How to work out your hourly rate

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How to work out your hourly rate
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Stacey

Joined: 18 Jul 2005
Posts: 8380
Location: Kernow

Posted: Wed Mar 14, 07 3:13 pm Post subject: How to work out your hourly rate

There are some things that cost me more in labour than others in terms of skills and equipment etc and I'm struggling to work out how to price stuff. I've just carded 44g alpaca that I've dyed myself and then blended it with some silk, which I also dyed myself. I reckon the raw materials and water/electric/label/printing etc cost me about ï¿½1.25 ish and to card it and blend it took me 35 mins. Dyeing time is negligible as you plonk it in and just check it every now and then - no more than ten minutes of actual work.

What should I charge?

I can't find any UK examples to compare it with.

Tradbritfowlco

Joined: 15 Feb 2007
Posts: 526

Posted: Wed Mar 14, 07 3:14 pm Post subject:
i just work out what it costs me to make and then consider what i would pay for it if i saw it on a stall somewhere...i dont even work out my hourly rate, thats at the bottom of the list!

Stacey

Joined: 18 Jul 2005
Posts: 8380
Location: Kernow

Posted: Wed Mar 14, 07 3:18 pm Post subject:
Ah well, that's what I used to do but now I'm on this here fancy marketing course I'm having to work things out proper loike He's (the tutor) got a good point actually - it's already been an eye opener. Tahir also pointed out that I'm on less than the national minimum wage for some of the work I sell

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 14, 07 3:33 pm Post subject:
Pricing level is important for sales too- too cheap & you either get too much demand that you can't keep up with, or people assume it isn't good quality & don't buy it at all. And you may as well do nothing for nothing as something for nothing.

tahir

Joined: 28 Oct 2004
Posts: 45670
Location: Essex

Posted: Wed Mar 14, 07 3:35 pm Post subject:
Well said Rob

sally_in_wales
Downsizer Moderator

Joined: 06 Mar 2005
Posts: 20809
Location: sunny wales

Posted: Wed Mar 14, 07 3:39 pm Post subject:

I tend to slide my rates about depending on the difficulty of the work. So, some of my very fine pixie hats actually take far longer than a chunky hat which replicates a historic example, but the pixie hat is knitting I can do almost without looking at the needles, so I can do it on the train or in the evening whilst talking to the family or watching a film. I charge less per hour for that than I would for the one I have to look at every single stitch on. Then you have 'perceived value', it takes me personally almost exactly the same effort to knit something in silk as it does in wool, and yes, the silk does cost more to buy in, but the end price will still be higher again because the market expects silk to cost twice as much as wool. Where I lose on one I gain on another. A very few items are so easy to make that I feel almost embarrassed to charge for them, but those are the ones that offset the items where you get a poor return on your time.

Like you very few of my items get me a normal rate per hour, what is important to me (or will be when I start doing this full time) is that my average over the year is at least the minimum acceptable wage for the amount of making hours I put in.

I think balance is the thing to strive for. If in doubt, work out your costs, double it and see if that looks like the acceptable market value. If its not, either up or lower the price, but only lower it if something else is picking up the slack.

Kits can be a lifeline here, the prototypes may be very time intensive, but a kit once made offers a good return. Personally I'm convinced that in the long run about half my income will come from things in kit form, and that the 'return' on those will be higher than the one off items.

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 14, 07 3:39 pm Post subject:

tahir wrote:

Well said Rob

I got the last bit from Joel Salatins dad- thanks to you

Stacey

Joined: 18 Jul 2005
Posts: 8380
Location: Kernow

Posted: Wed Mar 14, 07 3:57 pm Post subject:
So, how much should I charge? Sally, how much would you pay for alpaca/silk blend rovings? Does ï¿½5.80 sound too much for 44g?

jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28235
Location: escaped from Swindon

Posted: Wed Mar 14, 07 4:07 pm Post subject:
Unless you are running a social service, then what you charge should probably be what the market will bear. Then you need to work out the costs to see if it is worth doing.

Stacey

Joined: 18 Jul 2005
Posts: 8380
Location: Kernow

Posted: Wed Mar 14, 07 4:10 pm Post subject:
That's the trouble though Jema - I can't find anyone selling the same thing in the UK so I can't compare what the market will bear. I think I've underestimated the cost of the raw materials as well

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 14, 07 4:12 pm Post subject:
OK, price up what you think it should be, and double it

jema
Downsizer Moderator

Joined: 28 Oct 2004
Posts: 28235
Location: escaped from Swindon

Posted: Wed Mar 14, 07 4:14 pm Post subject:
Figuring out the market is 90% of being successful though And unless you are selling a "commodity" item, the price you can sell at bears very little relationship to the cost of production, and hence is the wrong thing be be concentrating on.

Stacey

Joined: 18 Jul 2005
Posts: 8380
Location: Kernow

Posted: Wed Mar 14, 07 4:18 pm Post subject:

jema wrote:

Figuring out the market is 90% of being successful though

And unless you are selling a "commodity" item, the price you can sell at bears very little relationship to the cost of production, and hence is the wrong thing be be concentrating on.

But if I just take the cost of the materials and double it I'll be eraning about a pound an hour

I might be the 10% that makes it despite being no good at priceing

tahir

Joined: 28 Oct 2004
Posts: 45670
Location: Essex

Posted: Wed Mar 14, 07 4:21 pm Post subject:
It appears that your materials cost ï¿½1.25, you've spent 0.75 hrs making it, at 6.00 p/hr that's ï¿½4.50, total cost ï¿½5.75 I think I'd double that. Where's all the knitters, how much would you pay for such an exquisite hand crafted creation?

Rob R

Joined: 28 Oct 2004
Posts: 31902
Location: York

Posted: Wed Mar 14, 07 4:21 pm Post subject:
No, the price you would pay, if you were buying it from someone else...

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