Commission, flat labor or percentage

[Eric Gourieux]

I received a call from a wood distributor in town who wants me to turn some bottle stoppers for him to sell on commission at a local upscale wine shop. The distributor will supply the wood and hardware for the stoppers. I'll just supply the labor. He apparently imports rosewood burl to distribute nationwide and has some select eye-burl that he wants me to use. I've never met the guy, but I plan on meeting him this week. Do I charge him a percentage of the asking price, a flat labor charge per item, or what? Should I get my $ up front or after the sale? Any assistance would be appreciated.

[Tom Hamilton]

Hi Eric: I'll push this off the dock: first, always, get your money up front unless you're on an incentive/commission/value-added compensation plan. Whether you get a percentage or flat rate is just a calculation. '

How much is your labor/skill/shop time/equipment depreciation worth? In other words, if you need $3.00 a unit to make a profit then whether you tell him 30% of retail or $3.00 a unit doesn't really matter. Figure your costs, visit with the wood distributor and see where the conversation ends up. If he/she is looking for a 50 cent bottle stopper and you need $3 it will become apparent very quickly.

The rest of the business advisers will be along shortly, I suspect.

All the best, Tom, from Muncie, but now in Douglasville, GA

[David E Keller]

I'd go up front and flat rate... Depending on the finish and the style of the turning, you can make several an hour, so it sounds like a nice little money maker.

[Robert McGowen]

Sounds like a flat rate job. It doesn't matter to you if you are turning a $2 piece of wood or a $50 piece of wood if he is supplying the materials. What he sells them for has no bearing on your end of the job. I would not expect payment before i turned them, but i would expect to be paid when they were picked up from me. You do, after all, have all of his materials and he has nothing from you. I don't really see any other options that make sense, but YMMV.

[Marty Eargle]

I would say certainly get the money up front. There is no guarantee that they will sell after displayed in the shop. Especially since you've never conducted business with this guy before, slow sales may lead him to think you haven't produced the kind of work people want...even though many other factors can determine sales.

With something like a bottle stopper, you will have to determine what your minimum pay per hour would be (and how fast you can produce), and then compare that with what the maximum percentage he would agree on. Which ever number seems fair and reasonable is the number that I'd go with.

[Gary Max]

I agree with everyone----get paid up front. I would get a flat Piece rate. The one thing I would add is start small, some floks only think they can sell.

[Bernie Weishapl]

I have did a couple of these transactions. I figure how many I can make per hour and then figure what I need to make. I talk it over with them and if agreed to I tell them I expect payment when delivered for my part. I will not wait till they sell for my payment because it may be months before they all sell. I had one small craft store that wanted to pay me as they sold and I just told them I wasn't interested.

[Jim Burr]

We have a few high end wine shops in town. I sell to one of them where you can make your own wine too...and they charge stupid crazy prices for them...$40-50 a piece. They get 20% and we go through 8-12 a month but I provide all the materials.

[Dan Hintz]

Another vote for a flat rate/per piece price. When people say "up front", I believe they mean when he comes to pick them up, not as he is handing over the material... unless you've been asked to do 100 of them and it will take you all week ;)