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.

Just as no one should be oblivious to the harsher realities of costs, one also needs to remember that there may be circumstances that help to bring balance into the life of the home based entrepreneur, no matter what they sell, their own art, or the supplies used by their artisan peers or the goods and services of day to day living beyond the realm of art.

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.

For me, when I was asked why the challenges of working for myself when I had skills and the health to work easily outside the home?

The answer has been different at different times in my life. It all relates back to having some control on when I had to work so that there could be the time needed for the children I raised. It has never been perfect but it was always more what I needed at the time.

Today, it is about what I can currently manage and frankly, anyone who says a 90 second commute that includes the stop for the fresh coffee on the way to your desk is probably worth many of the things that working for yourself does not always allow for in the budget.

It occurred to me the other day that I never owned a pair of “designer” jeans unless you call either Lee or Levi’s as designer labels. I don’t have a smart phone, just don’t need it. We do have a tablet, mostly so I can browse the web while watching TV (stops a fair amount of discussion on the finer points in tv accuracy or where did we see that actor besides this show) I see little to no point eating in high end restaurants since most are chains and I can duplicate (and enjoy the making) the dishes at home. These are my choices, your choices can and should be based on what you want.

My decision in recent years has been to sell supplies and thus only accepting commissions that (a) appeal to me and (b) where the buyer appreciates the quality, attention to detail and uniqueness of the product and is able and willing to compensate me for that work.

These are my choices, traded for the intangible benefits of the previously mentioned 90 second commute and the ability to decide now is good time for a break to do run a load of laundry or prep for dinner or take the afternoon off and do some erranding.

Your choices can and should be based on what you want and need for a healthy balanced life. I only hope you will choose so that your craft remains a pleasure and not a burden

This one is really pretty simple, we don’t need Mirriam-Webster or other sources,

Group Buys are orders placed by a group of folks – either working with a retailer or working around them by going direct to the manufacturer/distributor or other source.

“It used to be” that there was some affinity among the groups. Group member might have been part of a business or social organization, a local craft guild. But generally speaking they KNEW each other and often as not, functioned in many ways cooperatively.

Now, all it takes it Internet access and 5 minutes to set up a group on one of the many online services that support “groups” and poof you are instantly able to organize group buys.

Some of these groups are well run and organized and businesslike in how they operate. Others are not.

Quite simply, they exist so must be considered as a potential competitor for those who really are in business.