In last month's article (see D&WC, May 2000), we worked through the Manufacturers' Pricing Technique, a formula that can be used by virtually anyone to determine exactly what they should charge to earn the income they desire. We covered three important considerations in determining what a workroom should charge by the hour:
• overhead and expenses,
• your salary/wage,
Now that we've determined what we need to charge by the hour, we must next analyze what we can accomplish in an hour. We must perform a time study.
A time study is just what it sounds like. We are going to actually study our production to determine how long it takes us to make every treatment we offer. In a factory, performing a time study can be a very simple task because each workstation is doing the exact same thing, hour after hour. For drapery workrooms, it is much more difficult. Rather than creating the same widget hour by hour, workrooms are constantly switching from one treatment style to another. But with a little organization, patience and perseverance time studies can be done without too much trouble.
I've found two techniques that make this process much faster and easier. The first one is using a stopwatch. Purchase the style that can be worn around your neck on a cord. (I recently purchased a very nice digital model at Wal-Mart for only $7). Keeping the stop watch literally at arm's length allows you to conveniently keep accurate timings without having to run back to a desk to activate a timer. Just click a button on the stopwatch each time you start and stop working on each treatment. If interrupted by the phone, kids, etc., you can easily stop the watch. With another click on the button, it will continue timing where it left off. When the treatment is completed, pushing another button will clear the stopwatch.
The second technique uses a time study job ticket. I attach it to one of the cuts for the treatment I'm making so it is always readily available. This keeps me from running around the room wasting time looking for it. To help save time, I print as much information on the job ticket as possible and then just fill in the blanks.
For example, I start with the style, size, date and the name of the person being timed (if more than one person works in the workroom.) I also list every fabrication step I can think of and place a line beside it to fill in the time. I include planning/designing patterns, cutting, serging, tabling, hemming, pleating, tacking, folding, pressing, pinning, stapling. Having all of these categories listed reminds me to time every step.
If you prefer, you can simply record the total time it takes to make the entire treatment without listing every single step. In my workroom, I had to time each step individually because we could have as many as 12 to 14 seamstresses sewing. Each person performed a different task rather than creating the treatment from start to finish. In other words, one person cut all day, another serged all day, etc.
I also preferred to list each step because I could monitor how quickly each person performed each step. By timing different people at the same task, I could determine who was the fastest. I would then use that person on that task most of the time. (I also considered which task they liked to do to make sure they enjoyed what they were doing. More often than not, the tasks they personally enjoyed the most were also the tasks they performed the fastest. So, rarely were they assigned to tasks they didn't enjoy.)
TIMING TAKES TIME
If you have multiple employees, performing a time study can help in a multitude of ways, which time and space won't allow me to explain here. If interested in knowing how you can use this valuable information managerially, purchase a good business book at a bookstore. You'll be amazed how much decision-making information you can glean from an extensive time study.
Which brings me to another point: How long must a time study be done for it to be considered extensive and, more importantly, to be considered accurate? If you have a large workroom with several employees, your workroom probably will make most all of the treatments your company offers in a period of two weeks to two months. If you are all by yourself, or have only one or two employees, it might take you six months to a year before you create everything you offer.
And here's another stipulation: Don't time yourself on just one of each treatment you offer. That will not give you accurate results. You must time several of the same treatments, then determine the average. We all know there are fabrics that can be hard to work with that can greatly affect your production time. Averaging several timings will provide the best results. How many is enough? I personally feel it should be between six and 10.
Wow! That's a lot of sewing and a lot of timing! Yes, time studies can be a pain in the neck, but they can be worth every second of the effort to get a really detailed look at your business. Actually, doing the time study will slow down your production somewhat, but you will adjust very quickly as it becomes a habit.
I know of one workroom in California that performs a perpetual time study. Yes, that means every minute of every day is accounted for by all of the employees. At the end of each week, the owner tallies and analyzes the information, keeping a managerial finger on the very pulse of the business. What a great way to keep a check on your most costly expense: labor.
SETTING THE MINIMUM
Now that we know how much we need to charge by the hour and how long it takes to make each treatment, we simply plug both answers into our original formula: hourly charge x time = charge.
This will determine the price for each individual treatment and establish your set price list. But, keep in mind that this is the minimum you need to charge to meet your established goal. You may charge more for any given treatment; the decision, of course, is up to you personally. However, be careful you don't charge so much more than others in your area that you price yourself right out of business.
If you have a particular quality or service you can offer that the others don't, you have something extra that you are providing. (A lot of handwork or special interlining, for example.) In that case, you very well may be successful charging more than other workrooms in your area. You will simply need to promote your business by selling these features, rather than selling price alone. You may charge whatever the market will bear.
REPEAT AS NECESSARY
What do I do if I'm just starting out and do not have a year's worth of expenses to count up or haven't had the time to do a time study yet? I have several suggestions for you. The first is to guess. Estimate as closely as possible what you project your expenses will be for a year and how long it takes you to create each treatment. For help, try to find someone else who has a workroom similar to yours and ask him or her to share with you what their expenses have been. (A list of overhead and expenses to keep in mind appeared in last month's article.)
You may wonder how you get to meet someone who has a business similar to yours. Trade shows such as the Workroom Educational Conference this August are the perfect opportunity. The instructors and attendees are very willing to share and help each other. Many new, long-lasting friendships are formed there.
Another option is to temporarily use the price list of another company until you have been in business long enough to accumulate your own information. You could collect price lists of your local competitors or from industry friends. Also, Draperies & Window Coverings published a pricing survey a few years ago (seeD&WC, April 1995, page 50). More than 200 workrooms from across the country responded to the survey.
Although the results are five years old, they still would be very accurate. Simply add whatever percentage you feel would be appropriate for economic changes. The survey shows the range of the responses and the average. You could choose to be near the average for your temporary pricing.
When you have been in business long enough to determine your hourly charge and to perform a time study, you can revise your temporary price list with the exact pricing you desire. And then, each year review your price list again to determine if it still meets your goals. Regularly repeat the entire price-setting process to update your price list.
Next month we'll conclude this series by discussing how to determine a price for a one-of-a-kind, never-done-before treatment and what to do if you discover you're losing money on certain treatments.
Cheryl Strickland is owner of Professional Drapery School, Swannanoa, NC, and is an internationally acclaimed speaker with 20 years experience in the window coverings industry. She is the publisher and editor of Sew WHAT?, an international monthly newsletter for professional drapery workrooms. Strickland also is the author of A Practical Guide to Soft Window Coverings and the Designer's Sketch Pad, which are available through Draperies & Window Coverings magazine.