Author: Dutchy
Date: 2007-04-15 04:50
There is a good deal of information on the Web on starting your own home-based business. The most relevant hits are concerning crafts business.
There's a formula here for calculating how much you ought to charge for your product. And, interestingly, it starts with, not how much the market will bear, but rather with how much you (and your employees, if any) want to be paid per hour.
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1. Decide how much you (or your employee) will be paid per hour to produce products. So, pick a number, say $10 a hour.
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2. Multiply this hourly rate by the number of hours a week that will be spent producing crafts.
$10 x 40 hours.
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3. Write down this figure, this is your weekly cost of labor. (If you need to make $10 per hour, working 40 hours per week the weekly cost of labor would be $400.)
Okay, got it.
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4. Calculate the total cost-of-supplies needed to make one finished product.
You'll have to do this part. Figure in reed knife, whetstone, gougers, tube cane, whatever.
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5. Determine how many products one person can produce in a week.
Allowing 15 minutes per reed means you can make 4 reeds an hour, equals 160 reeds in a 40 hour week.
You'll have to do the rest of this math.
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6. Multiply the cost of supplies-per-piece by the number of products produced in a week. (If your cost of materials per piece is $1 and you can produce 100 products a week, the figure would be $100.)
7. Add this figure to your weekly labor costs. (In our example here that would be $400 + $100 = $500)
8. Divide this figure by the number of products produced in a week. (So $500 labor/materials divided by 100 finished products a week would be $5.00 per piece.)
9. If you will be wholesaling your products, multiply this number by two. (Which would give you a retail price of $10 per product.)
10. Compare this cost to similar products on the market.
11. If your price is more than similar products, you may need to reduce it by cutting hourly price, finding less expensive supplies or by increasing your production time.
12. If your price is significantly less than similar products, you may want to consider raising your price.
There is a more detailed exploration of "Pricing Your Crafts" here, courtesy of the Arkansas Small Business Development Center.
Lotta math, dude. You're sure you wanna do this? ![[grin]](http://test.woodwind.org/clarinet/BBoard/smileys/smilie5.gif)
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