How to price your ball

Price a product to sell it, is not easy. Calculate how much you are going to charge for a product, it's complicated, and a lot. Maybe you have even rejected, more than once, selling your products for fear of not knowing what to charge. Quiet, It happened to me too. That's why I didn't want to leave this lesson out of this course., because I know you need it and because I am sure it will help you from now on, not only with Christmas balls, but with any artisan product you want to sell. So this lesson is gold.

VALUE YOUR WORK

The first thing you have to do is evaluate your work yourself.. Artisanal products are unique products, and that we ourselves are the first who have to learn to value them so that. when calculating costs and setting a price, it doesn't seem excessive to us.

Many times what we want, and that's it, is that someone from outside comes and tells us that magic number to which we have to sell our product. But, let me tell you, It would be a real mistake if you put a price on your products without first calculating everything that I am going to explain to you below..

There are many variables that must be taken into account and you have to adjust to your particular situation., that will always be different from the situation that others may have. We are going to take as an example one of the Christmas balls from this course so that you understand how you have to work on this process..

Los 4 factors that you should take into account to calculate your price:

• Fixed costs: They are those costs that we are going to have regardless of the sales we have, that is to say, we are going to have to pay them yes or yes. Talk later, among others, of the self-employed quota, the internet quota, the light, electricity, monthly web maintenance fees, quotas from other platforms, etc.
• Variable costs: They are those costs that do depend directly on the sales you have, and will be increased depending on the products you sell. These costs will generally be associated with the production of the parts., of the balls in this case, For example: the spheres, ties, the fillings, the vinyl, The jingle bells, the ropes, etc.
• Labour: This cost is one of the most important when calculating our price, since it is a cost that is not usually taken into account and is the one that subtracts the most margin from the final profit. Is very habitual “give him the kick” at this cost for the simple reason that Since I love what I do, I don't mind putting in hours at my job.. ¡¡¡¡ERROR!! Please, don't fall for this, It will lead you directly to ruin and you will end up truly unmotivated.. It is very important that you have calculated your cost – labor hour, and we are going to work on them in this lesson.
• Margin or profit: is the percentage that we apply after having calculated all the production costs of the product. Because we can never set a sales price lower than the sum of production costs because, so, it would be costing us money, OMG!!! Let's not change time for money.

We start from the main base to start setting a price:

Fixed costs + Variable costs + Labour

This is the basic thing we have to charge so as not to be charging below the production cost of our product..

CALCULATE YOUR COSTS

I leave you a table at the end that will help you calculate your fixed costs, variables, labor and price your ball. I have taken as an example one of the Christmas balls, but you can edit it at your convenience.

But, before, I explain to you:

FIXED COSTS

• Fixed costs: luz, autonomous, rent, etc. Calculate all the fixed costs you have, both monthly and annually and calculates the fixed cost per hour, being like this:

VARIABLE COSTS

• Variable costs: materials. We can calculate the amount of material we use for each production and the cost of that material according to the price we have purchased..
• For example:
• Balls – ball: If we have bought a box of 20 balls at €15 a box we divide 15/20 = €0.75 ball price
• Ties: If we buy a roll of 4,5 meters and it cost us €1.5 per roll, we need to know what measure of loop we spend on each ball. Let's say we use 13 cm of bow on each ball. The roll comes with 4,5 metros, what they are 450 cm. To know how much each piece of 13 cm (What do we use in each ball?) we share 0,13 cm * 1,5€ / 450. meters = €0.00043 is the price of our piece of ribbon.
• bells: If we buy a bag of 10 bells at €0.85, the cost of the bell will be €0.85 / 10 = 0,085€.
• rope: we buy a roll of 4 meters at €0.90 and on each ball we spend 0,15 cm, The calculation of the cost of each piece of rope would be: 0,90€ * 0,15 cm / 4 meters = €0.0034 each piece of rope:
• stuffed: For example, the bag of artificial snow costs us €2.. We are going to take a measurement that is always the same to calculate how much it costs us to fill each ball.. Let's work with grams. Each bag of 200 gr costs €2. Each scoop for each ball contains each scoop will have 0,15 gr. The cost of the amount of snow in each ball would be: 0,15 gr * 2€ / 200 gr = 0,0015€.
• vinyl: each roll of vinyl costs us €8. The vinyl roll measures 3 meters long * 31,5 cm wide. Let's work with cm. In each Christmas ball we spend 6,8 cm wide * 3 cm high. Therefore, To know how many names we are going to be able to make, we calculate, first, How many names are we going to be able to do across the board?: 31,5 cm /6,8 cm = 4,63 names per row. Let's leave 4 through the spaces. To calculate how many names we can make throughout, we divide 300 cm (3 mts) / 6,8 cm = 44 unds (names). Therefore, with a roll of 3 meters of vinyl we can make approx.. 176 names. Each name costs €8 / 176 names: 0,045€ each name. That's not counting the errors that may arise during the process 🙁

• Packaging: add the cost of the box, bubble wrap, the labels, stickers, etc.
• Consummibles: Printing inks, glues and other materials that we use to cut, to take, etc. You can set a fixed average cost per production.

LABOUR

Let's go with one of the most complicated costs: workforce.

It is important to know how long it takes us to make each product.. For this I recommend that you use a timer.. I did it when I had to calculate my prices and, believe me, It is the only way to calculate your hourly cost.

I recommend you to:

• Don't start or set the timer until you are sure you can do it without rushing and without interruptions.. And, by some chance, they interrupt you, stop the timer and start it again when you continue. add the two times, Of course.
• don't try to do it quickly. Did you know, at first, it will take longer to manufacture a product, but all the time you gain later when you get practice will be a margin that you add to your profit.
• write down all the times. I leave you a table that will help you keep track of the timing of your products.. This is gold, I assure!

HOW TO CALCULATE YOUR HOURLY LABOR COST

• Desired salary per month: 2.000€. Here write the salary you would like to earn each month. This is just an example.
• Working hours: 8 hours a day from Monday to Friday (write the hours you are going to work per day). Calculate how many there will be per month: 8 hours * 5 days * 4,36 weeks (media/mess)= 175 hours rounding.
• Hourly price: we share 2.000 euros / 175 hours = €11.43 our price – labor hour.

Our labor cost/hour would be €11.43. We can now start calculating and pricing our products.

LABOR COST

• Preparation time: the time it took us to make our product (we have calculated it thanks to the timer). For example, we have taken a Christmas ball 30 min to do it.
• Product labor cost: 11,43€ * 30 min / 60 min = €5.72 our labor cost us.

PRICE OUR PRODUCT

We already have all the data we need to be able to price our product.

• Fixed costs: 500€ per month. To calculate the fixed cost we have per hour, we divide the monthly fixed cost (500€) between the monthly hours that we are going to work (175 hours). 500/175 = €2.86 fixed cost per hour of work.
• Variable costs: 2€ variable production costs.
• Labor cost: 5,72€.
• Margin or profit: Let's assume that we want to obtain a 30% of benefit. To know the price we would have to put on our ball and obtain a 30% of benefit:

WE ADD: fixed costs: 2,86€ fixed cost per hour of work.

variable costs: 2€

labour: 5,72€

TOTAL: 2,86 + 2 + 5,72 = 10,58€. This is the minimum price, the base price at which we can sell our product, never below this. Selling at this price we would have no profit margin., we would be exchanging time for money.

SALE PRICE TO THE PUBLIC: 10,58€ + 30% = 13,75€. This would be the price we would have to put on our Christmas ball to obtain a 30% of profit. Don't forget that, from here, You will have to pay the corresponding taxes once you make the quarterly declaration. BEWARE OF THAT!

You now have all the tools to calculate the price of your product. Don't forget that, your time is money. Don't worry if the first price you put on your product is not the right one., You can adjust it little by little as you see more or less costs in its production.. AND REMEMBER: to acquaintances, friends, neighbors, etc. they are charged. They also charge for their work and it's your time., the most precious thing we have, what we are giving away.

NOW IT'S YOUR TURN

I leave you a table so you can work on your data.. Download it to your computer and you can now work with it.

https://www.thepompomschool.com/calculapreciodetubola