FORMULA FOR PRICING

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Original Post

honeybee says

(borrowed and adapted without permission from an old aquaintance, Thomas Mann, from his book Design for Survival. He's a highly successful jewelry artist in New Orleans.)

I'm posting this in hopes that someone will benefit from these guidlelines. I know it helped me immensely when I was trying to wrap my brain around how to price my work.
Please keep in mind these are suggestions, not rules.


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
COSTS TO CONSIDER WHEN PRICING PIECES:
-Labor and Materials
-Overhead
-Profit

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
LABOR
-fair wages (do a search for living wage considerations in your area...google is your friend :)
-training time for helpers

MATERIALS
-actual materials (fabric, metal, ink, etc.)
-supplies (saw blades, needles, glue, camera, computer, kilns, etc.)
-shipping costs you pay when ordering the above

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
OVERHEAD

*Studio costs*
-studio rent/mortgage (plus any finance charges and interest)
-insurance
-utilities
-maintenance

*Web Site Expenses*
-etsy fees
-paypal/shopping cart fees
-labor (photo, editing, listing, convos, etc.)

*Marketing*
-festival/fair fees
-travel expenses
-labor
-display costs
-printing and mailing costs

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
PROFIT
*what you need to earn to fund your life, including living expenses, health insurance, education- yours and your kids', a business account cushion, and any fun you might want to have ("disposable income")

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The last part- the profit- makes me laugh cynically, but really, they're very reasonable goals to consider when deciding how much you need and deserve to earn for your labor.

Feel free to add anything I've overlooked. I hope this is helpful :)

Posted at 11:24pm Nov 20, 2006 EST

Responses

Honeybee, I think I love you.

Posted at 11:26pm Nov 20, 2006 EST

honeybee says

Curses, I forgot the biggest one (actually Mr. Mann forgot, too):

TAXES!!!

Uncle Sam wants 25-33% of your money as a self-employed entrepreneur. Don't ask me what it's for, that's another thread.

Why??? Is there no edit option?

(and you're quite welcome glittercritter.)
:)

Posted at 11:32pm Nov 20, 2006 EST

Very complete list! ;)
I follow everything on the list except for the *Profit* and *Taxes*. I don't make enough money to claim any of this on my taxes - rather they'll owe me for lack of profit! hehe
I could be wrong but I think in Michigan you're allowed to claim a loss on your business indefinitely if you are an artist. That's what my dad tells me anyway and he's been an artist for 30 + years - but he may have inhaled too much stone dust over the years too. (he's a stone sculptor). ;)
I'm really starting to feel the need to look at the *Profit* part... Especially when some of the stores I sell to are jacking prices up 100% *sigh*

Posted at 11:39pm Nov 20, 2006 EST

I expect B&M stores to jack prices up by 100%, they're covering their overhead and taking a risk on merchandise the may not sell. A lot of them also have to deal with shrink, which is a disturbing thought.

Somebody posted a formula a while back that seems to take a lot of the guess work out of all this, something about "10 x materials cost as retail". Or am I hallucinating?

Posted at 11:57pm Nov 20, 2006 EST

Honeybee, if you find that edit button please send me a hint?

Posted at 11:57pm Nov 20, 2006 EST

honeybee says

Accordng to Mr.Mann's formula, "labor and materials should not exceed 1/6 of reatal price OR 1/3 of wholesale price".

Also, wholesale should equal 3x materials/labor.

Posted at 12:01am Nov 21, 2006 EST

see, when you consider all of the things you've listed above, I find it impossible to make any profit at all :( I've been trying to establish my business for about a quarter of a year now, and have spent probably close to seven thousand dollars trying to get myself organised. I calculate all the above, and then when I add something on to make a worthwhile profit I find myself blushing at even penning such a price! So I push it down to a minimum because I love what I do. Maybe I am doing something wrong, maybe I am just looking at too expensive materials, who knows.

Posted at 12:03am Nov 21, 2006 EST

oh yeah honeybee that would be the lovely self employment tax which includes social security tax.

Posted at 12:05am Nov 21, 2006 EST

honeybee says

reatal+ RETAIL

sheesh.

And I hear you, smithnaturegallery. It's really tough to have faith that there will be buyers. But I figure, if I price my work too low and can't make a profit, then I'll never be able to keep doing this. I trust that there ARE customers out there with enough disposable income to pay what our work is worth. I KNOW there are. Perhaps it's just a question of figuring out how to reach them?

And someday, I hope to be the one with the disposable income so I can be one of those buyers.

Posted at 12:08am Nov 21, 2006 EST