From: JEFF-G@cup.portal.com (Jeff - Griffin)
Newsgroups: rec.crafts.misc
Subject: Craft as a Business
Date: Wed, 26 Aug 92 03:12:37 PDT
Organization: The Portal System (TM)

<How do you decide the asking price?
 
One rule of thumb is to multiply the cost of materials x 3.
I have established a 'shop_time' hourly rate ($10./hr). I then 'timed' each
manufacturing process (woodworking), layout, cutting, sanding, finishing
(either staining or painting (my wife does this part)).  There are some items
based on this shop_time that take over a hour (each) to make, while most of t
items can be made in multiples in less than an hour.
 
For example; I can 'make' (rough lumber to finished goods) 12 of a particular
item in 4.5 hours. Cost of materials is $35. The items sell for $12.95 each,
so; 12 items x 12.95 = 155.40 - $35. = 120.40 devided by 4.5 hrs. = $26.75/hr
Another item takes 2.0 hrs. to make, materials cost $3.00, the item sells for
$21.95 so; 21.95 - 3.00 = 18.95 devided by 2/hrs = $9.47/hr.
 
Fortunately I make/sell more of the $12.95 item (and others in the same price
range) than I make/sell of the $21.95 item. The 21.95 item is one of those
"you have to have a few of them for variety" kinda things.
 
Your post didn't say whether you were going to continue to work/sell from you
home.  I rent space in a factory-turned-mall place. Another consideration I 
have is the rent, phone, MC/VISA 'puter', alarm etc.  Fortunately my expense
are quite low, however I must take in $52.00/day to break even (only open
days/week).  This 'break_even' *includes* paying me to 'sit' there (this is
one consideration that a lot of folks don't think of, your time sitting in a
shop is 'worth' something as well).
 
'Cost of materials vs profit';
 
If you really want to know how much you are 'making', buy your materials then
determine how much it costs after its' distributed into each item. 'Time' the
manufacturing of each item or process, devide that 'time' into an hourly-rate
and deduct the cost of materials, the leftover is 'profit'.  Timing the makin
of an item not only lets you know how much you are making on a particular ite
but also lets you know whether or not an item is 'worth' making at all.
 
All this time-vs-hourly-rate-vs-materials *changes* if you rent 'space'.
 
Assuming you continue to work from home and get a 'tax_certificate' to
collect sales_tax (your name/DBA (doing business as) "XYZ_Crafts" allows
you annonymity (no one knows your address unless you tell them) and is
perfectly legal (at least in MA). A Tax_Certificate requires you to pay 
whatever your state sales tax % on items is, it also lets you to buy
materials as a 'tax_exempt' business, (the materials you buy are to be 'used'
in the mfg. of other items and you will collect the sales tax on the finished
item).
 
>A Tax_Certificate requires you to pay whatever your state sales tax % on ite
is - SHOULD READ: whatever your state sales tax % on items YOU SELL is.
(if you buy something and pay 5% then y'assess' 5% on an item you sell).
 
As a 'DBA' you can deduct heat/elec/phone/rent(mortgage) from your taxes,
(a portion of the above depending on how many rooms you use). If you rent
'space' you can deduct them as well but you have to have the $$ to *pay* for 
in the 1st place.
 
Hope this has helped, sorry for the length, send flames to:  Jeff Griffin,