Tuesday, April 10, 2007

Will That Pear Ever Have a Price?

You have been so patient. I have recieved several e-mails wanting to know....How much was the pear? I have not shared my price yet, because I wanted to share all this other information first...perspective if you will. But we are getting so very, very close. Perhaps today.

We have gone over all the elements of cost in the formula found in Wendy Rosen's book, Crafting as a Business. We have looked at some of those costs relative to the pear. But what do you do when you are just starting out? How do you begin to figure out what price to charge when you are so uncertain about costs such as overhead and selling expenses? Calculating your materials and labor is manageable, but what about the rest of the package?

First, make sure you have the lowest costs that you can for your materials and labor. If you are buying your materials at full retail, you will not be able to fully recoup your costs. If you are making your work, one piece at a time, from start to finish, you are going to have to revise that approach. But let's assume all those areas have been addressed. Now what? Get out the dart board, and slap on a price? Sometimes that seems to be the way we go at it, doesn't it?

A few of the e-mails I received with pricing suggestions for the pear included formulas to calculate the price.

"cost of materials + time + 10% = wholesale
(cost of materials + time + 10%) x 2 = retail"

"I personally triple my materials cost, add my hourly rate and depending
on how much of myself is in it I may double the total, then again I may
multiply by four."

Then I receive the latest issue of Crafts Report this weekend, and lo and behold, there is a piece on pricing. They quote a glass artist from Florida, Marcie Davis,

"A third, a third, and a third. Your materials equal one-third, your labor is one-third, and your profit is one-third. Or simply put, multiply your costs by three."

Finally, we can turn back to Crafting as a Business. There is a section in the pricing chapter by Thomas Mann, the reknown jeweler from New Orleans. He offers some guidelines for pricing:

"1. Labor/materials should not exceed 1/6 of retail or 1/3 of wholesale.
2. Wholesale is 3 times materials/labor
3. 1/3 wholesale is for studio, overhead, and marketing.
4. 1/3 of wholesale is profit."

So we have several approaches. Let's apply these to the pear. If you remember, I said there was about $10 of material in the piece. And there was about 5 hours of hands-on labor. This does not include time for the oven to preheat, time in the oven, time cooling, etc, etc. Let's use $10 per hour for labor.

Based on the first formula, the wholesale price would be $66, and retail $132.
The next approach gives me a price between $180 and $360.
The formula from The Crafts Report article gives me a price of $30.
And finally using Thomas Mann's guidelines, I end up with a wholesale price of $180 and a retail price of $360.
Is it any wonder there was such a range in the pricing suggestion, and there is so much confusion out there?

What price did I have on the pear at the show? $325. After doing all this research, and the calculations, I think it is a fair price. I have learned a great deal in this process. I hope you have too. But I am not completely done with this topic. I still want to write about the prices and venues....how does where a piece is sold affect the price? This was something that came up several times in the emails so I think it is worth looking at to clear up some confusion. And I may revisit the other side of the equation again...what will the market bear. Knowing what we know now, that is worth looking at again.

Thanks again to all who sent in their suggestions and comments. It was a treasure trove of information and insight.

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