Heidi, please don’t be afraid of doing the math, it has nothing to
do with your 'smithing experience. The formula that you should
follow is:
Labor + Materials & Overhead + Profit = Total Price
While this formula can be much more complex if you are actually
running a storefront, for your purposes it can stay with that. Now
for an explanation of why this formula should work for everyone, no
matter who you are or you level of experience.
Labor is the number of hours it took to make the peice times your
salary per hour. Example: As a journeyman apprentice, I charge $25
per hour. A peice that took me 3 and a half hours to make has a
Labor charge of $87.50. A beginner might only charge $10 an hour, and
take 5 hours to make the same piece, and would therefore charge $50
for Labor. This is the money for ‘YOU’, it’s what you are being
paid.
Materials & Overhead accounts for the exact amount you spent on the
materials to make the peice, and the prorated cost of the
consumables used in making the peice. Example: In making a simple
silver ring, I spent $3.50 on the metal and findings, $5.00 on the
cabachon, I used up a $1.00 felt bob in polishing, as well as an
estimated $2.00 in consumables (sanding belts, wear and tear on
burrs, files, the electricity you used, etc.). This is a Total of
$11.50 in M & O. This won’t change much for experience level of the
Craftsman, though it does have the potential too. A more experienced
jeweler might take less time using a particular tool, and therefore
put less wear-and-tear on it. This covers your shops expenses. This
is separate from what ‘YOU’ get paid, this money goes back to your
shop.
Profit is simply a percentage of Labor + Materials and Overhead.
Example: In my previous two examples, I had a Labor charge of $87.50,
and a M & O charge of $11.50. This Totals to $99.00. I add in a 15%
profit charge for my business, coming to a Grand Total of (99 times
1.15) $113.85. This is the Total Price for that item. Profit is the
one that some people have trouble with, but it’s the variable that I
argue for most. As a business, you deserve to make a profit, even if
you are simply wholesaling to other stores. This profit is what
allows your business to survive and expand. This money goes directly
to your shop and allows it to remain afloat. Even if you don’t have
a “store” you do have a shop; it’s a separate entity from you and
should be paid the same way you are paid.
You will notice that the Labor charge is much higher than the
Materials charge. This is why the old “rule of thumb” such as “3
times your materials” will almost always never truely represent what
your item is really worth. There are simply too many times that your
cost of materials will be miniscule in comparison to the work you
have put into a peice. If I am doing something like reticulation on
a small peice sterling, how can “3 times your materials” cover my
true cost? A reticulated brooch may have only $2.00 worth of
materials, but I’d never recoup my true cost if I sold it for only
$6.00.
This may seem like a lot of work, and a lot of math, but it really
isn’t. Try it on a couple of your peices and see. You can even
guesstimate for your first few times; the Total Price will be
incorrect, but not as incorrect as if you’d tried a “rule of thumb”.
Now, one final comment on why I stress this so much for new
craftsmen. I’ve seen many people come and go in the Artist trades.
The few that stay in the trade have many common traits; one is the
willingness to deal with the business side of the trade. This
includes (quite highly) the willingness to do the math that’s
involved with running a business. I strongly feel that there is more
than enough room in our game for everyone, and hate to see people
fail simply because they undervalued their work. I know that you may
not feel that you are worth what the formula says you should charge,
but please beleive me that you should stick to the price it tells
you. Cut the Profit to the bone, but don’t lose money in making you
art. That way leads only to failure.
Neil