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Begin As You Mean to Go On

By Aislyn Bryan August 28, 2006 3834 Views No comments

We've covered why you might find it difficult to charge a fair price for your work and why you really need to get past those issues and do it anyway. That brings us to how. How do you know what to charge? What is a fair price? There are countless formulas that say triple the price of this and add that and it all seems rather arbitrary. In truth, there's only one formula that matters: You have to cover your costs and make a profit.

Your costs are materials, facilities and labour. You know what your materials cost. The rest is easy to understand if you plan for success. If you make a success of your business, there will come a time when you can't do everything yourself. Figure out what it will cost you to pay someone else to do what you're doing now. That's your labour cost. There will come a time when your house isn't big enough for your business. Figure out what it will cost you to provide facilities for people who work for you. If you work out the cost of facilities for 10 people, then divide that cost by 10, you have the facilities cost for one person.

If that's all you charge, then you don't make a dime off your work once you become too successful to do it all yourself. Work out a profit margin that provides you a comfortable living wage. Add that to your costs and the figure you come up with is the minimum you can charge for your work. If it seems high, then you need a better target market.

Until you have employees, you're wearing all the hats. You're management, design, labour and everything else. That's fine while you're small, but you won't be able to do it all later. If you don't cover the costs for all those jobs now, then 1) you won't have any money to put back into your business to make it grow and, 2) you won't have the money to pay the people you'll need when it does grow. In other words, you'll either never get bigger than you are now because you won't have the funds to put into growing your business, or you'll have the good fortune to get some big attention, your order volume will increase tremendously and you'll go under because you don't have the funds to hire the people you need to meet the increased demand. All the great publicity in the world won't do you a bit of good if you can't meet the demand when it comes.

While you're making your jewelry, you get to live completely in the moment and that's a wonderful feeling. But for the business part of things, you have to live in the future. You have to build infrastructure now that you'll need then because you won't have time to build it at all if you wait til you need it. Always think ahead... and always bet on yourself. *s*

 
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