The following is an extract from my latest blog article. 

Click here to read the full article.

When students ask me about pricing their work, most of them want a simple formula that involves multiplying the cost of their materials by some magic number.   Unfortuantely, this just doesn't work.  

Remember, if you are going to make money at this, you have to cover things like material waste, inventory, electricity,  advertising, travel costs and a whole host of other costs that do not factor directly into your pricing formula.   

Here is an alternate formula that might help.  This is just one variation of a complicated exercise.  I know others who do it differently.  Either way, it will at least give you some ideas to think about. 

(Materials x 1.1) + (Labor x Hours) = Cost
Cost x 2 = Wholesale

Wholesale x 2 = Retail 

There are a number of areas in this formula that can be adjusted to account for things like experience and reputation. 

The first line is where you would look at your own experience level.   You can not charge the customer for learning curve.  If it takes an experienced artisan 10 minutes to make something and it takes a beginner 2 hours to make the same thing, that does not mean the beginner can charge more.   You have to set the hours to what it should reasonably take once you're practiced at it.  Also, you should not be charging as much per hour as an experienced person. 

The second line of the forumla is where reputation comes into play. Someone who is known and respected can increase the multiplier accordingly.  "Cost x 2" might increase  to "x 2.5" or "x 3" to increase the wholesale price.  How much is charged per hour might also be a factor of name recognition.