[Jewelry making - Article 00026] - Re: [Orchid] What is your hourly rate?

[Mark Parkinson]

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Hi Roberta,

    When you are first starting out, how much to charge is (in my
    opinion) one of the most difficult questions to answer. I remember
    being surprised that there were no tried and true formulas that I
    could find to use. Rather I was told that I should charge as much as
    I can...advice that wasn't super helpful. What we do now has become a
    fairly complicated mix of formulas based on the type of work we are
    doing. What I suggest to people who are relatively new to the
    business is to decide how much you feel like you can reasonable pay
    yourself annually and then work backwards, $50,000 is $25 p/hr,
    $80,000 is $40 p/hr, $100,000 is $50 p/hr.... 

    Then you need to figure in your annual overhead, rent, insurance,
    fees, phone, electricity, tools...etc. If that is $30,000 (for
    example) then you divide that by 2000 (hours) and you have $15 p/hr
    of overhead. You need to add that $15 to your hourly rate to cover
    overhead. That will give you a rough number that you can shoot for as
    a minimum charge per hour. 

    But in reality you are not working every hour of every workday.
    Running a business is not like working a job for an hourly wage.
    Typically you will want to work up a price list for the most common
    tasks you perform and those prices need to include your time, your
    overhead and your materials. The material component is marked up. So
    the combination of the labor and overhead charge and the marked up
    materials should give you a cushion of profit that will lift you to
    your target income and also provide your business with enough capital
    to continue to operate. 

    Another note is to look at your prices that you arrive at and
    reflect on them. Compare them to what others are charging. Ask
    yourself if there is more value to that work than you are charging
    for. Often there is a perception of value that already exists of that
    you can create. Those are profit opportunities that you should not
    pass up. You need to make a living after all. 

    Hope that helps a little bit. 

Mark
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