GetCrafty Craft Facts

Q: I've been doing some simple pieces from silver (sheet & wire), cabochons, a few settings & a dabble of silver & bead work. Basically, to arrive at my selling price I just doubled my material cost for each piece and this has pretty much worked out fine.

A: The first thing that you have to remember is that, unless you are cheating the IRS, your time is going to be at least $30 an hour (if you don't care to be paid for your work) and will be a lot more as your equipment goes up. This covers a basic workbench and no machine tools. For jewelery, prices are a lot higher than that because of the craftsman content of the work. As I see it from what you have said, you are working for fun and not getting what you are worth compared to the professionals. Work for your old customers at a bit higher price and keep it going up until they start screaming about the price, but the new customers, start with a much higher price and see what works. For most stuff, about 60% of what is retail (not MSRP) sales prices is a good start for similar parts and you can usually go up a bit from there as if your work is good. Remember that you don't work for free (unless you really want to) and the material cost can be just a very small part of what the total cost of an item is. For example, take a camshaft for a car - cost of the material is probably about $1.00 to be generous, but they can easily sell for more than $100. I'd love to be able to buy a bumpstick for $10, but even that item the prices are a lot higher than that because you need to support the company behind the thing with it's price. Please also note that the bumpsticks are made on a pretty much automatic line and there's not much humantime involved in them. Actually, that sounds about right to me - not sure if that is what the market will bear, but that is a reasonable price (works out to $20/hr - did you think that was too low or too high?) When it comes to predicting your cost for a new project, my advice is, be conservative, but not nitpicky. That is, if the new project will require you to buy a new tool, consider the whole purchase price of the tool as part of the cost of the new project - even though the tool may prove useful on other projects too. Don't worry about things like what fraction of your electric bill is going into lighting the shop while you work on the new project. If you're going to buy a pound of material and turn most of it into scrap, count the whole price of the material as a cost of the new project, even if the scrap has salvage value. This approach will generally overestimate your "cost" for the new project. That means you'll underestimate your profit on the job, at whatever price you charge the customer. That's a good thing. All of this is for your internal purposes. The only external number visible to the customer is the price. If your product is entirely unique, and can't be had anywhere else, you may be able to set the price way above your cost. If your product is a commodity, you can only charge what everybody else charges, regardless of your cost. Most products fall somewhere between these two extremes, of course, so there's no universal formula - alas.