A simple but less efficient way of pricing crafts is to multiply an hourly wage rate by the number of hours it takes to complete a job. Let us say that it takes five hours to finish a craft. The problem with this is that the artisan may be underestimating her worth in terms her skills and tools. Furthermore, she is not considering what it will cost her to replace her tools when they need replacement, the interest she would have earned on the money she invested in the business, and the cost of utilities and services involved in her craft. When these cost are included, the artisan would realize that she may not be paying herself a sustaining wage.
Overhead cost is every cost excluding direct material costs and direct labor cost.
For example, studio rent, tools, utilities, and studio clean-up. This may also include the opportunity cost of investment funds, which could be measured as the interest a similar deposit amount would yield in a bank. Sales costs are what it costs to sell the craft. An example is what it will cost you if you should consign your craft to a store for sale or the commission that a seller will demand to sell the craft for you. Some may require fancy equipment and others may not.