Author: CD Mohatta
When you work for yourself, there are all kinds of hidden expenses. You may only be thinking of the time and materials it takes you to make a particular piece, but you must also spend time planning, promoting your business, speaking with customers, making estimates, buying supplies, doing the financial record keeping, etc. For this reason, always pad your prices! A good rule of thumb is to figure out how much you would need to earn per hour for making your arts and crafts, and then double it to cover other expenses.
You must make certain that all your time and costs are covered. In general, prices should be set according to what is marketable, and not limit the price to what you need to make. Seek to offer the products and services that are most profitable for your time and investment. Eliminate all projects that you can't sell for more than your time and expenses. If you price your work too low, you will lose profit and others will deem your work inferior, even though it isn't. If you price too high, you will lose sales and some customers will never return. Investigate thoroughly the prices others are asking for similar items in the better markets. Remember also, that you may not sell every item you make.
Keeping a detailed record of all the time you spend at various tasks and your costs for each project will help you greatly in avoiding mistakes and improving your profits. Estimate the time it will take you before you begin any project and write it down. Then keep track of your actual time and record that when you finish. Compare. Did you earn what you expected for your time? This will help you more accurately estimate your time in the future.
Set standard prices for typical jobs to simplify your pricing and reduce how often you need to estimate. You could start, for example, with three to six typical pricing levels for small, medium, and larger projects. A small project might take you less than two hours to make and less than $5 in materials. A medium project under six hours and $15 in materials. A large project six to twelve hours and less than $25 in materials. You might charge $20 for a small project, $100 for a medium project, and $200 for a large one. You will need to determine what time and material categories are typical for you, as well as the prices.
At the end of every month total up all the time and all the expenses you spent on your business, and all the income. This will help you to stay on track and keep you motivated for success.
You must make certain that all your time and costs are covered. In general, prices should be set according to what is marketable, and not limit the price to what you need to make. Seek to offer the products and services that are most profitable for your time and investment. Eliminate all projects that you can't sell for more than your time and expenses. If you price your work too low, you will lose profit and others will deem your work inferior, even though it isn't. If you price too high, you will lose sales and some customers will never return. Investigate thoroughly the prices others are asking for similar items in the better markets. Remember also, that you may not sell every item you make.
Keeping a detailed record of all the time you spend at various tasks and your costs for each project will help you greatly in avoiding mistakes and improving your profits. Estimate the time it will take you before you begin any project and write it down. Then keep track of your actual time and record that when you finish. Compare. Did you earn what you expected for your time? This will help you more accurately estimate your time in the future.
Set standard prices for typical jobs to simplify your pricing and reduce how often you need to estimate. You could start, for example, with three to six typical pricing levels for small, medium, and larger projects. A small project might take you less than two hours to make and less than $5 in materials. A medium project under six hours and $15 in materials. A large project six to twelve hours and less than $25 in materials. You might charge $20 for a small project, $100 for a medium project, and $200 for a large one. You will need to determine what time and material categories are typical for you, as well as the prices.
At the end of every month total up all the time and all the expenses you spent on your business, and all the income. This will help you to stay on track and keep you motivated for success.
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