Thursday, May 16, 2013
How to Price Handmade - Labour
A lot of people forget, when pricing their work, they have to pay themselves for their time and expertise. We, as artists, often feel that our efforts in the process are inconsequential. That kind of mentality might work if it is just a hobby for you but if you expect it to become a profitable business you have to factor in your contributions to the end result.
Let me be very clear here. You deserve to be paid for your time, effort and craftsmanship. You put a lot of yourself into all aspects of your business and you should get adequately compensated for your part in the creative process.
From the conceptual drawing board, through the purchase of materials, down to pulling it all together into the finished product, you spend a lot of time on each project. Your time is valuable. I’m going to repeat that because it is very important to remember. Your time is valuable.
So, how do you calculate the labour costs for each piece? It’s actually easier than you think. Decide how much you want to earn per hour. Then, multiply the hourly rate by the amount of time it takes you to plan and make each piece. That is what you will plug into the pricing formula you are using.
Below minimum wage is not acceptable! You are worth more than that.
As an example, if you decide you want $20 per hour, and you spend 1 hour and 15 minutes in the planning and execution of your design, then you would add $25 to each piece for labour. Don’t cringe and try to tell me that it’s too much! If you don’t think your work deserves the recognition, no one else will either.
Keep in mind, your initial prototype will take more time but once the concept is finalized they will come together quicker. Keep the ‘first’ of any design for your personal collection, or perhaps offer it at a higher cost than subsequent ones...a 'special edition'.
Next week, we will discuss your profit margin and why you have to factor that into your pricing formula.