Claremont Designs


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Pricing an Edison Lamp on a Cost Plus Basis

I built my first Edison Lamp nearly 2 years ago.  I’m not sure yet if I’ve perfected how to price them.  In fact I’ve made some slight changes in pricing based on writing this post.  There are numerous approaches that I could take to determining the right price for a lamp…  Price based on a cost plus model, based on what the market dictates, based on a reaction to competition, or any number of other approaches.  So far I’ve priced based primarily on a cost plus basis.  I know that what I’m doing still isn’t optimal, but I’m working on it.

To put pricing in perspective, it’s important to consider that I’m still building Edison lamps for the enjoyment of the work; it’s still fun for me.  Although the “fun factor” shouldn’t enter into pricing decisions, it’s impossible not to happen when you are operating at a small scale.  In the cost plus model, the fun factor means that my labor is free.  If this ever turns into a job and not fun, my hourly cost would make the lamps only available to the oft-spoken of 1%.  So for now, we can avoid that aspect of the pricing equation…

So if labor is free in my cost plus model, from there I need to factor in all of the costs associated with building a lamp.  The materials costs can add up quickly.  I have the lumber, glue, light sockets, dimmer switch, wiring, wiring nuts, lamp cord, and the finish itself.  In all cases these materials are purchased in bulk – bulk for convenience reasons rather than the volume discounts that I would love to get.  Unfortunately, I don’t order in large enough quantities to get a volume discount.   

The costs that are known and don’t tend to vary much are the dimmer switch, the sockets, and the lamp cord.  I’ve ordered the sockets and switch from the same provider for the last 12+ months.  My “standard” order is 20 light sockets and 5 dimmer switches.  Home Depot has become my de facto provider of lamp cords.  The lamp cord is one area where I should be able to find a lower cost provider.  While there is only 1 switch and 1 cord per lamp, obviously the number of sockets varies directly with the number of bulbs in the lamp.  The table below shows standard costs that I incur for a 1-, 3-, and 5-bulb lamp build.

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The costs associated with the glue, the finish and the wiring supplies is tiny.  It’s so small that I’m not even sure what it is.  There might be ~$1 in cost per light bulb in the lamp, but even that is a guess.  That’s not going to make or break the lamp cost, so I choose to ignore it.

Ultimately, the lumber is the hardest raw material cost to factor in – prices differ significantly based on species, supplier and quality.  Additionally, there is a significant scrap material factor.  Lumber is sold by the board foot and priced according to the quality and the species.  I’ve used some lumber that cost as little as $4 per board foot, and some lamps might cost as much as $40 per board foot.  Obviously, I try to avoid building the $40 per board foot versions, but sometimes that’s what the customer requires.  I price the standard versions of my lamps based on a $9 per board foot average cost.  Additionally, I need to factor in at least a 35% scrap factor – this basically means that if the lamp requires 2 feet of material, I need to expect to use 2.70 feet of material.  20% scrap is an industry standard, but 35% seems to be more realistic.  The table below shows how this prices out for a standard lamp (walnut or cherry).

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I’ve now basically figured out my Cost of Goods Sold (COGS) for 3 types of lamps.  At the low end, a single bulb lamp is running me $24.80 and a 5 bulb lamp is coming in at $59.51.  Compared to my selling prices, I have pretty decent gross margin (~69%) on the lamps themselves.  I can’t think of anyone in the manufacturing world that wouldn’t love to have margins like that. 

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My challenge of course is that I don’t produce (or sell) lamps in quantities that even remotely approach those of a full time shop.  This volume of output factor really hits my profitability when it comes to considering my allocated costs.  I have shop rent, insurance, utilities, equipment and equipment maintenance.  The first 2 are basically fixed costs for me; fixed in the sense that I know what they are each month and that they don’t vary based on volume output.  Utilities should vary with output, but it hasn’t significantly for me.

There are a lot of pieces of equipment required to build a lamp.  The list (in order of use) is: miter saw, jointer, table saw, band saw, planer, dovetail jig, router, router tale, clamps, drill press, and sander.  I would ballpark the cost of all of that equipment combined at ~$6,000 (that’s probably underestimating it).  From an accounting perspective, most of my equipment is old enough that it is now fully depreciated and doesn’t really have a cost for me.  Thankfully maintenance is pretty limited as well – small enough that I don’t need to factor it into my costs.  Basically, this means that I’m completely ignoring my equipment related costs in the pricing decision.  This isn’t the right way to think about it, but this goes back to the “fun factor” which allows me to make illogical business decisions.  The fun factor would almost prefer to see equipment fail, so that I could buy all new shiny shop tools.  Illogical – yes, but this is the difference between a hobby business and a true for profit enterprise.

So if I isolate just the shop rent, insurance, and utilities, I incur a monthly charge of ~$585.  The question then becomes what volume of lamps I would need to sell to cover these allocated charges.  There are a number of ways to get to the $585 figure, but the most direct path would require selling 7 lamps (in one month) – 3 single bulb lamps, and 2 each of the 3- and 5-bulb varieties.  7 lamps per month would be 84 lamps in a year – last year I sold 25.  So the question is if the $585 figure is appropriate…

$585 pays for a month in my shop.  On a perfect month, I might get to make 9 trips to the shop (this is a fun side way to make money, not my career).  So one logical approach might be to take a normal work month of ~20 days and say that I’m able to effectively use 45% (9 divided by 20) of the shop workdays.  Under this math, I would only need to sell enough lamps to cover $263.  I can cover that with just 3 lamps a month (1 of each variety).  Another way to view it is to view my effective usage of the shop at 30% (9 divided by 30) of the average month.  Under this scenario, I’d need to cover $175 each month.  There are numerous ways I can get to that number, but as few as 2 lamps would need to be sold to cover costs.

The only other costs come from my channel partner.  I’ve chosen Etsy for all of my sales needs (at this point).  The fees are fairly reasonable.  In total they charge about 7% of the net sale amount (not including shipping).  These fees are split between the listing, transaction cost, and credit card processing costs.  Ideally that cost should be closer to 5% – 6%, but given the small volume I do with Etsy, I can’t complain.

So where does this leave me in this cost plus world?  Under my current pricing model, I need to sell about 24-36 lamps a year (depending on the mix) to cover 30% – 50% of my shop costs.  That’s not bad, but it’s not where a full functioning business should be operating.  Maybe I have a cost issue, maybe it’s price, maybe it’s awareness of my offering…  There are any number of factors that can be influencing my ability to turn a profit.  I’ll run some tests throughout 2014 to see what kind of impact I can have on my little hobby business.  I’ll have to do an update post later in the year to show what the results are.


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Setting the Depth of the Top Reveal on an Edison Lamp

Selecting the depth of the reveal is partly for aesthetic reasons and also for a simpler build out process.  I hinted at these reasons in a prior post about updating the Edison lamp prototype.  Probably the first 5 versions of the lamps I built were similar to the prototype.  Since then, I’ve set the Edison lamp top about an 1/8th of an inch lower.  It’s a minor change but it has significantly reduced the number of times that I’ve had to rebuild a lamp – frequently the corner of one of the pins would chip out when routing the channel for the top.

By lowering the top a fraction of an inch, I’m able to route the front and back of the lamp without using a plunge cut.  On the sides the plunge cut is still required.  Basically what I’m doing is dropping the lamp side down on top of the router bit.  The photos below show the result of the plunge cuts.  The first photo shows the result of two plunge cuts and a little clearing between the cuts.  Technically a single cut on each side would be more than enough, but I’ve taken the belt and suspenders approach.  To make sure that I don’t extend my cut too far, I clamp a stop block to the router table fence.

From there I’ve flipped the side over and drawn lines on the top of the lamp sides.  The lines are shown in the second picture below.  I align the marks with router table fence where the cuts start and stop.  In the picture the left side of the piece is complete.  From here I repeated this process of plunge cuts and marking the sides on the right side of the piece.  Finally I remove the stop blocks, plunge the piece over the existing cuts and then route the piece between the plunge cuts on each side.

This whole process takes maybe 15 minutes to complete properly, but any missteps can result in having to start the entire build over again.  Thankfully by dropping the top a fraction of an inch, the number of rebuilds has dropped to zero.  Final picture below shows the end result – the latest single bulb koa Edison lamp to leave the shop.

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Updating the Edison Lamp Prototype

It’s been a few weeks since I’ve updated this site with some Edison lamp photos.  It seems that the walnut lamps are the most popular.  In 2013, I’ve sold 21 lamps and 15 of those have been in walnut.  While I don’t list more walnut lamps than cherry on Etsy, it appears that their search algorithm favors that iteration of the lamp.  Perhaps that is the reason for the popularity of the walnut version.  Of course it’s possible that people just prefer the walnut look.

The original prototype I built was walnut.  Recently, I took it into the shop to update some of the hardware on the lamp.  I updated the switch to a dimmer switch and I swapped out the sockets to a new porcelain version.  The prototype also featured a few design elements that I ultimately changed.  The most obvious change is the shift from 4 tails (in the prototype) to 3 tails (on the current version).  I’ve also recessed the lamp box top a little lower on the current version.  Whereas the shift to fewer tails was purely for aesthetics (I think it looks nicer), the change in the lamp top makes the build process a little easier.

The first set of photos below, show the original prototype (which was just sold).  Below the 2 photos of the prototypes are photos of the new design.  The next lamp was built out of lacewood (and can be purchased from my etsy store if you are interested). The final lamp is built from walnut and was highlighted in an earlier post.

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New Lumber New Edison Lamp

I’ve been working off of the new stack of lumber for a couple of months now. It’s good lumber and I’m happy with the quality of the walnut, but it is definitely different than the last batch of walnut. Not better. Not worse. Just different.

I’ve recently started the 20th lamp of the year (technically it is the 21st since USPS lost one and I had to rebuild it). For those that are interested, this is the 14th out of walnut and the 5th that is of the 3 bulb variety (3 of those 5 have been in walnut). I love the look of walnut and it is my wood of choice, but I’m still surprised that I don’t sell more cherry and maple lamps at the Etsy storefront. I love them all, but sitting on my walnut table I have always found the contrasting maple to be the most striking look.

To “celebrate” the 20th lamp of the year, I’ve gone back to my old format of highlighting the build process of the lamp. To build a 3 bulb lamp I need to shoot for a piece that is 4/4 (this is woodworker talk for a board that is an inch thick; spoken “four quarter”) and at least 4 1/4 inches wide by about 47 inches long. In my last post I wrote about starting the build of leg blanks for a new custom piece. In selecting wood for that piece, I ended up with one extra board (shown in the first picture below). I didn’t end up using that board in that piece, because it had a pretty nasty little bow to it. If you look closely, you’ll see that it isn’t flat on the surface of my table saw.

Fortunately correcting that type of issue is pretty easy for this style build. I’m not going to go into every detail of how I correct the issue because there are numerous posts on this site that talk about the build process for an Edison lamp. Basically it involves cutting the board at a strategic location and then working the jointer, band saw and planer until I get the four boards shown in the second picture. One of the 4 boards there becomes scrap (or turned into coasters), but the rest are destined for dimensioning, time in the dovetail jig and then a pass through the router table. This results in the 5 boards shown in the final picture. From here it is a pretty straightforward build process. The next post related to this build will be for the final “glamour” shots.
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3 New Lamps Have Left DC

I’m still working to get this blog in sync with actual activity happening in the shop, and it is now close. The photos in this post show the last 3 lamps that have been shipped off to customers. Nothing too unique about these builds, other than one lamp was shipped off to Canada (little pricey and a lot of paperwork) and one of the walnut lamps was done in just boiled linseed oil (wanted a slightly different finish than normal). Currently in the shop are 2 more lamps (one in walnut and one I’m trying out of lacewood) and a bunch of walnut strips that I’m turning into cutting boards.

I’m guessing now that the next post won’t be that meaningful either. Hopefully by the end of October I’m back with posts that highlight the build process as much as the finished goods.

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Doubling Down on Edison Lamps

This update is coming from the Acela en route to NYC.  It’s been ages since I last posted a meaningful update to the blog, and trips like this are primarily to blame.  I targeted this update a few weeks back, but it’s not until today that I can make an entry.

The orders from Etsy still come in.  And when I’m lucky they come in at the same time, so I can be as efficient as possible with shop time.  In this case, I had two orders for 3 bulb lamps.  I thought that the build was going great.  I was so proud of my progress that I took the first photo below to show the nice looking grooves for the top panel in each piece.  From there I worked to get each lamp glued up.  What I didn’t mention, until now, is the process of cutting the dovetails.  It appears that I grabbed the wrong piece for my jig.  I’m guessing I grabbed a 9 degree instead of an 11 degree piece.  The result is that I have 2 lamp boxes that can’t be used.

So it was off to round 2 of the build.  Trust me that I was considerably more careful this time around.  Everything turned out as planned and I had 2 unfinished lamps; one in cherry and one in walnut.

In the spirit of doing everything a second time, I also decided to revisit the first lamp I ever built.  It was minor, but I must have been too aggressive with my sanding of the top front edge of the lamp.  The result was a little “dip” on the top.  Well that lamp was back in the shop to correct that mistake.  While I was tackling that issue, I decided it was time to upgrade the lamp to a full dimmer switch and some higher quality light sockets.  In the second picture below, the original prototype lamp is sitting on top of the new unfinished lamps.

So doubling down on Edison lamps…  lots of multiples this time (2 lamps, built them twice due to my error, and bringing the original prototype into the shop for a tune up).  Ultimately, the 2 unfinished lamps will be off to NYC and Canada; the improved prototype should be destined for Etsy.

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4 New Edison Lamps Have Landed at Etsy

I don’t usually do posts that are straight up advertisements that say “please buy me” but I figured adding one of that type isn’t that big of a deal… I’ve enjoyed building the dovetailed boxes that are used in the Edison Lamps that I make, but I wanted to start making some that are “ready to ship” rather than “made to order”.

I just finished an additional 4 lamps that have been posted to Etsy. 2 are made from curly maple. The other 2 are from walnut. Both of the walnut lamps are a new design. These are the first that have featured just 2 light bulbs. They are slightly different widths as I’m trying to figure out the best spacing for a 2 bulb design. I like both of these, but I’m not positive I’ve nailed the ideal proportions yet.

The other reason I wanted to make these “ready to ship” is that it gives me a chance to use lumber I like, but might not appeal to people generally. The best example of this is the wider 2 bulb walnut lamp. The lamp base has a significant change in the color of the walnut – shifting from a dark brown to a much lighter brown (almost yellow) color at the top. I could never sell that to a customer without them seeing it first. I love the look, but I know that it’s not for everyone.

Bunch of pictures below. You can find the lamps listed here.

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