More thoughts on pricing your work to sell
Since I wrote my original post on pricing your work, I have come across a new book all about setting up a successful jewellery business, written by Angie Boothroyd. I don’t want to plagiarise her, but I did want to share with you her brilliantly simple method for working out how much you should charge for your labour.
Firstly make a list of the overheads that your business will face. These will vary massively, depending on whether you work from home, whether you are doing this as a hobby or trying to make a living, but these overheads will be the things that you have to pay, whether or not you sell anything. For example, if you rented a studio from which to work, you would have to pay that rent even if you never make a single item. If you’re doing this as a hobby, then maybe you have a website, so what does that cost? There may be a web-hosting fee, you may pay someone to design the site or update things on it. These costs will be incurred whether or not you sell anything. It could be that you have an Etsy store, in which case you would incur a cost for listing an item and you may be incurring advertising costs. Do you have a mobile phone or landline specifically for your business? The cost of buying and maintaining this would be an ‘overhead’. You probably use a computer and printer, so these could count as overheads. Basically, it covers anything that is essential to selling your work and that you would not be using otherwise (ie if you own a computer and use it mostly for sending emails to friends or social networking, then this counts as personal use and should not be charged to the business). There are many more examples and Angie covers them all very well, but hopefully you get the gist of the idea.
Secondly, work out how many hours you can actually devote to making jewellery, or other beadwork. This does not include the hours you will spend on doing admin tasks. For example, you may decide to devote one 8 hour day per week to your beading. During that time, you will probably spend around 3 hours doing admin (contacting customers, updating your website, keeping track of finances, sorting out orders, recording stock etc) – believe me, the admin takes up a lot more time than you think! So that leaves you with 5 hours per week to make beaded items. If you work for 48 weeks per year (you are allowed some holiday!), then that’s a total of 240 working hours per year. Angie goes on to explain that not all of the stuff you make will be sold, so you should do a calculation to take account of the ‘profitable’ working hours. For example, if you think you will sell half of the items you make, then this would bring your profitable working hours down to 120.
Now return to your annual overheads, divide this number by the number of profitable working hours and this will give you the hourly labour rate. However, this is only a guide. If your labour rate comes out at £2, then probably you want to take a look at your figures, or maybe just decide to increase the rate to something closer to the minimum wage, at least! If, on the other hand, your labour is coming out at £150 per hour, you’re really not going to sell too much unless you’re selling to ‘A’ list celebrities with money to burn! Once again, check your figures and the assumptions you made to see how realistic they are.
Now, Angie goes into much greater detail in her book and explains a lot of different things that you should be considering, so don’t just take my word for this, but I’m hoping this post gives a few helpful pointers. The idea is fresh in my mind after teaching a class where we got on to discussing selling and pricing your work. Remember, you are using skills, so don’t be tempted to sell yourself short – what you create has a value and a uniqueness that shouldn’t be competing with mass-produced cheap goods.