Raising my prices

[ffq-lar]

On January first, after thinking long and hard and crunching some numbers, I raised my prices.

I now charge $1.50 per bobbin to cover thread costs (which have really sky-rocketed at the retail level). I was charging $1.

I have instituted a $15 set-up fee for every top. This covers the time it takes for intake, loading and pick-up. This also allows me to usually surpass my minimum charge ($50) for smaller items like baby quilts and lap size, since the $15 will probably pop them over the minimum. I really think this fee should be $25 , but my customers may get sticker shock initially and I don't want to scare them away! I will re-visit this next January and perhaps bump it a little.

I am trying to discontinue offering 1.5 cents an inch quilting. I don't do pantos and have some quick overalls that I do, but most of my customers want borders and body separate, so not much call for overalls. I will still have them available, but have taken the 1.5 cent offering off my intake sheet. My printed prices start at 2 cents. That way, I think my 2 cent customers will think they are getting a bargain.

Let me give you a little back-story--Bayside has been selling HQ16s for several years now and quite a number of locals are doing under-the-table quilting for cheap--and I mean CHEAP. One regular of mine had a really bad quilting job done on a lap size throw and was charged $20. Here is my thinking--I am a professional. I will not and cannot lower my prices. Eventually their greed or the State of Washington will catch up with the "illegals".

So, to celebrate my independence, I am raising my prices!! Gosh, I am so evil!:P

BTW, I have a pretty loyal and referral-happy customer base and am booked out quite a ways--It will be interesting to see how this all plays out.

[sspingler]

I raised my prices back in August and couldn't be happier. I now charge by the square inch instead of the hour. No guess work on the customers part and no having to keep track of time on mine.

I did have to add a charge since then tho. I have one customer that always sends animal panels and wants dense quilting.......that means fur, leaves, grass and whatever else so I went halfway between freehand and custom. Now if I can just get her to make her backing bigger!!!

[TAQuilts]

Linda..the timing on this subject couldn't be better. I recently talked to a CPA about starting my own business. The shop who I now LA quilt for will be closing and many of our/my customers want me to continue doing their quilts. I refuse to do under the table:cool: so I am looking into a business. I already own my own machine and too many tools and gadgets:D :D But I must say she really opened my eyes and has me wondering, is it worth it:( given the amount of time one really devotes to each customer and quilt.

She factored a 2 hour average time per quilt for service/prep. This includes everything outside of the actual quilting that has to do with the customer, pinning, phone, intake, paperwork, pick-up etc. Says a 2 cents average quilting fee isn't really enough to cover expenses and realistically compensate me for all of the "TIME" I will be devoting to my business.

Her suggestion was a Set -up fee of some kind for starters. Stating businesses can no longer afford to offer FREE estimates or services anymore.

I'm going to wait before starting my business, even though I love to quilt customers quilts, even the wonky ones. Didn't realize how much goes into setting up a home business or any business for that matter, so much to think about.

Terry

[mrsbishwit]

Good for you Linda!, I streamlined re-did my pricing last January...got rid of stuff that wasn't working/making money like custom, selling backing and batting (I was taking a loss on these areas) and broke out the pantos into 3 catorgories, low density, med density and high density and charge accordingly. I also started charging $50 for my minimum because I got tired of spending the hour for pick up/ drop off, phone time& quilt prep and only making pennies when the customer could have easily have done the quilt themselves on their DSM. I also wanted to discourage the table runners and place mat crowd.

This allowed me the flexibility to offer promos/ specials throughout the year which makes the customers feel like they are getting a great deal. The $50 minimum dosen't discourage the baby quilts or the lap quilts and it off sets the promos I do. It has worked really well for me this past year.

I won't be increasing any prices this year but may add in additional charges/increases for 2010 such as ironing, squaring up quilt backs, seam charge etc..things that some customers get lazy at and rely on me to do these for them.

I think of it like fishing, you cast out your line then you slowly reel in the slack and in the end you end up with the catch of the day, or in this case a customer Makes for good business.

BTW I have a few customers that own the HQ16's and they still bring me their bed size quilts because they don't want to mess with the larger quilts...go figure!

[Mary Beth]

Linda,

It seems the "business owners" operating under the table are the ones that make it around here. I am paying personal property tax on the county level of about $350 per year. I pay a city license fee yearly. And of course state sales tax. Plus pay the tax man to figure my taxes every year at about $300/ year. This all adds up. Then I find out that most of the longarmers in my area look at me with a "deer in the headlight" look when I tell them this and say "I don't pay all those things, I didn't know we were suppose to." Almost all of them say this. How is it that I am the only one doing all of this? I wanted to be honest about my business practices and do everything by the book....I think that was the final straw for me, just knowing that I am spending all this money when those around me are not. Then I became resentful and I don't like feeling that way....sooo....I'm no longer in business. Just trying to finish up the last few customers, then I quilt for me and family. Whew!! :)Thank you for letting me share....that felt good

[SandraG]

Linda,

You may want to check into Cindy' Roth's articles on pricing. It really helped me. I charge at least $2.00 a bobbin. I do not do anything for less than .02 a si, and my min is $50. That includes the thread for top and bottom. In addition to all of the other things I also have to pay rent, utilities taxes and a multitude of other hidden cost. You can get her articles at Longarm University and it was published in UP last year.

Sandra

[MarieBrewer]

If I charged what you guys are getting, I would not be in business. Someone told me that we have about 30 LAers in this area. I charge 1.5 per sq inch and that includes the batting, ironing, thread and the whole nine yards. I will do a little wall hanging/table runner for $15. Perhaps I should tell people to do their own little projects but I'm afraid they'd go elsewhere for everything. The competition here is really something. I think I do good work but know I'd not have many customers if I started charging for ironing, batting, thread and all the other little things. I only charge 2-2.5 for custom. The really top notch LAers in the area get about 3-4cents per sq inch for custom. They are definitely better than I am.

[Primitive1]

I/ve heard some people complain that they are nickle and dimed to death so I just raised my prices to include the thread...it seems easier to them to see only one price and I recoop my thread expenses...everyone's happy...you have to do whatever works for your area..

Vicki

[Daisy2018]

After reading Mary Beth posting, I have a question for any and all: I am a new LA but very experienced in sewing, both home dec and bridal/prom/alterations. I have always taken in sewing to pay for my hobby, help with college expenses and emergencies. I have never put myself out as a business, never had the desire to be "professional fulltime". I have hopes I'll get good at this with practice, and have already had people ask when I would be taking in LA projects. I refer people to 3 people I know who do good work , but what would be the right thing to do in the future? I thought of pricing the same as the others, and taking a very limited number of quilts, I'm not even here only about half the time, but would like to hear about other LA thoughts on this. Do you have to be a business to do this kind of thing? I will never want to spend full time at this, but do look forward to having a complementing skill to my quilting and piecing and applique. I would like to recoup the cost of the machine over the course of about 4 years, only because I don't want to steal from the retirement fund. I thank you in advance for your ideas.

Pat

[mrsbishwit]

Most people that buy these machines (the larger ones) do buy with the intent of running a business. There are others that just want to do their own quilts and maybe some friends here and there but not as a regular business. If you intend to take in quilts for money you really should set it up as a business (depending on how many quilts for others, per month you plan on doing would dictate whether it is for personal use or if it is a business).

If you run it as a business and don't file the proper paper work with the state/feds than if you ever get caught running a business without a license, you could get into a lot of trouble/hefty fines etc..

If you are worried about the expense you could always purchase a less expensive machine or even a used machine that is a few years old that is less expensive. That won't put such a strain on your retirement fund.

Another thing to remember is that with the eccommy the way it is people are cutting back on sending their quilts out to be done.

[Quilting Heidi]

Pat,

Joann gives good advice. If you are going to accept payment for work you do then you should have a legal business. I don't know of too many states that set a minimum on how much profit you can make. Of course as Mary Beth says that includes additional fees and those can add up depending on your state. I only had to pay a one time license fee and just have to collect and report state taxes on sales and purchases. Then I have insurance and tax return. Hubby does my tax return so it isn't a big deal...at least not for me :P:P. I would suggest that you contact your local government office to find out what you can and can't do. You will always have some that don't do things legally but I can guarantee you if it were me I'd get caught!

[SandraC]

I think there a many good reasons to have insurance. For instance, my insurance guy told me that once you use the LA for gain, if there were a fire in my house, the machine wouldn't be covered unless I had business insurance. I'm sure the same would go for a customer who was here and fell in my house, etc.

Plus, being a busines, you have access to wholesale price on batting, thread, etc and can claim a percentage of your house as a business expense.

[Bonnie]

Yes, the monthly paperwork is a true hassle, but like Heidi said if it were me and I didn't do it correctly, I would be IN SO MUCH trouble it wouldn't even be funny.

Well, with that said, I now only quilt for myself, I consider myself retired, but there was a time I did quilt for others, and yes, there were city license's, and being in Nevada at that time, I had to have both Reno, and Sparks, and if I did take quilts from the other counties, I had to file county taxes from those counties as well, there were bonding licenses, insurance of the studio as well as the machines...plus the utilities, and rent of the studio...and the list goes on and on and on... There were times I wondered why I was doing it...there were many many months that there were more month than quilts...and it was scary.

I never bought in quanity except for threads so that was the only wholesale advantage I took in those days....and the batting houses weren't as easy to work with as they are now....in those days you had to almost buy in truck loads and not in single rolls as you can now.

I now have a hobby permit...which doesn't entail me any business rights at all...it just covers me if my neighbors complain about UPS or Fedex coming to my house more than once a week......silly I know, but its a township thing, which many don't even have to worry about. Also it states that I will keep my hobby in a 500 square foot area of my home....like anyone comes to check, and if they did I would be in totally in trouble...I pretty much have the the whole basement for my sandbox.

Do the correct paperwork each month and it will be a happy adventure, don't and its not worth the fines and more paperwork in the end. And with the cost of things going up...you girls that need to increase your prices...bless you and keep up the great work...this business/hobby is such a grand thing...and I'm still glad that I love it as much now as I did 12 years ago.

[ramona-quilter]

I'm with you Linda. I just raised my prices for the first time in 2 years after re-assessing what works and jettisoning what does not work. I am finally OK with the idea that I charge more than others. Maybe that will keep Cousin All Thumbs from sending me her first ever quilt. LOL. I want to quilt, not repair.

As far as a quilting business, it is simple here in California. I can't speak for other states. If you get paid to perform a service or sell things, you are in business, and you need to get a business license (free) just so you can get a TAX ID. That entitles you to purchase wholesale and tax-free only those items listed on you business license application. I listed batting and thread so I can't buy snow tires wholesale. LOL.

The business license/Tax-ID is just a way to identify yourself when you pay state sales tax. Here quilting is called fabrication labor so it is a taxable. I collect the tax from my customers for the quilting, batting and thread. I put that tax money in a special account and mail it to the state once a year (in July). Additionally, all that money I have been making (chuckling to myself) is taxable income that must be declared on my income tax forms every year. I made a whopping $8,000 last year and it was added to my real job's income and that is what I paid income taxes on. I don't do this out of the goodness of my heart. I do it because it is the law. I have no control over the business practices of others.

[ThreadWaggle]

Originally posted by Bonnie

I now have a hobby permit...which doesn't entail me any business rights at all...it just covers me if my neighbors complain about UPS or Fedex coming to my house more than once a week......silly I know, but its a township thing, which many don't even have to worry about. Also it states that I will keep my hobby in a 500 square foot area of my home....like anyone comes to check, and if they did I would be in totally in trouble...I pretty much have the the whole basement for my sandbox.

I just learned something new... I had never heard of a hobby permit. I must have really nice neighbors because even before I started the business UPS/FedEx trucks were here almost daily. I do 90% of my shopping online and also get a couple of Rx this way so I know my drivers for both companies pretty well. The only difference now is occasionally I get half a UPS truck of stuff at once. I almost died when the truck driver suggested that I move my mini van out of the garage because everything left in the truck was mine.... 4 rolls of batting takes up lots of room but there were almost 30 boxes in that delivery. YIKES!

[Bonnie]

Angela...what a surprise to me as well....I called up to see what it would cost for me to set up the business again and was asked is this a profit or nonprofit busines.... Well really not set back up so would have say nonprofit....no customers not profit right?

Okay that said, next question was...will you be getting any customers... Not at this time and may never get any customers...just wanting to know what it would entail said thoughts until I make my mind up.... So he told me to come in and he would set me up with a ZONING PERMIT that authorizes the home occupation for the use of quilting.... In short a Hobby Permit....

When I asked why for something so silly at a Hobby Permit it was explained to me that I live in a SNOOTY neighborhood (about 90 percent live in the city and commute on weekends only) and if the neighbors saw the UPS or Fedex trucks coming up to the house more often than they thought necessary for our neighborhood he would have this permit on file to tell them to shove off and to leave me alone as the Town of Gallatin, knows exacly what's going on and all is okay. The silly thing cost me a whole $5.00..... But it is not a business license...and to do that I would need to carry it much further, to state and federal levels.... and now since then I have decided I may never open up for customers again...so I'm legal and all is cool.

[ffq-lar]

I have a tax ID number and collect sales tax on everything--materials and labor. My business is considered manufacturing, not a service--which works better at tax time.

I also work a day job and add my quilting income to that for tax purposes.

I my state, you must show a profit (taxable) within four years or you are considered a "hobby" and will be hit with hefty fines and pay the tax guy even more!

This (should) weed out the people using a business license to make wholesale purchases when they have no intention to re-sell.

My gripe are the under-the-table cheaters who can't or won't make it legal. I can't control what they do and eventually they will get caught or get legal. Or quit!!

But, as my DH says, don't cheat the tax man or he will take your birthday away!

[Bonnie]

Originally posted by ffq-lar

But, as my DH says, don't cheat the tax man or he will take your birthday away!

DH IS so right....I've seen this happen....its not pretty.

[juliagraves]

Pat wrote: ... I thought of pricing the same as the others...

That's a good plan if you are as good as the others, but if not, I would then offer a discount to people while you are starting up your business. This way, you're not "raising your rates" later, and they feel good that they got a discount.

I give referral discounts to both the person referred and the person that refers them, with a time limit (2 months) - so if my current customer refers someone who brings me a quilt within 2 months, the new customer gets a discount ($10 or $20, or you could do a percentage), and the current customer gets a discount on their next quilt. This brings me a new customer and my current customer back. I tell them they can copy my discount coupon as many times as they want and refer as many people as they want. If folks don't actually use it in the 2 month period, at least I got my name out there.

Good luck to you!

Julia

[aktink]

Bonnie,

I just learned something, after reading your post I checked with our local city office and they said I may need to put in paperwork to get rezoned. I hadn't even thought of that. I bought my LA a few months ago. Right now I am just doing my own and my sisters to get practice and then once the last of the kids are in school I figured I would start doing business (gives me another year and a half to practice). Anyway, the lady that I talked to said that I may be able to petition 100 of my neighbors to see if anyone has a problem with me starting a business in a residential area. I don't know if I actually have 100 neighbors, I live in a very small community. Oh well, at least now I know what I may be facing in a year when I start getting ready. There is one other LA in town but she lives outside of city limits, I wonder if my hubby would be willing to move?

Thanks for the food for thought.

Sheryl

[qwltnldy]

Wow, am I glad I ran across this thread. Here in the People's Republic of California our illustrious Governator has just managed to raise our SALES tax by 1%. Now, that may not sound like much, but when you are a "manufacturer" like we are, on top of the 7.75%, and the NEW city taxes that my stupid city voted in (we're up to 8.25% now. OK, add in the new 1% and I have to charge my customers 9.25% in taxes alone. This is INSANE. I am so sorely tempted to go "under the table" that it isn't funny. I have had 2 customers make appointments with me in the last month, only to cancel. I called them both back and one of them wouldn't tell me why she "made other arrangements for her quilt" and the other one flat out told me she found someone cheaper. I'm starting to wonder what to do now...I know some people (not necessarily quilters) give a "discount for cash"....wonder what that means.

If I don't turn a profit soon, I'm also going to be considered a hobby. But if people are leaving me for "cheap" then how can I get enough customers to be really profitable? There are literally hundreds of longarmers in Southern California and I'm still paying for my machine. I'm wondering if this was a serious mistake. I'm also wondering if I should even be saying this online.

[ThreadWaggle]

Robin,

Ouch your taxes are high. Just wondering, if your customer is not in CA do they have to pay CA taxes. If not, maybe it would be to your advantage to do national advertising in some form. Like in the classified of some of the quilt magazines or maybe try ebay.

Most of my customers are not in NC and therefore do not pay NC sales tax. They do have shipping cost, but don't seem to mind paying them.

As far as a cash discount if I ever start taking Credit Cards I will give a cash discount equal to the percentage that the merchant services company charges me for CC usage.

I hope things start looking up for you soon!

[DoryJM]

I've had my longarm now for almost a year and have been taking customer quilts for about 6 months. I'm seriously looking at my pricing structure, but won't change anything until I've been in business for a year. I'v just gotten Cindy Roth's pricing articles to review, which I'm hoping will help.

Currently, I have way too many pricing categories (from .012 for light pantos to .03 for custom). I have yet to charge anyone anything except the .012, and that's just gone up from the .01. I don't charge for bobbins, but I do have a $5 thread fee that covers the first two colors and $5 for any additional (I rarely charge this); I also charge a $25 set up fee that includes squaring, pressing, picking up and dropping off (I prefer to do this rather than have folks drive out to my house only to get lost or stuck in the snow). My minimum quilting fee is $50, but I still charge the $25 set-up on top of that.

I've just acquired a stopwatch-type timer and timed myself on my last quilt; I made almost $20 an hour...almost. And I did have a customer who said she was going to have some smaller quilts that she didn't want to pay alot for, so instead of offering to quilt for less, I explained my pricing structure and told her that if she went for a simple meander or panto that would keep her costs down. She's a wonderful customer (and person), so it was really hard for me not to offer to do more for less.

Several women in my guild haven't tried me yet, preferring to take their quilts out of town. I'm hoping to eventually win their confidence and maybe get them as customers, but I do know that one lady not too far away charges $75 for any size quilts and includes the batting. She's computerized, so I stress that my quilting is more personal.

[ramona-quilter]

I looked at Cindy Roth's pricing articles in the magazines and noted the amount that she thinks is a good price. I tried to refresh my memory with her pricing strategy online at Longarm University but I see that she now has both the Pricing Articles and the Customer Worksheet in booklet form and they cost $15 each. Ahem, that is one way to increase your profit margin without standing at your machine.

Actually, I was thinking when I read the articles the first time, that the info was all fine and good....but Cindy Roth doesn't live here.

I do think that professionals need to examine their pricing annually just to be sure that you aren't working for peanuts. Fabric and batting prices go up, so why shouldn't the quilting service price go up. If you are paying more for your supplies, thread and batting, then adjusting prices is just prudent.

[Robin]

I need to re-think my price sheet. For one thing the LQS owner nearby whom I said I would not undercut, recently raised her prices and didn't tell me. I found out through another quilter. I'm thinking I am going to leave my prices where they are until I'm in it for a year. The LQS owner has a lot of years of experience. I have charges for squaring and pressing on my price list but I rarely charge for it. I kind of think I will take the squaring charge off, as I would rather use a squared edge that I have squared compared to what I sometimes get from customers. I did add a minimum $45.00 charge for quilting to my price list and I think that is a good idea. Just my 2 cents.