Pricing your work
There are a lot of outlets to sell work and more opportunities for selling online than ever, but this has made pricing work more difficult than ever. When creating work it’s really easy to forget the amount of time you spend generating ideas, trying materials, travelling to shows and photographing stock. All of this is work, and you should be paying yourself fort – therefore it needs to be factored into your costs.
The idea of selling a lot of work cheaply is something that works for large retailers, but your market will always be more limited than Tesco. The reality is that very few designer makers ever sell in quantities large enough for ‘stock ’em high, sell ’em cheap’ to be a true adage.
There is a formula you can apply to pricing work, and will this should only be followed loosely it might give you a better idea of what to charge (when you have your final price always do an idiot check – you will know instinctively if the price it too low, or high).
Firstly, start with the scenario that sees you losing most money – selling though and online or retail shop. Normally these will take 40% to 50% of the final selling price, so if you start with a ball-park price, take this away and see what is left.
Next you have to factor in material costs, so work out what one item will cost to make and double this. You will always have to buy extra material to keep yourself stocked up and account for mistakes during the making process. Additionally you should also include packaging costs because the money you will charge for postage rarely covers this 100%.
When you add these costs together, does it leave you anything, or do you need to up your price?
Ideally you should have something left for yourself at this point, and to make your business viable prospect this should be something approaching and hourly rate. If you are left £2.50 profit and your items take two hours each to make, ask yourself wether this is a viable business. If however you are sure that this is a hobby rather then a career prospect, then go ahead, but if you want to build a business you will need to build in a greater option for profit.
Lastly, remember that you will have to give the taxman a percentage of your earnings, so factor this in too. But the good news is you can claim all of your expenses against tax, so keep those receipts!
So, when should you implement this pricing plan? I would suggest from the start as it’s really difficult to raise your prices further down the line. If you start cheap your business will be perceived in a certain way, but if you sell your products at a slightly higher price from the outset then this can be seen as a mark of quality.