Bait Costs and Pricing

[BassDetective]

I have been going through a very vigorous exercise on what it really costs to make baits and what prices I should set based upon how much I want to make.  I have created a spreadsheet with a number of variables.  I am willing to share the Google Doc Worksheet for all to use and add to as they see fit. 

Here is a link:  http://dl.dropbox.com/u/51529844/Cost%20Analysis%20Baits%20.xls

I saved the file as an excel file so you can open it in MS Excel or import it to Google Docs or Open Office.

Feel free to use it, share it, improve it.

[ghostbaits]

Great start!!!!!

I would also add your 10% excise tax to that as it is a fixed cost. I try to add in the cost of electricity as well but have a seperate meter for my shop so it makes that far easier than for most.

Thanks for sharing this!!!!!!

Jim

[BassDetective]

There is no excise tax in California for re-sellers - the tax is only collected at the retail level and at the retail level the customer pays the tax.  I will add it because it does apply to many situations - good call.  I assume it is a function of the selling price?

[ghostbaits]

Excise tax is federal. All pay it.

From the IRS website:

Sport Fishing Equipment
A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. This includes any parts or accessories sold on or in connection with the sale of those articles.

Pay this tax with Form 720. No tax deposits are required.

Sport fishing equipment includes all the following items.

Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips.

Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)).

The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies.

Fishing tip-ups and tilts.

Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers.

Check the IRS before they check you! http://www.irs.gov/publications/p510/ch05.html#en_US_publink1000117228

Jim

[bribass]

looks good but what is the re-seller price?? -- is it the price you sell them to a bait shop for?? If so that is WAY too much of a cut from the "retail price" 

[Cormorant Lures]

I know we all have to pay it but I would just like to say... EXCISE TAX for Sport Fishing Equipment IS A JOKE!!!

JUST SAYIN' 

[ghostbaits]

I know we all have to pay it but I would just like to say... EXCISE TAX for Sport Fishing Equipment IS A JOKE!!!

JUST SAYIN' 

Most taxes are!!!!!!!!!

Jim

[Cormorant Lures]

Look at the group of businesses we're surrounded by in the excise tax catergory and tell me how we belong in that group?!? Federal government wants a piece of everything!!!  

Sorry... Just wanted to vent my frustration a little... Now back to the topic at hand...

[ghostbaits]

Look at the group of businesses we're surrounded by in the excise tax catergory and tell me how we belong in that group?!? Federal government wants a piece of everything!!! 

I would not have that much of an issue with it if the money was used to improve the fishing sport. We all know that it doesn't end up there though!

Jim

[superharmonix]

I would not have that much of an issue with it if the money was used to improve the fishing sport. We all know that it doesn't end up there though!

Jim

+1 on that Jim

I will be the positive voice here though and I'll say the same thing I said to my wife the first year she had to pay tax on her business income:

When you file, thank God you made enough to have to pay taxes.  Paying 10% is much better than making zero. 

[Frank]

At one time I actually spoke to the woman that was in charge of the department that collects this ta. Face to face not on the phone and she said it was one of the only taes that had not been reasigned to anything nut the enhansment of fisheries and habitat. A good tax? That sounds funny. Frank

[BassDetective]

Wow.  I had no idea about this excise tax.  Really?  So all these little mom and pop and bait manufacturers are paying this?  I am shocked.  That is a huge hit.  I just read IRS publication 510 which deals with all Excise Taxes.  Clear as day in the document.  Gonna have to factor that one in plus the time to file it.

The re-seller rate (if you look at the formula) allows you to adjust the percentage discount the retailer gets if you are selling to bait shops.  I could be wrong but California is a different animal.  It is just plain expensive out hear.  $2-4 for a pack of baits for a small shop is about right.  I have a couple other shops I will be calling on soon and I will see what they are asking for.

[BassDetective]

http://dl.dropbox.com/u/51529844/Cost%20Analysis%20Baits%20.xls

Here is an updated version which includes the 10% excise tax.  I applied the 10% to the price I am charging the shop.  I made some other adjustments to the prices for the components too.  The file is completely open to modification to suit your individual needs.

In the near future, I will probably apply a rate at which I can produce or need to produce to hit my target per hour.  I will assign labor rates to cooking plastic, injecting, demolding, applying eyes, second dip to secure the eyes, packaging, ect. 

I really want to see what price does a small producer need to charge to make your target hourly rate.  For me, If I can't make 40-50 per hour then it will be a hobby because I can't see taking time away from my primary business to put into this. 

[ghostbaits]

Welcome to your new hobby!!!! 

Jim

[knifemaker3]

There are 2 different ways to handle the excise tax.

1:  Figure it into the cost of the product and the distributor/consumer will not even know you are charing it.

2:  Clearly state the charge on your invoice and let the distributor/consumer know that they are paying a mandated Federal Tax.

I have a couple of manufactors I purchase from that have the 10% excise tax charge right in their billing process so that you know you are being charged the tax.  Others don't but I know they are hiding it in the amount charged for the product.