Hi frame builders,
Daniel and I have been chatting a lot about the bike biz IRL and I was checking out some recent posts here. I have not done framebuilding for a living for the last two years or so but I did it for about 8 and made pretty OK money doing it for a minute. I feel like there is a lot of vague talk on forums about the business side of things but I wanted to post something more concrete that really helped me in the hopes that it could help others. I am calling it the “framebuilding calculator” which in case you do not recognize it, is just a profit and loss statement. Feel free to download it and mess around with putting your own numbers in there. I do not have the best excel skills to make it super pretty, but it definitely gets the job done. Here is the gist of how to use it:
The green boxes are inputs, so it is your job to plug in your own numbers. The numbers in there are rough approximations of what I was doing when I was building full time FYI, hopefully that is helpful too.
I will start by saying, we do not care about hours here. You are self employed now and you know how long much work it is to build a frame, so decide how many frames you want to build a week/month/quarter and plug that in to the top row. Maybe you want to build less in the summer because you want to ride more. We can come back and adjust that later.
Next lets fill out the assumptions, the box on the right. You should know these numbers pretty well, if you don’t go look at the frames you have made and calculate them. What is the average price you are charging for a frame, fork and build kits, percentage of bikes you sell with a build kit. This tool is for approximating, so do your best guess if you don’t know. Then fill in the COGS (Cost of goods sold) for all those things.
Then go fill in your expenses. Maybe you don’t pay for any advertising, so that is $0, R&D is pretty much how many bikes you want to build for yourself, travel - maybe that is going to MADE or something. The only funky thing here is the salary part, not technically an expense but I like to build that in. Put in what you think you should get paid. Maybe you just want to build as a hobby, you could still put in $0 and see if you can break even.
The big three things to look at with this are number of frames, salary and average frame price.
Plug in what you hope to see with those then go to the bottom line, net income, and see how off you are. Can you afford to pay yourself more? do you need to work your way up to that frame price while you are getting started? Do you need to build twice as many frames to make it a reality? Maybe take some guesses on what other builders are doing and see what their business could possibly look like.
OK have fun messing around with that. Let me know what you think. Is framebuilding a real job?