This one of the two parts where I where I allow myself to use more emotion than fact about the business viability of craft. Hereafter, it is about business and as such, as objective as possible

REMEMBER ONLY YOU can properly and completely perform the necessary due diligence to determine your costs – this article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.

Although there are others, including the stress of deadlines, the uncertainly during off season (selling yarn from April to July can be pretty scary in terms of regular cash flow)

The largest consideration you will want to at least consider is taking something you love and making it a JOB.

Every says if you have a job doing something you love, then it is never work.

But that only works when you have someone else to do all the NOT FUN stuff mention in Pts 1,2, and 3.

When you have ALL the responsibility plus the laundry, the kids, the pets and every aspect of everyday life, the non-creative part of business and regrettably often the part that takes the most of your time for the least amount of joy – can suck the joy out of the creative aspects.

If you do not accept anything else I suggest and are determined to go for it anyway no matter how illogical cold analysis says otherwise,

Please don’t get yourself so far in financially that you cannot say “the heck with this other stuff” and go back to enjoying what you love. This means building inventory and supplies over time not getting into huge financial debt.

Up to you, but this series is going to be a work in progress for a very long time. REMEMBER ONLY YOU can properly and completely perform the necessary due diligence to determine your costs – this article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.

Among the perennial questions in just about any group where people also sell their finished projects the question of pricing will not only come up but it will be brought up on a rather regular basis.

You may not be surprised to find I have some strong – some have said harsh opinions. My answer is usually if you can’t take the heat, get out of the kitchen. The reality of the business world and certainly the competition for “disposable income” in any economic time, much less one where folks are worried about paying their mortgage or buying food or medications or clothing their family do not make it less harsh.

Unless you have a patron – perhaps a spousal unit or even a day job – that covers your cost of living. If you want the life of an artist, best you start by understanding you may have to make some life style choices.

Because unless you are very very lucky, not only unique but manage to be discovered – the road to success is long and hard and increasingly paved with people who can afford goal number one so will be giving away what they do.

It was not until the first time the sale of my art made the difference between eating or not were beaded earrings outside a Dead concert. The reality of that experience along with realizing that my pricing meant I could not afford to buy the materials to make more, made the bus ticket home look like a very attractive alternative even if the job and the life waiting there were a lot less interesting. So the sooner you get smart about pricing, the better of you will be.

You can not price your work without answering as honestly as possible (and it took me a LONG time to be able to do this) WHAT IS YOUR GOAL?

Do you want/need the ego boost of calling yourself an “artist”?
Do you want/need to make “pin money” so you can buy more materials to continue your “art”?
Do you want/need to contribute to your support or that of your family?

Next up… Costing

Danger Budding Artist – My opinions have been deemed Harsh by people who take everything personal.
REMEMBER ONLY YOU can properly and completely perform the necessary due diligence to determine your costs – this article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.

Maybe it was the reality of that first lemonade stand, the one where my Dad fronted the money for the first day of ingredients and agreed not to charge us rent for space at the foot of the driveway which happened to be a very busy bus stop (we were 5, 7 and 11) but it never ceases to amaze me how many costs those selling their work will over look.

I think it was Ben Franklin who paraphrased an older English proverb,
Look after your pennies and nickels
and your dollars will look after themselves
But is an excellent thing to remember when you are costing out what you will sell.

here are some of the pennies over looked. It might be useful to know the reference to my formula are for “things I have done before”. New Product development is different.

You bought a bag of 10 charms for $10 – so the cost per charm is $1 right?
Did you drive to a local store? Our closest store is about fifty cents worth of gas round trip
and since it was local and not delivered to our place of business, and was under $200
I would have to add the 65 cents sales tax.
Ordered On Line? so no tax or transport, well what about the cost of shipping?

My personal formula is an additional 15-20% for “obtaining” the materials. This averages out to cover lots of overlooked overhead related to building studio (as opposed to store) inventory. It has worked out over the years to cover, internet ACCESS ONLY, shipping, reorder, utlities and most if not all of the pennies and nickels.

Selling On Line?
Domain Name(s) and Web Hosting, fees charged by Etsy or Ebay, AND OUR TIME TO POST THE PRODUCTS.

PAYMENT PROCESSING: PayPal, etc and of course Discover/Visa/MasterCard all want their share aka/Discount
Depending on volume of sales, there may also be monthly fees involved and dear God, I sincerely hope you bought your equipment not leased it. This is really the last step, because most fees or as I call it, vigorish, is based on a percentage of the total sale (and don’t forget that when PayPal, Discover/Visa/MasterCard OR YOUR BANK CHECK FEES – they are also taking a piece of the cost of Postage)

DELIVERY/SHIPPING/HANDLING – The cost of packing materials, labels, printer ink for invoices, boxes or bags to ship in – Once again don’t forget to include the cost of the percentage/discount/fee/vig collected by PayPal etc when you are paid other than cash in your hand.

Rent/Table or Booth Fees – Local Craft Shows, farmers market or even “big events”
Business use of your home. We have areas within out home that are strictly limited to our business. The costs related to that space are tracked for both costing and tax purposes. Since we tracked show sales on an event by event basis, it was easier to know what the cost and the ROI was/is on each event. Sometimes depressing post event when you face the reality, but helpful in knowing “if we should go back” once the honeymoon repeats are over.

Government Fees Paper Work. It wastes several hours of my time each month to keep and summarize the records required by local, state and federal government – Your business license, record keeping for sales tax and other tax purposes are all part of the cost of doing business.

INVENTORY: Did you buy those charms using a credit card? well until they are sold, they are either costing you interest on your charge card or “cost of money” that might have been earning interest no matter how nominal in a savings or brokerage account.

IN all of the above, the only consideration of your time was in what it costs to do all the not creative business – things often euphemistically called “over head” – these are all EXPENSES and in the art/hand crafted world have not produced a single item you can sell.

Whether you are a master in your craft or just starting out, there is a good chance that all of the above are pretty much the same.

Where it gets different is Part 3 The valuation of your time.

P.S. We were allowed to “charge” (guaranteed by my Dad to the corner grocery) the cost of the lemonade ingredients each day, but had to go back to the store and pay the bill every day or no credit for the next day. Half of the profits “went into the bank” and the balance was split 3 ways. Although my older brother only did the going to the store twice a day, he got a full share because my younger brother and I were not allowed to cross the street so he made a vital contribution. An interesting lesson in valuing the service provided in a bigger picture.

Still a work in progress and one of the parts where most people tend to get most offended.
REMEMBER ONLY YOU can properly and completely perform the necessary due diligence to determine your costs – this article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.

So if you did not start the day in your grown up panties and will tend to take this all too personally, probably best to leave now.

If you are NOT selling a finished item, but perhaps just a work for hire where the customer chooses the pattern and materials, you will need to add the price of the pattern AND that pattern should be delivered to the customer. Whether you choose to do this out of respect for the work of the designer whose shoulders you are standing on even if they are your own – both deserve the few pennies of profit that will be derived from your legal use of their product – the pattern without which you could not perform the service.

Please also be sure BEFORE you buy a pattern, that the pattern author has granted you permission to use it for the derivative function of a work for hire. You might also want to confirm that “free” patterns are also free for use in work for hire situations – some are free for personal use, but the pattern author

If you are so selfish as to be okay with stealing the work of another for your own profit, karma will catch up even if the person you choose to harm does not.

REMEMBER ONLY YOU can properly and completely perform the necessary due diligence to determine your costs – this article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.

Really pretty straight forward – a fair hourly wage that takes into account an honest evaluation of the level of expertise exhibited in your product.

Your hourly wage should reflect not only that expertise, but what it took for you to get there.

Your hourly wage should allow and reflect the time needed to provide a quality product.

Your hourly wage should respect your peers. I actually have little to no problem with people who simply want to enjoy a craft and share the work of their hands with those they love and value – with little recompense beyond the cost of materials.

However, when you join the world of professional artisan – you should not be the Wal-Mart price cutter driving down the fair market value of all who create with a view to selling and supporting themselves.

It might be contradictory, but I have often thought that the place for those whose primary goal is “all I want is more money to buy supplies” is that of sample maker. Today’s pattern authors and designers are constantly looking for a good sample makers but may not be able to afford the services. By hooking up with trade professionals you get what you want – patterns and materials and more often (an interesting evolutionary bit in itself) than not, recognition and appreciation for your quality craftsmanship.

There are also shops/small retailers/even wholesale distributors who may well be willing to provide materials in exchange for well executed samples – sometimes even an additional stipend even if only a “store credit” for materials of your choice.

Okay so undaunted you still want to dive into the rough and tumble world of selling your work.

At a MINIMUM – Minimum wage PLUS employer/self-employed taxes you will need to pay to state and federal government. It may vary in your home state, but the current Federal Minimum wage is $7.25 again my lazy formula is 1.5 times that number as the MINIMUM you should be including in your product price or about $10.88 per hour until Obamacare kicks in – depending on your situation, that may be a serious consideration.

For those currently collecting some form of government funds each month whether earned or an entitlement, you will want to keep in mind that you may lose some of those funds if you do well.

Anyway, if it takes one hour to fully complete the product ready for packaging for sale (packaging is part of general costs) you will need to add $10.88 today and probably about $1 per item to cover projected health care premiums or the fine.

Bottom line? If you don’t place a fair value on yourself, don’t be surprised when no one else does either.