that was brought up in the post was the following: https://www.rodbuilding.org/library/sportfishingtax.html In this article, the author purportedly provides the reader with a formula for calculating the tax due - EXCEPT IT'S WRONG. Anyone who has been using this formula has been UNDERPAYING FET. Please, allow me to illustrate. From the article: "Consumer sale {(60% of the selling price) divided by 1.1} x .1 = tax due" The example given in the article was a $300 fishing rod. The tax was manually figured as 300*60% = 180. 10% * 180 = 18. So you sold the rod for $318 ($300 + $18 FET). All is well. However, the article goes on to say that if you tried to backfigure the FET based upon the selling price, you would be OVERPAYING - and he's right. 318 * 60% = 190.80, 190.80 * 10% = $19.08 tax you would think you owe - except that the tax paid should be backed out of the selling price. Problem is, the above formula, shown on the website as the means to back out the tax? The author apparently couldn't even spend the 30 seconds it took to double-check his own work. Please, allow me! I'll break it down individually:

It's not about cutting through the water, it's about creating turbulence. Dave posted a Vortex Shedding video that illustrates this. A few nights ago, I got curious, and I also found videos for vortex shedding around a square (not as violent) and vortex shedding around a cylinder (even less violet). I'm certainly no physicist, but in layman's terms, the more time the water has to "smooth back out", in the case of the square, with it's (relatively) much longer sides than a fishing lure lip, or with a cylinder, with it's gradual water splitting and recombining, both produce vortices that are not nearly the same as the thin material in the illustration video Dave posted. The chamfer helps to thin that edge, which creates more turbulence.

Wow. Those look like hell! My prototype lures look better than that. LOL I would never do... whatever that is. So yeah, I'd never sell those as a "factory second" or "grade B" or whatever. I'm talking about that one lure that has some bubbles in the epoxy that you missed. Or maybe you laid it on a LITTLE heavy in one spot so the epoxy has a bump in it. Or there was a blemish (overspray, booger, whatever) in the paint that you didn't realize until you did the topcoat. Or the lip has a scratch in it. Something along those lines. In other words, they would fish just fine, but cosmetically maybe they are only an 8/10 or something.

An interesting point, that. But isn't the whole idea that eventually you get good enough that the blems are few and far between? Guys can line up all the want for blems, but if there's none available.... ? I guess I'm looking at it as a way to recoup *some* of the cost of the lure vs throwing it in the trash. Additionally, it might allow a new customer that perhaps is on the fence about your regular pricing a way to check out product at a reduced cost? I don't know. I talked to a buddy that makes lures, and he says he waits until he has a dozen or so, then sells them for 40% off.

Weight placement isn't something any of us are really going to be able to tell you. You're going to need to make several baits of the same design, and put weight in different places on all of them and see how you like the action. One lure might do great with weight right in the middle, one might do great with a single weight towards the front, another might do great with two weights evenly spaced apart, another might need more toward the front than the rear.. Also depends on what type of action you're looking for as to where you place the lead. Further, you're going to need to be very judicious with the amount of lead you use if you intend to have a floating lure. Beech is much more dense than most of the types of wood used by lure makers, so you don't have much room to play with.

To clarify, I'm referring to cosmetic issues. Say you make numerous copies of the same body/design/etc. All function, but one has a booger in the paint, one has a bump in the epoxy, etc. Clearly these would not be "put out" as a product with known defects. However, your statement makes poor business sense. Every manufacturer does it. There are "factory seconds" sales constantly, for extremely high-end brands, no less. Hence, my question: What do you do with them? Keep them for your own personal use? Sell them as "grade B" or "factory seconds" or "bargain bin" lures at a reduced price, give them away to friends for free, throw them in the trash?

Those who sell lures: Try as we might, I'm sure at some point you end up with the occasional lure that just doesn't QUITE make the grade. What do you do with them? Keep them for your own personal use, sell them at a discount as "grade B", or "bargain bin" lures, something else? Trying to plan for the future...

I'm beginning to get the impression that you and I have vastly different opinions of exactly what a quality lure is. But I'll tell you what - rather than sit here and argue about it, how about you go and find me a commercial source to buy .062" or .093" G10 lips, off the shelf. Let me know when you come up with something. As for cost - that is the least of my concerns, quite literally. They cost what they cost. As a wise man once said: "The price is the price. Either people want to fish your lures, and are prepared to pay the price, or they aren't." I'm making high-quality, hand-crafted, wooden lures, not widgets. If I wanted to fish with inexpensive, mass-produced plastic nonsense, there's already plenty of that available on the shelves of every tackle shop in the country.

That doesn't sound very unique. Why make a "custom" bait that is beholden to some nonsense everyone can buy online? I want my baits to be MY baits, not just another conglomeration of off-the-shelf parts nonsense that anybody with some free time and some superglue can create.

There are a good number of ready-made lips available from commercial suppliers. However, not always the EXACT ones we are looking for. I just had the good fortune of figuring out a better way to get lips made. As some of you know, I'm working with G10. .031" is a bit too thin for my application, but I didn't know how much thicker to go. So I ordered some .062", some .093", and some .125". I just dropped them off at a local fab shop that has a waterjet and they are going to cut lips from each sheet for me and get them back to me tomorrow. I was also speaking with them about the possibility of doing aluminum lips. He said they'd do that on the laser. He said they charge $7/min to run the laser, and it cuts 2400 inches per minute. We spitballed some rough measurements, and with them providing material, they can cut aluminum lips for me for about 30 cents each. Point is, don't be afraid to look around and contact some people you wouldn't think would work with small customers, or in industries that have nothing to do with fishing. You might just end up pleasantly surprised.

That's what I'm doing - moving an entire batch from step to step. I'm working with a lot of ~40 blanks right now. I have them all to the step that they are sealed and primed and ready for paint. Paint is where I plan to deviate. Initially, I plan to do runs of only 2 or 3 of a particular pattern. If the lures become somewhat popular and I'm selling them, I'll do runs of 10-12 of each color. My turner currently holds 20 lures, so that's about my practical limit for a batch at this time.

Excellent points, these. Presently, it's taking me roughly 3 hours of actual hands-on work, per lure. The bulk of that (probably 50%) is spent painting. As I get better at it, and paint more than 1 or 2 baits at a time in the same pattern, this time will go down. Much of that painting time is spent cleaning the airbrush between colors. My target price point to enter the market with my first lure is $60. After taxes and materials costs, that leaves me about $45ish profit. From there comes income tax, plus time spent keeping the books, responding to customers, processing orders, traveling to the post office, etc. Not much headroom. My plan to increase profit is twofold: First, as my painting skills improve, so, too will the appearance of my lures, which means I can increase prices. Second, lowering cost - in terms of both materials, and amount of time spent per bait. If I become serious about this, I'll find a better wood supplier, and I'll order materials in a more bulk manner, which will drive those costs down, and see above about reducing time spent per bait. Additionally, I already have plans for other lures in the works, including a larger trolling bait, with an aluminum lip, that will be through-wire. That will likely have to go for somewhere in the $125 range - which is very competitive with other lures out there in that segment. Most of them are in the $100-110 range, and are still using screw eyes. I plan for this lure to be a premium quality lure, so it will command a premium price. Buy it from me, don't buy it from me, I don't really care. As Dave once said: "Customers either want to fish your lure, and are willing to pay the price, or they aren't." It really is that simple. I guess we'll find out soon enough. Either way - I'm not looking at this as a day job, not even remotely a replacement to my day job. I plan to only make lures from October or November until March or April, as a way to pass the horrible winters up here. From March or April until October or November, I'll be out using the lures, not making them. When I sell out for a season, sorry about your luck, wait until I start up again in winter. It's nothing more than a hobby or a way to pass the time. If I happen to make a few bucks at it, so much the better. I'll be happy if I can use it to pay off the truck and the boat a few years early. Not expecting much, so it'll be difficult to be disappointed.

Ain't that the truth. There's a guy on there selling handmade wooden baits for $19.99. They aren't exactly the best looking lures out there (I wouldn't buy one, even for that cheap), but $19.99? I know what kind of materials costs are involved, and he should be paying 1.199 in FET on each one, so his profit can't be more than $10 per bait. That $1.199 would put a big dent in that if he was actually paying it. I don't know for sure, but I gotta think guys selling at that price are simply ignoring it. I don't know. I already registered. Filed the LLC and registered to collect sales tax and registered the FEIN for FET. Accountant charged me only $50 to set it all up. FET is paid quarterly, sales tax annually. Not that big of a deal, IMO. Just raise my prices a bit from where I thought I wanted them to be.

A buddy just got one of the higher-end X Carve machines. Spent upwards of $5k on it. I haven't been over the check it out myself yet, but he seems happy enough with it. It's a neat idea, but I'm still trying to nail down my design. The best laid plans do not survive the first encounter with the enemy, as the saying goes. Shipped a bunch of lures out to guys for testing, and I'm making some tweaks on the design based upon their feedback. Once I get it all sorted and begin offering them for sale, if they start flying out the door, maybe I'll consider a CNC. For now, I'm doing well enough with the manual tools I have.