KNOW YOUR WORTH...

Articles in this Topic Discussions in this Topic

Oct 26, 2001

Give yourself only minimum wage if you want, but you are a creative person using your talents to create a livelihood for yourself. Why shortchange yourself because you don't have the self- confidence to know you are worth much more! It's amazing how our pay scale has changed. Look at the History of Federal Minimum Wage for an eye-opener. Know that crafters and small business people earn what they think they are worth. Know your worth, be proud of it and allow your prices to reflect it!

It's important to know the cost of each item you manufacture to arrive at a profitable price. There are several elements included in that cost. The time you spend making the item, shipping costs generated by mail-ordering the materials, the cost of the materials used and the cost of selling the item. The following reading shows how to arrive at a calculated cost for each element:

Calculate the cost of your time involved in manufacturing an item. When you try to calculate cost of time while making only one item, the calculation will not be as accurate. Mentally you will know you are timing the process and will work more quickly "to beat the clock" rather than working at the normal pace. To calculate for one item -- time yourself while constructing five like items through the full process. Take the amount of time used and divide it by the five to find the time spent making one item.

Pricing in a Manufacturing Firm might help you, f you alone are the manufacturer, compute the time it took to make one item. Then multiply that times your chosen hourly wage to add to the cost of each item. If you used 15 minutes to sew an item and your hourly wage is $5.00 per hour, you should add 25% (1/4 of an hour) or $1.25 to the item.

60 minutes divided by 15 minutes = 1/4 or 25%

$5.00 hourly wage times 25% = $1.25 cost per item

The calculation must be figured differently if you hire employees to manufacture the items. Use the hourly wage paid to the employee, increased by 30% of the wage, to cover expenses of social security and other payroll expenses such as the additional bookkeeping.

Example:

Wage of $5.00 X 30% = $1.50

$5.00 + $1.50 = $6.50

$6.50 X 25% = 1.625 or $1.63 wage used per item

Postage paid or delivery costs should be divided out per item and charged as part of the cost of the item. If you buy a dozen wood cut-outs, pay $1.40 for shipping and handling; each item should have an additional

Go To Page: 1 2

The copyright of the article KNOW YOUR WORTH... in Crafts is owned by Cheryl Lewis. Permission to republish KNOW YOUR WORTH... in print or online must be granted by the author in writing.