(Photo courtesy of Guiletta on Flickr)
One of the most fundamental things for running a successful craft business is charging the right amount for your services and products.
Below I will show you a simple way to calculate your hourly rate. It may seem really confusing if you don’t know how but it really is straight forward. It just may take you a little while to gather all the necessary information first. I use this calculation myself for my jewellery design business in Brighton.
This post is aimed at self-employed designers/ crafts people who are sole traders, although it would apply to most people running a business on their own. If you are just starting up or have been running a business part-time for a while and aim to earn a living from what you love full-time then read on.
If, like me you are a designer / maker / artist and you want to know how much to charge for your artistic creations this article is just for you.
Underselling your work is probably the most dangerous thing you can do and will inevitably lead to your business failing. If you are not covering your costs then you will not even break even. It may sound obvious, but to grow a business you need to make a profit.
Even if you are only a maker part-time right now, if your aim is to work full-time as a designer / maker in the future and earn enough money to live on you must use the following calculation below to work out your hourly rate.
If you come across people who’s prices seem too low ask yourself are they doing it for a living or as a hobby? Are they being subsidised by a high earning partner/relative? Did they just win the lottery? If you want to sell at the right price to survive don’t give in and under charge for your work. You must not.
Your hourly rate applies to consultations, design time, making time, exhibition/ show time, all the time you spend running your business. If your situation changes (you move home or studio) recalculate your hourly rate.
You may find that the first time you make a new design it may take a little while but the next time you make it, when you know what you’re doing, it takes half the time. Bear this in mind when pricing up work. When preparing an estimate for a private commission I always double the time I think its going to take me as a contingency.
Once you have calculated your hourly rate you can more easily work our how to price your product. Look out for my post on how to price your product.
Firstly, work out the number of hours you work in a year. Sounds hard? I’ll do it for you…
365 (total days in the year) – 52*2 (weekend days in the year) – 8 (bank holidays/national holiday uk only) – 5 (sick days) – 20 (holidays) =288 days
NB. Don’t forget to minus days for part-time work if you have another job.
Now use the following spreadsheet (requires you to have Microsoft excel) and fill in the yellow boxes as appropriate. Add the number of days worked per year. Your hourly rate should be automatically calculated in red at the bottom right.
Good luck and let me know if it works out as you expected.
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