you're reading...
How To Guides

How To: Pricing your Products

How much are you worth? Well, you are priceless but how much is your precious time? That’s a whole different story. Pricing your work is easy, but your time can be more tricky. If you are planning on taking your small business to another level, whether or not one for which you can survive on alone, then your best best is to work backwards from your annual cost of living. The process of figuring it all out is easier than you think. There are a few simple breakdowns for which you should consider. A simple concept. Let’s dig a little deeper.

Cost of Living 

I’m a  big fan of lists, they are the best way for me to keep organized and on-top of tasks. The first step to determining your actual cost of living is figuring out what you need to pay out each year in order to survive. So get out your paper and write down all of your out-going obligations. Examples are your rent or mortgage payment, health insurance, utility bills, transportation expenses, food for your hungry belly, .etc.  Write the cost down next to each list item, include a cushion for emergencies as well. Add it all up! Now, you might discover you think you need more then you really do to live, or you might realize that your living way beyond your means (I hope this isn’t the case.).

 Actual Material Costs

Start by making a list of every single material that you use in one of your products. You should include any packaging materials as well. Nit pick your list to include even the smallest aspects; even the tape used to bind the boxes.  Your list might be 100 items long, but you really need to focus on every last detail. Everything has a price. You may figure out that one bottle of glue, for example, makes 30 thing-a-ma-bobs – do the division.

Time or Labor Cost

Think realistically. How much time does it cost you to make your product? Don’t count the time that you are letting something dry, brainstorming, or running to the kitchen for a snack. Keep a simple log next to your work area. Make a note each time you start and end. Take a look at your cost of living and see about how much an hour you need to make for your payments each month. Again, think realistically. We tend to overvalue our time, and just assign a number to what we feel it is worth, so be careful. If you think your time is worth $50 an hour and you add that onto your product, will it be realistic for someone to purchase? I’m not saying you aren’t worth that $50 an hour, but you may find you really only need to make $22 an hour to live comfortably.

Overhead Cost

Your overhead cost is every other expense to operate your business that is not directly related to the above mentioned, time or material costs. If you have a studio, or home office then make a list of these miscellaneous things like your tools, internet service, phone service, rent, supplies, .etc.

Your Profit

After you add up all of your time, material, and overhead costs you can subtract those figures from the cost of your products. This will be your actual profit.


Your markup is a percentage or amount that you will add to your products actual costs to cover your overhead and profit.


You can add this into your material cost if you offer free shipping. I have seen quite a few businesses who will work this into the retail cost of a product instead of an additional charge for shipping. This is a personal choice to make.  Shipping costs are all of your exterior packing, labels, postage, and even your transportation to and from the post office or mailbox.

For those of you who may be on the lazier side of life, here is a neat website that I’ve been using for years. You can just type in the values and have a computer do all the work for you. Personally, although this tool is awesome, I tend to still do everything manually on paper, you know, the old fashioned way. So, why not put it on paper and then use the tool. Check your work 🙂  Take a peek: http://freelanceswitch.com/rates/


About PixelGrin

Photography. Punk Rock. Art. Travel.



  1. Pingback: Hey, iPhone Lover! « .PiXELGRiN. - 6 March, 2012

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Hi Hello I'm Jennifer Jackson. ...and the world is my oyster...



Flickr Photos

Blog Stats

  • 24,784 visitors
%d bloggers like this: