For Those Of You Selling Baits

[carolinamike]

I've seen the subject come up several times on this forum and other forums asking how to figure price per bait. This is the formula that I use and it takes into consideration your time, all of your costs, including electricity, and all other expenses involved in making baits.

weigh a bait

weight of bait X price per lb of plastic(including shipping on plastic)

figure up how many baits you can make in an hour.

multiply the product of weight of 1 bait X price per lb of plastic by # of baits produced in 1 hour.

here's where you take into consideration the electricity, your time, also your flake, coloring and any other components that you use. This figure will vary with everyone so take into consideration what you would have to have for 8 hours of pay for producing the product, electricity for 8 hours. So let's say for example, $100.00 a day.

Add the amount figured from the # of baits per hour to the total operating costs ($100.00 per day). Then divide by the total by the # of baits made in a day (8 hr day). This will give you a price per bait. You need to calculate the Federal excise tax based on this price and add to it. (10%).

Here is an example based on a half lb weight and 250 baits per hour.

.5 X $2.15 (price of plastic per lb) = 1.075

1.075 X 250(baits per hour) = 268.75

268.75 + 100.00 = 368.75

368.75 divided by 2000 (baits per day) = .18 per piece.

.18 X 10% (Federal excise tax) = .198 per piece (in other words .20 per piece)

So the more pieces you can produce in an hour the less cost per piece. This is also why price per lb on plastisol is important. I'd be interested to see how other people calculate their prices. But I've found this formula works best for us.

[toadfrog]

You hit the nail on the head . You can go a little further but by the time you go this far the jeepers will be scared out of you .

[loodkop]

I have found this to be a very instructive post. At this stage I am only selling a couple of packets to club members and friends. I have never thought about half of the stuff you mentioned. I will definitely re calculate my production costs using your formula. Thanks for sharing.

[SHK]

gimme some more time to look at this Mike, but something don't look right to me. would you not want to take 268.75 (cost per 250 baits, total made in one hour) and multiply by 8 (hrs) before adding 100.00 (8 hrs misc costs) and dividing by 2000 (number of baits made in 8 hrs)? seems odd to be taking the cost of baits per hour and dividing by the amount made in 8 hrs.

i could be off but that is my thinking right now.

[carolinamike]

You're right, sorry about that. The correct formula is

.5 X $2.15 (price of plastic per lb) = 1.075

1.075 X 250(baits per hour) = 268.75

268.75 X 8 + 100.00 = 2250.00 divided by 2000 (baits per day) = 1.13 per piece.

1.13 X 10% (Federal excise tax) = 1.24 per piece

Our costs are not comparable to hand pour costs due to the volume we produce in a day. Imagine the cost per piece with plastic that is $6-$8 per lb.

Dang SHK, you made it more scary.

[JSC]

Good Information Mike ... SHK put the final touches to it .

Now add the distribution costs to it ... also the discount rates from retail down to what your profit would be Example:

Standard Industry Minimum Discounts (Quanity, Anticipation, Early Buy, FREIGHT & etc not included in this)

SRP (Suggested Retail Price) 1.00 ... To dealer is less 40% (sell to dealer for .60)

SRP (Suggested Retail Price) 1.00 .. To Distributor is less 50% & 10% (Sell to distributor for .45)

Standard Commission Rate to MFG Rep is 10% off of what he sells it for. (Commission .045)

It all adds up in a hurry.

[MonteSS]

You're right, sorry about that. The correct formula is

.5 X $2.15 (price of plastic per lb) = 1.075

1.075 X 250(baits per hour) = 268.75

268.75 X 8 + 100.00 = 2250.00 divided by 2000 (baits per day) = 1.13 per piece.

1.13 X 10% (Federal excise tax) = 1.24 per piece

.

1.24 what per piece? Cents? Dollars?

...Bill

Edited February 11, 2012 by MonteSS

[MonteSS]

Is .5 the weight in ouncesthat each bait weighs?

If so where is the conversion from ounces to pounds?

...Bill

[MonteSS]

Is .5 the weight in ounces that each bait weighs?

If so where is the conversion from ounces to pounds?

.5 ounces is .031 pound

.031 x $2.15 = $.066 (cost in plastic that each bait cost)

.066 x 250 = $16.50

$16.50 x 8 = $132

$132 + $100 = $232

$232 / 2000 = $.116

$.116 + 10% = $13 cents each bait cost

Obviously the average baitmaker cant do 250 baits per hour and would pay more for plastic.

About what does a gallon of plastisol weigh??

I could be wrong though. Late here.

...Bill

Edited February 11, 2012 by MonteSS

[SHK]

Here is an example based on a half lb weight and 250 baits per hour.

here you go MonteSS, this was all just hypothetical to give you an idea as to how to figure out your costs.

[carolinamike]

Here is an example based on a half lb weight and 250 baits per hour.

.5 X $2.15 (price of plastic per lb) = 1.075

1.075 X 250(baits per hour) = 268.75

268.75 + 100.00 = 368.75

368.75 divided by 2000 (baits per day) = .18 per piece.

.18 X 10% (Federal excise tax) = .198 per piece (in other words .20 per piece)

So the more pieces you can produce in an hour the less cost per piece. This is also why price per lb on plastisol is important. I'd be interested to see how other people calculate their prices. But I've found this formula works best for us.

MonteSS please read. I think this answers your question.

[carolinamike]

monte, please tell us how you figure your price per piece. that was one of the main reasons for posting this.

This is the way i do it, like i said i would like to see how other people calculate thier prices

[MonteSS]

This is a hobby for me and not a business. So I am more or less looking at this and observing.

I am just not sure why in the example you use a single bait weighing 1/2 a pound. I think this may confuse people

Thats why I used your calculations but changed the bait weight to 1/2 oz.

I think your formula is good and puts you in the ball park.

....Bill

[MonteSS]

You forgot to multiply times the 8 hours in a day which would then give you a single bait price of $1.24. Pretty pricey, but hey its a 1/2 pound bait

...Bill

Here is an example based on a half lb weight and 250 baits per hour.

.5 X $2.15 (price of plastic per lb) = 1.075

1.075 X 250(baits per hour) = 268.75

268.75 + 100.00 = 368.75

368.75 divided by 2000 (baits per day) = .18 per piece.

.18 X 10% (Federal excise tax) = .198 per piece (in other words .20 per piece)

So the more pieces you can produce in an hour the less cost per piece. This is also why price per lb on plastisol is important. I'd be interested to see how other people calculate their prices. But I've found this formula works best for us.

MonteSS please read. I think this answers your question.

[Painter1]

I don't want to add anything confusing here but would mention a something for consideration. I am not in the bait selling business (this is a hobby for me) but I have extensive business experience. A thought to consider / remember

Markup % vs Actual Margin

Let's assume that 10% is the "gross profit" you expect to make by marking up the product. ($1 plus 10% markup = $1.10) At the point of sale you collect $1.10 and all is good, right? You have not made 10% on the sale however. (10% of $1.10 = Eleven Cents) the actual margin in this case is 9.09%. Following are some more examples.

15% Markup will yield 13.04%

20% Markup will yield 16.67%

30% Markup will yield 23.08%

40% Markup will yield 28.57%

50% Markup will yield 33.33%

So after calculating your actual DIRECT costs to make a product be careful when you apply markup to that cost so you don't short yourself in covering your "fixed costs" or "overhead" costs.

[carolinamike]

Bill, either I've got you real confused or you're wanting to get everybody else confused. The half pound weight is just an example. Different baits and shapes will weigh different amounts so if you make two different baits with a half pound of plastic, you're going to get two different numbers of pieces, so I guess to help you to look at it easier, think of how many baits you can get out of a half pound of plastic, but it doesn't matter, you're calculating the price by weight, so a half pound is a half pound. Like I said this is based on how we price baits. I've got one mold that a half pound of plastic is two hundred pieces. The two hundred pieces is one shot. The reason I said one bait is most of you guys shoot single cavity molds, so if you've got a multi cavity mold that will hold a half pound of plastic, then the calculation should be right. I've seen so many times the question being asked about pricing a bait, and everyone always says all the things you have to consider when pricing, but as far as I know this is the first time anyone has ever posted an actual formula for pricing. It is a little harder for me to break down considering most of the time I use a half pound or more per shot. That's a half pound of plastic sometimes every 50 seconds. Don't mean to confuse anyone just trying to give you some base to start from when pricing your product. One thing I can tell you for sure, the eight years that I did hand pours and kept up 5 stores, I never once was paid for my time. Truthfully in plastic, I think that the only way a person really comes out is to have a product such as a large swim bait or something else that can be sold for a dollar or more a piece. Like I said this is not some kind of pricing bible, but it is the way that a lot of people that use large volumes of plastic calculate their prices.

[MonteSS]

weigh a bait

weight of bait X price per lb of plastic(including shipping on plastic)

.

Really didnt mean to get into a pissing match here but....

You say weigh a bait. Why in an example would you use a HALF A POUND bait as an example. I have never seen a 1/2 pound soft plastic bait. I have not weighted a bait but would assume it is closer to 1/2 OUNCE.

So the .5 in you example should be .031 pounds (1/2 oz)

What you initially want to know is what the plastic cost is to make one bait. Correct?

.....Bill

Edited February 12, 2012 by MonteSS

[Frank]

I use a simple formula but not sure if it is real acurate but it gives me what I want out of my time. I do charge for the weight of the plastic. I believe an liquid ounce of plastic basically weighs an ounce of weight. It cost me say 25cts. I charge for my labor a cost for opening a mold say 10cts. If a bait weighs .5 of an oz and a mold has two cavitys the charge would be 35cts for two baits. I include the weight of the sprue too. Laminates are not used again so it is kind of a watse. Some sprues cost 7cts and you only get one bait from the mold. If it was a two cavity it would be half the cost because they share the same one. I know this wont work for Mike but for the little guy like me it works OK. Frank

Edited February 12, 2012 by Frank

[Bass-Boys]

Here is how I used to do it. --- hand pour from micro..

make up a 13 oz batch of plastic ready to pour, ( i use a 2 cup pyrex )

1st you have to figure your cost on all items used in the batch.

it was time consumming but you only have to figure it one time ( touch it up when the cost of an item goes up )

figure plastic cost by the liquid oz. ( 128 oz in a gallon ) x 5 for 5 gal. include cost & shipping all items

figure salt in table spoons

glitter in tea spoon-- if buying by the 4 oz.. I tea spoon the glitter out in another container and checked how many teaspoons

color by the drop ( this is not exact ) but close, figure high. see how many drops in a table spoon and how many table spoons of water fill a 2 oz. bottle

scent by the tea spoon

softner by the table spoon

hardner by the tea spoon

ect.

see how many baits you can make from that batch ..

divide how many baits ( from each mold you pour ) in to cost of batch..

end result cost per bait.. ( just materials )

for example cost .10 cents per bait..

times 4 = .40 cents retail each

not exact but should cover most all other cost..

just how I did it.

[carolinamike]

Bill, if you don't mean to get into a pissing contest, don't use the word but after you say that. Instead of a pissing contest, like I said before, this is the way I do it. You've done your calculations and everything, give us some helpful information. Using your plastisol how much would you charge for 1000 pieces? You have a formula now and you seem to have corrected it in every way that you think you should, so using your plastisol and to make a profit show us the calculations of either 1000 baits or either the cost per piece of an hours run. Either way I would like to know what you come up with as your cost per piece. Also on the other forum that you're active on there is a thread about pricing there and you've not even once posted. Again if you just want to argue please find somewhere else besides TU. I posted this as an example if you don't think it's a very good example and apparently you don't, give us better information instead of arguments. It's got to where everytime I post, there's a Caney Creek person sitting waiting to criticize me, if you don't like it don't read it.

Frank and Bassboy, your post was one of the reasons for starting this thread, I was wondering how people that use smaller amounts came up with their pricing. I pretty well understand what both you guys said in your post, but I was wondering if you would give us an example and show what the actual cost would be say on a 1000 baits or a one hours run per piece. That's what I started this post for, so that people could get an idea whether or not they're even making money. When I did hand pours, I basically just broke even, never got paid for my time. Again you two guys post was some of the information that I was trying to get to help everyone. Like I said I've seen this subject come up a million times, but no one ever actually tells you how to do it. They just always give you a big list of all the things you'll need to factor in for the price, but you never see how they actually come up with their price or you never actually see their price. Again thanks to both of you guys but I would like to know things like how much do you charge for a teaspoon of salt, and how did you actually come up with that price. Same way with the flake and other components, not just prices, but how you guys actually come up with your formula. Like I said I think this would be the first post I've ever seen where someone would be willing to say how they come up with the actual prices. If you guys are nice enough and generous enough to take your time and to give this information to everyone, I hope that everyone will be nice and courteous enough to you and try not to pick it apart. And I understand that you guys calculations and my calculations won't be the same and that's fine. At least we're giving people that may want to start selling their baits several different formulas. Again, thanks for the very useful posts. You do not have to name whose plastisol you're using, and it would probably be best if you don't. This is not about anyone's plastisol. My main thought is that weight of all components involved in making baits comes down to calculating prices by weight.

[MonteSS]

I am on your side here. I think your formula is good as I have said already.

I found a flaw in you formula that I thought you would like to correct.

I give you specifics but you wont answer that question.

Answer this one question and I will be done.

You say weigh a bait. Why in an example would you use a HALF A POUND bait as an example. I have never seen a 1/2 pound soft plastic bait. I have not weighted a bait but would assume it is closer to 1/2 OUNCE.

So the .5 in you example should be .031 pounds (1/2 oz)

What you initially want to know is what the plastic cost is to make one bait. Correct?

I know that by putting .5 in your original example that you meany it to be .5 oz. I am just pointing out that .5 would be 1/2 a pound and not 1/2 an oz.

I respect you here and honestly am no trying to be a wise guy. I am fairly new at this and willing to learn. So please dont take this as a personal attack on you.

....Bill

[carolinamike]

_{Bill, i did answer your question. i dont know why you're so hung up on the half pound, like I said this is an example of a weight out of one of my molds. Its just an example. Like I said if you want to get exact, then weigh a single bait and let us know what the price per piece would be. The half pound weight could possibly be a single large bait or it could be ten baits. I dont make baits to sell one at a time, I think the smallest mold we have here is eighteen cavities. So the one piece you keep talking about really dose'nt pertain to the work I do and my example is based on my work. I thought this would be a good start for you guys to breakdown to help you figure your cost. Without looking back to see what my calculations were (i think it was $1.24), there are salt water swimbaits that weigh this much. For this item I would have to charge $1.24 per piece as a production cost. I also corrected this by telling you I was figuring this per shot and not per piece, so give us an example as if you were selling one of your baits, give us a breakdown formula, and show price per piece. I would like to see people do this with several different sizes and styles of baits, and again it will just be an example. Keep in mind, all of my molds are at least 30 inches tall. The width of the mold would be determined be the size of the baits.}

[Frank]

Bill let me say I get both of your points but you are talking about the same thing just differant amounts just like my example. He used a 1/2 pound because that is what it take to fill his mold. I used 1/2 oz because that is the weight one of mine is. In my mind apples and apples. Mike cant quote a weight for a mold that he does not have. Price per piece has to include a sprue so some sprues weigh more and like I said before there is a differance if there is a 1,2,4,6 or 8 cavity mold.

Here is and actual bait I make in two sizes

Small craw bait. actual weight including sprue .47 which cost me 12 cts for plastic and 16cts to open the mold cost 28cts per bait plus fet.

Large craw bait actual weight including sprue 1 oz which cost me 25cts for plastic and 16cts to open the mold cost 41cts per bait plus fet.

My plastic cost is from the worst case possible at the highest price it will cost me to get it to my door. Pretty simple for me and it works for now.

I will remelt sprues and reuse but that way the money is for me. If a customer can use the colors from some of the laminate sprues I just charge for the labor per bait. You can see the cost would be lower per bait if the sprue was shared. Not the only way just the way for me right now. Frank

[carolinamike]

Thanks Frank. And you're right you have to include the sprues. The weight is based on all the plastic produced in one shot. Sprues and all. And that does give you a chance to make clear money off your sprues by remelting. Where in my case, the volume of plastic that is used is so high and I would have to grind my runners to reuse with the machine, the time and the trouble it would take to run them through a grinder plus the D.I.M.P. I would have to use as a lubricant to run the plastic through the grinder does not make regrinds a feasible cost for my production and I think you've figured out by the pricing that my runners are actually sold for less than I have in them, so I really don't recoup anything on sprues myself. Again thanks for mentioning this, this is another way for a new guy to help his profit margin.

[FishAction]

This thread is a great argument to use software to control the manufacturing process. Building a bait is the the same thing as creating an assembly using materials in different amounts to build an item, say a car for instance.

I won't go into deep accounting or pitch a specific software but give an example to show the value of moving in this direction.

Using software, we first setup inventory screens of basic raw materials used. Each inventory item is entered into the software as ounces which is the lowest useful unit since we're dealing with small produced items. Each gallon of plasic bought is entered into the computer upon receipt and is tracked by the software as how many ounces were received. Same for other bulk materials purchased to make items with.

Once basic screens are set up, then create your assembly inventory screens and figure out the raw materials used to produce one item, called BOM or build of materials. Let's assume you are building a 10ct bag of plastic worms as a finished assembly. Notice I skipped the individual item since tracking the sale item is where you should focus not on the lowest finished item. This bag of worms requires 9 oz of plastic for worms, .05 percent plastic to cover scrap (sprues), .001 oz black color, 1 oz salt, 1 laminated bag, and one label to complete the sale item.

When entering the purchased products into the computer by item number of the basic raw materials, most software will track the weighted cost average. Landed or weighted cost's are what it takes to get that material at your doorstep, a cost you should always use and by entering this into the computer, the software will use average cost when you enter a completed assembly. This average cost of the materials used to build our bag of worms will be deducted from the basic material screens as the assemblies are entered into the software as completed. By using good inventory tracking software, and quite a few good softwares are freeware or low cost, your products always have current costs calculated on finished inventory regardless of cost changes of basic materials.

Bottom line, the math for each material used will only have to be figured out during the initial setup of the inventory. Cost's will alway be averaged by the computer software if entered correctly. No matter future inventory cost increases, the weight average will still calculated.

Utilities are hard to figure in unless you are big and have your equipment is on individual meters. Better way is to figure out daily operating costs for elect, phones, misc, labor, insurance, etc, and divide this amount by daily production. This figure added to weighted average of finished item is you cost basis to mark up to the sale price. Taxes should not be figured as part of the cost basis since they are required to be a percentage of the selling price.

Using a manual method, the math has to be redone each time material cost's change if you want to remain up to date on item production costs. This can be tedious since different items may use different amounts of the new material purchased. Either way, a profit has be there to remain in business.

I know, a long post. It take's work to automate, but it pays off by not having to constantly figure costs. The time spent after automating is time available to make more, and hopefully sell more so there is a reward for your hard work. Plus, cost's, revenue, retained earnings at the push of a button.

Questions, software recommendations or other, just PM.

Charlie