Unit VII Material Culture: The Stuff of Life
Lesson 6 Louisiana Crafts and Decorative Arts

Pricing Your Craft Worksheet

Name ___________________________________________ Date _______________

Task: Pretend you are a Louisiana craftsperson who wants to start marketing your handmade work at festivals in the state. How will you know how much you would have to charge to make a profit? Is it even worth your time and effort to enter this market? Use the definitions, example, and worksheet below to help you find out the true cost of making your craft items. Then decide whether to try to market your craft.

My craft is ______________________________________________

Cost of Materials __________
Labor cost __________
Overhead costs __________
WHOLESALE PRICE __________
Multiply by 2 to get a RETAIL PRICE __________

 

 

How to Figure the Cost of Producing a Craft Item

There are many "hidden" costs in producing a craft item. It is important to figure ALL expenses when deciding how much an item should cost. The Wholesale Price is the total of your labor, materials, and overhead. Craftspeople who want to ensure that their time and effort is profitable double the cost estimate to arrive at their Retail Price.

Pricing One Item

1. Determine the Cost of Materials __________
2. Determine the number of hours spent making the item __________
3. Multiply Hours X Wage for Labor cost __________
4. Determine overhead costs __________
5. Add Materials + Labor + Overhead to get WHOLESALE PRICE __________
6. Multiply by 2 to get a RETAIL PRICE __________

 

Some definitions to help you

Labor Costs

Production Time - The cost of your labor. For this exercise, use the Minimum Wage - $5.25 per hour and multiply that by the number of hours you worked plus the number of hours you spent on office time.

Office Time - The time you spend designing your product, collecting and looking for "free" items, ordering supplies, paying bills, record keeping, making repairs, and anything else related to producing the craft item.

Material Costs

Direct Costs - List the cost of all materials. For those that use only a portion of what you buy, figure the cost of that portion; i.e., paint is $4.00 a can and you use half, so figure $4.00/2 = $2.00.

Transportation Costs

The postage and shipping costs you pay when ordering materials.

Overhead Costs

This includes the costs for such things as your equipment, loan interest, rent, electricity, water, phone, insurance, postage, packing materials, promotional materials.

Equipment depreciation

All equipment wears out sooner or later and then it must be replaced. Figure how many years it will probably last and divide the cost by that number of years. This is the cost per year. Then divide that number by the number of hours you plan to work in a year. The number you get is the cost of using that equipment for that craft item for an hour. Multiply that answer by the number of hours you use it or one craft item to get the depreciation cost. For example, if you use a sewing machine for 12 hours to make a quilt, the depreciation on the sewing machine would be figured this way:

Sewing Machine

Cost $800.00
Expected life 20 years
Depreciation per year $800/20 = $40 per year
Hours worked per year 20 hours per week x 45 weeks = 900 hours
Depreciation per hour $40/900 = $ .04
Depreciation for this item 12 hours x $ .04 = $ .48

 

Rent, Electricity, Water, Phone

These expenses are paid every month for the house or shop where you make your crafts. You need to figure how much of each is used for producing your craft item. This is called Prorating. For each of these, figure how many hours are in a month, then divide the total hours into the amount of the bill to find out how much it costs per hour. Then figure how many hours per month you spend working on your craft, and multiply that by the cost per hour. For an individual craft item, multiply the cost per hour by the number of hours spent making the item.

Example:

Hours in a month - 31 days x 24 hours - 744 hours in a month
Hours worked per month (20 hours a week x 4 weeks = 80 hours per month)

Rent

If rent is $400, $400/744 = $ .5376 per hour (round it to $ .54)
Prorated Cost of Rent, 80 hours x $ .54 = $43.20 per month
Prorated Cost for 1 item, 6 hours x $ .54 - $3.24

Electricity

If electricity bill is $75.00, $400/744 = $ .10 per hour
Prorated Cost of Electricity, 80 hours x $ .10 = $8.00 per month
Prorated Cost of 1 item, 6 hours x $ .10 = $ .60

Phone

If phone bill is $25.00, $25/744 = $ .033 per hour
Prorated Cost of Phone, 80 hours x $ .03 = $2.40 per month
Prorated Cost of 1 item, 6 hours x $ .03 = $ .18

Water, phone, insurance, postage, packing materials, promotional materials

Use the formulas as you used for Rent and Electricity to prorate any of these costs that you incur to produce your craft item.

 

         

 

Here is an example of how you would compute the Wholesale Price of a Duck Decoy.

Wholesale Cost for Making a Duck Decoy
Labor    
Production time - (Multiply the number of hours by $5.25) 6 hours x $5.25 31.50
Office Time (Multiply the number by $5.25) 2 hours x $5.25 10.50
Materials (List them)    
Direct Costs    
Cypress block
   4.00
Paint (6 -4oz cans, different colors, at $3.00 each)
Lt. Grey 1/2 can = $3.00/2 1.50
Green - 1/4 can - $3.00/4 .75
Black - 1/4 can - $3.00/4 .75
Blue - 1/4 can - $3.00/4 .75
Yellow - 1/8 can - $3.00/8 .37
White - 1/8 can - $3.00/8 .37
Sealer - $2.00 a can
 1/2 can - $2.00/2 $1.00
Nails
 2 @ .01 .02
Glass eyes
   .50
Glue - 1 tube - $1.25
  Few drops .02
Transportation Costs    
Postage for paint
   1.09
Overhead Costs    
Prorated Rent bill
 $ .5376 per hour x 6 hours $3.24
Prorated Electricity Bill
 $ .10 per hour x hours .60
Prorated Water Bill
 $ .03 per hour x 6 hours .18
     
Total Wholesale Cost   $57.14
Retail Price 2 x Wholesale cost $114.28

For a blank copy of the above Pricing Grid, click here

For Pricing Your Craft - Page 2: Factors That Affect the Final Price of a Craft, Click Here

 

For a PDF of this page click here.