Labor Costs

[distancerunner]

"The problem of labor...is gargantuan."
/Rosalind Russell as Mame Dennis in Auntie Mame

This post is a reaction to the thread Any other thrifty winemakers out there?

Everything costs something. Everything has a price. There is no way to accurately put a price on a bottle of your wine without including a cost for labor.*

There are a lot of ways to calculate this. Two stand out.

The first is using your current (or historically highest) hourly rate. For those who are on salary, divide your annual compensation by two thousand for a quick but usable number. The downside to this method is that as a winemaker you may be over or under "compensating" yourself. It may also over or under estimate your current skills.

For example, say your salary is $50,000. Divide that by 2000 and the result is $25.00. That's your hourly rate. As a winemaker you might be worth more. Or not. It is also important to understand that most wineries do not pay the folks on the crush pad the same as they do for lab personnel or the head winemaker. So for an apples to apples comparison this method is somewhat skewed high, especially if you spend an inordinate amount of time at the tasks.

The second is to use the hourly rates paid to winery personnel for the various tasks they perform. This is a little more involved. While you are the head winemaker, when working the crush pad (or stocking in juice) the task will be at one rate and when doing labs the rate will be different. This method will render a more accurate estimate of the cost of your wine when compared to commercial versions. It is time consuming to research.

Once you've calculated your rate, the next thing to do is to accurately track your hours. It's also important to accurately describe the work done. Purchasing, transporting, sorting and crushing are three (or four) different tasks. Lab work, racking, bottling, are compensated at different rates unless you've elected to use the first model.

Calculating hours is tricky. We tend to spend (at least I do) a lot of time thinking and wandering around the cellar than we do pulling samples and testing. This is natural. Most of us are not professionals and therefore the tasks we perform are occasional. Sometimes it takes a minute or two to remember (start writing things down!) what we did the last time. Or maybe we're trying something new. Some of our methods may be inefficient. Like gravity racking/bottling. That's not a comment on the choice to do so, just on the amount of time it takes. Don't forget to add in the time spent cleaning, The winery, the cellar, the bottles, there's a lot of cleaning to do.

None of this is any help unless you track the hours. How much time on the crush if you use grapes? How much time on labs before pitching yeast or starter? How much time on racking? All of this needs to be written down. Then apply the hourly rate(s) to see what your labor costs really are.


*"Labor of love," "It's my hobby," "I'd do it for free," or any phrase or thought that eliminates, minimizes, or attempts to otherwise negate the cost of labor is not germane to this discussion. We are attempting to accurately estimate (not necessarily calculate!) the cost of a bottle of our wines.

 

[FlamingoEmporium]

It cost me $3.00 in labor costs to read your post

 

[ChuckD]

But how do you assign a value to your free time? Is it the rate I get paid at my day job or the rate I think I deserve at my day job? Is every hour of the day and every activity to be valued the same? @FlamingoEmporium jokes but it’s a valid point. What value is assigned for watching The Bachelorette and is it the same if I spend that time making wine?

My “free time” is both worthless and the most precious (valuable) time I have.

 

[ChuckD]

My “free time” is both worthless and the most precious (valuable) time I have.

And yes I realize this is rather philosophical and not helpful . But really I don’t see how you answer the “cost” question unless you are actually trying to sell your wine. For those of who treat wine making as an enjoyable hobby it is perfectly valid to disregard our time. Similarly, If I replace a shower fixture I am chalking that up as saving the entire amount the plumber would have charged. And I don’t enjoy plumbing.

With all that said I still think with free/scavenged/grown fermentable’s and reused bottles I can make wine cheaper than $14 a bottle. Even with a reasonable labor cost.

 

[vinny]

There is no reason to factor in time for something you enjoy, or something that benefits you. The reason we sell our time is because it benefits others and takes away from what we can do for ourselves. OR, it is something I don't want to do.

The garden fence I am building now, for example, cost me $2000 in materials. My labour saved me from paying someone else. My total cost is $2000.

Were I to build you a fence I would expect to get paid because that is time that I am no longer able to spend building my fence, or I would have to pay someone else to improve my life.

The same applies to wine. I enjoy it. I don't do it to save money. I do it because I get a kick out of drinking something I made.

I made skeeter pee for about 50 cents a bottle. Add in the cost of the bottle, cork, cleaning supplies, sure. 55 cents, then.

Just because I am for sale during the day does not mean I should add my income to everything I do. If I make a 3 dollar bottle of wine. It's a 3 dollar bottle of wine. If I make a 3 dollar bottle of wine that tastes like a 20 dollar bottle of wine, it's still a 3 dollar bottle of wine. We are hobbyists, our time is not part of the equation unless we are trying to recoup our costs, which then no longer makes us hobbyists.

If someone, as in the post mentioned, is able to find free or cheap supplies and make a good country wine for pennies in their spare time, they are saving themselves a lot over buying 10 dollar bottles.

Working our land, building things for ourselves, raising our own food, or making our own wine is what makes us capable, independent, and allows us to build ourselves up. If we are taking away from that, it's going to cost someone. This is a perspective the world has lost because many no longer do the former, they build there life on their wages.

 

[wpt-me]

I do wood turning for a hobby and sell at craft shows. I charge cost of materials, booth rent and small profit.
I don't think I could get any kind of wage added for my time included.

Bill

 

[Obbnw]

"The problem of labor...is gargantuan."
/Rosalind Russell as Mame Dennis in Auntie Mame

This post is a reaction to the thread Any other thrifty winemakers out there?

Everything costs something. Everything has a price. There is no way to accurately put a price on a bottle of your wine without including a cost for labor.*

There are a lot of ways to calculate this. Two stand out.

The first is using your current (or historically highest) hourly rate. For those who are on salary, divide your annual compensation by two thousand for a quick but usable number. The downside to this method is that as a winemaker you may be over or under "compensating" yourself. It may also over or under estimate your current skills.

For example, say your salary is $50,000. Divide that by 2000 and the result is $25.00. That's your hourly rate. As a winemaker you might be worth more. Or not. It is also important to understand that most wineries do not pay the folks on the crush pad the same as they do for lab personnel or the head winemaker. So for an apples to apples comparison this method is somewhat skewed high, especially if you spend an inordinate amount of time at the tasks.

The second is to use the hourly rates paid to winery personnel for the various tasks they perform. This is a little more involved. While you are the head winemaker, when working the crush pad (or stocking in juice) the task will be at one rate and when doing labs the rate will be different. This method will render a more accurate estimate of the cost of your wine when compared to commercial versions. It is time consuming to research.

Once you've calculated your rate, the next thing to do is to accurately track your hours. It's also important to accurately describe the work done. Purchasing, transporting, sorting and crushing are three (or four) different tasks. Lab work, racking, bottling, are compensated at different rates unless you've elected to use the first model.

Calculating hours is tricky. We tend to spend (at least I do) a lot of time thinking and wandering around the cellar than we do pulling samples and testing. This is natural. Most of us are not professionals and therefore the tasks we perform are occasional. Sometimes it takes a minute or two to remember (start writing things down!) what we did the last time. Or maybe we're trying something new. Some of our methods may be inefficient. Like gravity racking/bottling. That's not a comment on the choice to do so, just on the amount of time it takes. Don't forget to add in the time spent cleaning, The winery, the cellar, the bottles, there's a lot of cleaning to do.

None of this is any help unless you track the hours. How much time on the crush if you use grapes? How much time on labs before pitching yeast or starter? How much time on racking? All of this needs to be written down. Then apply the hourly rate(s) to see what your labor costs really are.


*"Labor of love," "It's my hobby," "I'd do it for free," or any phrase or thought that eliminates, minimizes, or attempts to otherwise negate the cost of labor is not germane to this discussion. We are attempting to accurately estimate (not necessarily calculate!) the cost of a bottle of our wines.

Although I 100% agree with Chuck D. For me the only way to really get your hourly rate is to figure out how much someone else would charge you to do the work.

I had my own company for years. I did work for the government so I had an "audited OH rate". You get reimbursed based on your OH rate and a nominal profit so it is in your best interest to keep track of all the costs. One of the costs was my wife doing bookkeeping etc. She initially thought the "rate" we paid her was outlandish and that the auditor would reject it. I just asked her how much she thought it would cost us to have someone else do the work and said there is no way we could get someone else to do it for less than she charged the company. Which is true.

Make sure you add the companies portion of SS etc. ; ) and rent yourself a piece of your house.....

 

[Raptor99]

@distancerunner thanks for the detailed explanation of calculating labor costs. If we want to take a business approach to making wine then that is a very important calculation.

A few times in the past I have thought about the labor cost of things that I do myself vs. hiring someone else. A factor to consider is whether you could have earned that rate for the time you spend making wine. If you work full-time and make wine in your spare time, then if you didn't make wine how much could you earn by working that extra time? If you are retired like I am, how much could you earn now if you spent those hours working?

For me the "cost of wine" calculation does not matter. I do not try to track my time or estimate my labor cost. This is a hobby, so I don't care about that. I try to keep my spending on wine making equipment and ingredients "reasonable," although the definition of "reasonable" seems to keep shifting.

In the end, each of us will need to make our own decisions about how much to spend on this hobby depending on (1) available funds, and (2) how much we are willing to spend on making wine vs. something else.

I wonder if we want to calculate the cost of the wine we make to justify our spending on this hobby, either to ourselves or others. "See, look how much money I am saving!" It's like the person who goes shopping and says "I saved $300!" That's great, but how much did you spend?

 

[BigDaveK]

Change "wine making" to "gardening".
I grow everything from seed and I enjoy working in the garden. In the spring there are weeks of work to be done. During the growing season there's daily maintenance, maybe minutes, maybe hours. Then there's the harvest which can last days for some things or weeks for others. And now we have to do something with the harvest, use it or preserve it. I can easily spend eight hours a day canning. And at the end of the season there's clean-up and maybe amending soil for the next year. My half pint jars of catsup - and it's really good catsup! - with the price of labor have got to be approaching $200-$300 a jar...maybe more!

Putting a dollar price (including labor!) on my fun sounds like a bureaucratic diktat. No offense intended. I just look at cost of materials and have fun.

 

[Rice_Guy]

my brother an engineer has suggested some tasks have a negative labor cost. His prime example is paying $49.99 a month for cable TV, and then not produce anything all evening every weekday.

My labor as QA chemist for the vinters club is similar, I pay for chemicals and Vinmetrica and pipettes etc for the fun of doing a wrap up presentation on the buckets.

 

[CDrew]

Yikes-You are making my wine much too expensive! But you are right, I tend to think of my labor as basically free, since I would not be working in the time spent wine making, but this should make for a good discussion. Just the time spent racking and bottling is substantial and I definitely would be better off working more and buying the equivalent amount of wine. But that's like going on a fishing charter and saying you'd be better off just buying fish at the market!

And BTW-this sounds like an argument my wife would make, LOL.

A quick back of the envelope hour count for 400 pounds of grapes/20 gallons of wine:

Picking-2 Hours
Crushing destemming and clean up-2 hours
Initial lab and additions-2 hours
Punch downs 4x daily with data recording=1 hour per day for 7 days-7 hours
Press with clean up-3hours
Racking 3x with clean up, 4 hours each-12 hours
Bottling 100 bottles with set up and clean up=6 hours

So that's 34 hours (extremely rough calc with lots of assumptions).

edit: On reflection, this is not a good topic because if you add in my fully valued work time, I should be working more and not making wine. But, that isn't the point. So it actually IS an intangible thing!

 

[Raptor99]

But that's like going on a fishing charter and saying you'd be better off just buying fish at the market!

Exactly!

 

[CortneyD]

I know I'm a bit late to this debate, but I've been thinking about this more and more since I read it.

My logic is that, if its my hobby or a task that benefits me, the "cost" of my time CANNOT factor in. Why? Because I don't factor in my labor costs when I make a loved one a birthday cake. Nor do I do it when I do a load of laundry. Or make dinner. Or Thanksgiving dinner, even though it takes up a boatload of my time, requires weeks of planning, shopping, prepping the food, cooking it, serving it, and cleaning up the dishes. That dinner should be $500 a head! Am I to start sending Venmo requests to my family for my labor?

Doing this sort of math, for me, take the fun out of it and makes it about something (profit margins, penny pinching, efficiency) other than what it should be about (the joy of doing it, delicious end products, using the fruit we grow on our land).

Labor costs and hourly rates/wages are devices created to compensate an individual for doing labor for someone else, labor that doesn't benefit themselves, or labor they wouldn't otherwise do. That is never the case in a hobby, by definition. We're doing this because we want to, therefore our time doesn't need to be compensated.

 

[Nebbiolo020]

I’m a professional in the industry and average cellar hand pay is $22-25$ a hour with overtime being 32-35$ and double time is 52-55$ a hour.

Average work is 12 hour shifts 6 days a week sometimes it can be as much as 16 hours in a day if harvest is really busy.

Pay is not bad, most winemakers make 100-150k a year my old boss was getting paid less cause he was Chilean literally the lowest paid winemaker in the entire region he was always complaining about it he made $85k a year.