Yes, you knew it didn't you...that pricing your work was important...really important...like maybe the reason you stay in business or not...
commit to the Lord whatever you do, and your plans will succeed" Proverbs 16:3
Pricing your work as a maker can be one of the most frustrating tasks, and it is the most common issue I hear from you. How to do it? What to account for? Why does it always feel like I am giving my work away?
I hear you, I have been there and I hope this post helps. Pricing is so imperative to your success because it puts a monetary value on your work, a value the rest of the "non-maker" world comprehends.
I am going to walk through the pricing model that I currently use and it has served me well. It is not rocket science but simply accounts for the different aspects of your product.
To view a PDF of this pricing model CLICK HERE.
Following is an example of the pricing model used on a sterling silver engraved ring.
STEP 1- You have to track your time and be very diligent about doing so...I'm serious you have to! Add all the time you have in the piece. For our example it is as follows:
25 min cut out / 15min file and prep to solder / 30 min solder / 30 min to cleanup and prep to engrave / 2 hours engrave //
Total is 3.67 hours x $14.40 ($40/hr wage rate) = $52.80 (total time)
This total time is multiplied by the Wage Rate...what is this? It is the amount you want to get paid per hour multiplied by 0.6 twice, don't worry to much about why just decide your own wage per hour.
STEP 2- Take the total square inches of silver and multiply by how much it costs per square inch. For our ring we are using 16 gauge sterling silver that is $5.94 a sq/in. For 7.5 size ring that is 0.5" wide and 2.34" long the total material is:
2.34" X 0.5" = 1.17 sq/in X $5.94 = $6.94 (total material)
Add your Total Material and Total Time together to get $52.80 + $6.94 = $59.74 (total cost)
STEP 3- Figure out your Fixed Costs, these are the cost related to your business that keep it functioning such as electricity, internet, website hosting, etc. I take the total and divide by about how many orders per month I do. So for our example we are going to say this is $60 of fixed costs.
STEP 4- Take your total cost and divide by 0.6 once, than again.
$59.74/ 0.6 = $99.56 + $60 (fixed costs) = $159.56 This is your WHOLESALE PRICE
$99.56 (wholesale from above) / 0.6 = $165.93 + $60 (fixed) = $225.93 This is your RETAIL PRICE
At this point I take a look at my price and ask my self how it sounds. For me I would sell this ring at $235. Its good to work the numbers and then take a logical look at the end to see what can be changed. The reason you add in fixed costs at the end, after your have divided your prices, is to account for them but not charge your customer a mark up on them.
Bottom line is no one will value your work unless you do. Please give this a try and let me know what worked and what you think needs tweaking. Thanks!