How do you price a knife when someone actually wants to buy one?

For a first commission to a coworker, I'd skip the hourly math entirely and just pick a flat number that feels fair to both of you. The truth is your three weekends were mostly learning, and you'll get faster on the next one. Charging him for every hour you spent re-doing the finish isn't realistic and you know it.

What I did on my first paid blade was price it at materials plus enough extra that it felt like my time counted for somthing. Say the steel, pins, and wood ran you forty or fifty bucks, telling him the material cost and letting him decide is a bad move. That puts all the awkwardness on him and he'll lowball himself out of politeness. You're the maker, you set the price, that's part of the deal.

A good approach: figure your materials, then add a modest amount on top, somewhere in the range a decent production knife of similar size would cost. He's getting a hand-forged blade with custom scales, so being in the same neighborhood as a mid-range factory knife is honestly a bargain for him and a real win for you. Quote it once, plainly, no apologizing and no long explanation about how long it took. One thing to watch out for with coworkers specifically: the first price sets the tone for every knife after. If he's happy with it, word spreads around that office and you'll get more asks. If you go too cheap now, you're stuck there. Better to start at a number you can live with and let it grow as your work does. And keep a simple record of what this one cost you in materials and time. Not to bill him from it, just so you have real numbers when the next person asks instead of guessing like you are right now.

One thing I'd sort out before you quote anything is exactly what he's getting, in writing, even if it's just a text you both agree on. My second paid piece turned into a headache because the guy assumed a sheath was included, then hinted at a free resharpening forever, and I had nothing to point back to. Spell out the steel, the handle material, and wether extras like a sheath or a care card cost more. Also take decent photos of the finished knife before it leaves your bench, because that first commission is the only proof you'll have when the next person at that office asks what your work looks like.

Gotta push back on the bit about pricing it like a mid range factory knife. My first couple of blades had gaps at the scale line and a grind I'm embarrassed by now, and comparing them to something from a production shop was never a fair fight. The guy knows it's handmade and rough around the edges, but if you charge production money the expectations go up with it. Quote what feels right for where your skills actually are, and let the price climb as the work does. Also, second knife I sold took half the time of the first, so whatever number you land on, don't assume the next one costs the same effort.

Way back when I took my first paid order, the fella didn't have much cash so we settled up half in money and half with a pickup load of firewood, and I'll tell you that wood heated my shop all winter. The trick is he paid something. A man who pays, even a little, takes care of a knife. A man who gets it free loses it in a tackle box by spring. So whatever number you land on, take it up front or half up front, and hand the knife over after. Never hand it over on a promise, I watched that go bad for a buddy of mine more than once.

Agreeing with the poster who said you set the price and quote it once. I did the same thing on my first paid knife, a little paring knife for a neighbor, and I quoted materials plus a flat bump without explaining anything. He paid it without blinking and later ordered two more for his brothers. The part nobody warns you about is how much easier the second one goes. I finished it in a fraction of the time because I stopped sanding and second-guessing the handle like you're doing now. Whatever number you land on, say it plain and move on.