Reasonable Profit?

[spoonbender]

This topic might not be the most appropriate for this site, maybe even impolite, but I'm curious as to what most folks consider a reasonable profit for handpainted crankbaits. I'm not in it to get rich but would like to show a little something for the labor involved and recover the material costs. I've only sold lures to guides and individuals previously, ranging from 10 to 15 bucks, but have been getting requests from tackle shops for custom patterns in larger quantities. How much do they make on commercially available lures? One shop suggested they double their cost, which sounds a bit excessive. Thoughts?

[jim45498]

This topic might not be the most appropriate for this site, maybe even impolite, but I'm curious as to what most folks consider a reasonable profit for handpainted crankbaits. I'm not in it to get rich but would like to show a little something for the labor involved and recover the material costs. I've only sold lures to guides and individuals previously, ranging from 10 to 15 bucks, but have been getting requests from tackle shops for custom patterns in larger quantities. How much do they make on commercially available lures? One shop suggested they double their cost, which sounds a bit excessive. Thoughts?

If you are going to sell your lures remember a few things...you have put in all the labor, all the cost for the materials, all the pain and agony of getting them perfect for use.Don't be afraid to make a nice profit for yourself.

The bait shop wants them as cheap as they can get them to make a profit and most (not all) could care less about the time and trouble you put into each bait

So with that being said....don't be afraid to price your work.You can't make them and sell them and compete with large companies. Your baits are one of a kind.

[mark poulson]

Only you can say how much your time and effort should be worth.

Hand made lures cost more. Custom paint jobs cost more.

People pay for having something hand made, hand painted, and unique.

Don't sell yourself cheap, because there will always be someone who will meet that price.

Ask for what you consider fair, and let the market tell you if you're overcharging.

If it takes you more to make and paint a lure than you can get for it, you should probably rethink trying to sell lures, or you need to streamline your production methods.

I know it takes me 2 1/2hrs. start to finish to make a four piece swimbait, provided I do them in six bait batches. I price my work accordingly.

I suggest you look at how much time and money goes into your lures, and price them accordingly, too.

[bassrecord]

...........

If it takes you more to make and paint a lure than you can get for it, you should probably rethink trying to sell lures, or you need to streamline your production methods.

Mark, may I suggest another option after cutting production cost and that is to develop a lure that is so good that it wins umteen tournaments (or some other technique) such that he can sell it wholesale in the $50 to $100 range and higher. Then he could ramp up and/or hire and/or subcontract others to make his lures for him. This wonderful but lucky "demand pull" in retail/wholesale/distributor price setting will then let him focus on streamlining his production methods and reap as much profit as possible before competition drives prices down.

Good luck!

John

[Vodkaman]

It does not seem right to me either, that I do all the work, design, R+D, testing, process development, building and finishing, to produce a bait that is unique to the market and the shop keeper takes at least as much profit, if not more than I do. But that is the way it works, unless you sell direct, you cannot get around this fact.

Producing baits to order is not as much fun as making baits for yourself and very close friends. You will probably have delivery dates to meet and be compelled to work instead of desiring to work. If the customer shows his/her appreciation by paying what they are worth, then you will feel the desire to produce and enjoy the experience. If the rewards are not enough and you find yourself thinking, “why am I doing this”, then you should probably put your tools away and turn down the order.

If times are hard and money in demand, then everything changes, needs have to be taken care of. Don’t be afraid to negotiate hard for your labors. You may be a regular customer at the shop and consider the proprietor as a friend, but this is business, not favours and don’t forget, the tax man will be sticking his finger into the pie for his share of the profits.

Dave

[MEISTERICS]

I have never sold a lure. But there are a few things I do KNOW about business.

NEVER cut the market, people will pay for QUALITY, selling high quantities does NOT necessarily mean greater profits.

I would rather make and sell fifty lures at $75 than sell 75 lures at $60. No matter what it still takes me the same amount of time to make the lure(s), materials are fixed. At least for me.

In the big picture, if running in batches you save 15 min on a 2 hr bait the time savings is negligible unless running in large quantities.

Quality is biggest key. If you have a quality and unique product that is usefull people will pay.

Just my opinion.

[wcgood]

Having taken a bait to market from scratch I can attest to the fact that custom bait making is not a great business model. Yes, you can make some money and it is certainly rewarding. The large bait companies make money on volume. Profit per lure is relatively small and they are quite automated. If you choose to hand carve and finish or even use a high tech duplicator as I did, at the end of the day you are working for minimum wage or maybe less. It's simply a volume business and volume will make you a slave to it. The market demands a certain level of quality and achieving this quality can cost you tens of thousands and don't expect not to break even for several years. I'm really not trying to sound negative or discouraging here but sometimes hobbies are better as hobbies and not businesses. I'm just sharing my personal experience. Some guys here may be doing well at it, I don't know. Bait making is labor intensive and unless you can hire cheap labor to do the work it's not real profitable or you work for small wages yourself. If it's for love, wonderful. If it's for profit, not so wonderful. A leader in balsa bait manufacturing once told me "if you like to fish...don't go into the bait making business". How true this was. Now I enjoy bait making as an art and without the baggage of bottom lines. Good luck.

Another things to keep in mind. If you sell direct to the public you will maximize your profit, assuming there is any. If you sell directly to a retailer, they generally like to make 40% (there goes your profit). They are making at least that on mass produced baits. If you use a distributor then cut another 20% from the 40%. Advantage is you will sell more baits.

I like the idea of selling fewer baits for more money. Problem is the market will only bare so much. To get your production cost down you have to make a certain volume. Commercial grade paints and coating don't have a long shelf life so you have to use it with larger productions putting you into the volume business game of small margins.

Hope this helps or at least it is personal experience and insights.

[wcgood]

Also forgot to mention that legally you need to comply with the IRS excise tax. It's a whooping 10% of gross sales. Which is just not fair for the little guys.

[Vodkaman]

Good post WC, pretty much what I discovered, without getting too involved. Ironically, a lot of the skills that I learned in my lure building education are serving me well in other fields of fiscal persuit.

Dave

[dlaery]

This is just from my point of view, or from another side, not disputiing anything that has been said here.

When selling you product to a retailer, in order for him to make 35%, he will have to mark up 50%

In Bob's example of:

$100 item needs to gross $35

That means the dealer paid me $65, marked it up 50%, and sell it for $100, to make 35% on his $100 sale.

In order for me to make 25%, in the $65, subtract $6 for FET, now my selling price is $59. To make 25%, I will have to produce that product for $39

Now I have the same expenses on less Gross profit. I have machines, tools, molds to replace or repair, plus the building, but no traffic.

[BobP]

It's simple but some don't realize: if it costs you $10 to make something that sells for $9, the more you sell, the faster you go broke.

[dlaery]

It's simple but some don't realize: if it costs you $10 to make something that sells for $9, the more you sell, the faster you go broke.

In this case you need a bigger truck.

[spoonbender]

Good points here on both sides of the coin, just what I was looking for. I've done lure making all my life, mostly just for my use and a few fishing buddies. I'ts now taken on a life of it's own with more requests for custom patterns. I realize how quickly an enjoyable hobby can turn into an ugly mistress and would rather not lose money at something that begins to resemble another job. I'm flirting with retirement in a few years and wouldn't mind a part time business so need to start putting the wheels on a program now.....hopefully with a clear, objective viewpoint of the tackle industry. Thanks guys, good info.

[JSC]

Bob gave a good summary of the subject.

Having been in it (Tackle Biz) more ways than one ... the tackle industry at one time broke the margins down as follows (since that time it will vary slightly according to deals & etc)

Retailer Sells an item for 1.00

it cost him (60%) (40% profit) .60 (.40 profit)

the jobber sold it to him at that price

it cost the jobber 50%-10% off of the 1.00 (.45)

That leaves him with a 25% profit (.15)

(All of this is Gross profit)

In order to do it up right the Mfg should have a good Sales Rep orginization (or individual)

and this part is 10% of what he sells it to the jobber (.045) .. So we are now down to .405

and out of that comes another 10 % FET == .36 (that is off of the .45 it sold for)

All of this with out taking in all the over head and there is a bunch of it in every level of sales.

Wal Mart went so far as to tell the Mfgs that they did not need the Reps and wanted that 10% ..

Make sure you have all your Ducks in a row before you take it any further than a hobby or as a custom made item.

Hope this was not confusing

2 cents worth

JSC

[MEISTERICS]

Many people often confuse Margin & Mark-up.

Margin is the percentage or dollar value of profit a person makes on the sale of a good.

$100 sale with $60 cost = 40% margin. The $60 is presumed to be your direct and sole cost to physically get the good.

the mark-up of this good is 100/60 = 1.667 or 166.7%

The 1.667 is the estimated increase in direct cost of a good to cover general and overhead cost. Buildings, utilities, marketing & so fourth. Along with making a "take home" dollar value.

Generally speaking, a good company knows what amount they have to mark-up the good in order to break even and make a worth while profit. If they don't, they go out of business.

Hope this clear things up.

[Seeking 56]

All good points!

If you know and you've been told you craft a quality bait with quality components, paints, clear etc.. don't be afraid to sell them at a premium price.

If you make musky lures for example, that is a very specific niche. Musky fishermen will pay for a good crafted bait that is durable and catches fish.

You should also consider consignment. If the retailer is receptive to this and if your lures don't occupy a large amount of space it could be the best of both worlds. He doesn't have to buy them and you may benefit from a higher percentage.

You can produce a limited amount of baits and in the end you reward yourself with an acceptable return for your efforts.

Just a thought.

S54

[RiverMan]

There's a reason why 90% of all commercially available lures come from overseas and that's because it's very difficult to make a reasonable profit by producing in the USA. For what you pay one person in the USA you can hire a half dozen or more in China. After you figure in all your materials, equipment, wear and tear on equipment, and your time, it's pretty much a labor of love. You can make a little money at it but don't expect to make much. How much to charge depends on how much your competitors are charging and what customers are willing to pay.

RM