Work at Home Crafters: What is Your Time Worth?

A Home Business Article Contributed by Donna m. Brown

You Work at Home, but is it a Business or a Hobby?

Many crafty people work at home making artistic creations to sell. The work is fun, fulfilling and can give you a warm fuzzy feeling when somebody purchases a piece that came straight from your heart. The question is, is it lucrative for you? Proper pricing can make the difference between a hobby and a work at home business that nets real profit.

If you are thinking about turning your hobby into a work at home business, determine at the onset if you can make a profit that will reward your efforts.

What is Your Time Worth to You?

Decide right now how much money you will make per hour. This is the first step to proper pricing. If you plan to mass produce, consider how much your employees will make. Multiply your hourly rate by the number of hours you will actually spend making crafts.

Be realistic in your expectations. Don't accept a wage that is so low it will demean your work and eventually cause you to throw your hands up in frustration. The time may come when your crafting is more work than fun.

By the same token, don't set a goal that is so high it is unattainable. Sure, we'd all like to make $35 an hour, but can you realistically achieve that goal in your first five years in business?

Say you decide you will pay yourself (or your employees) $11 per hour. Decide how many hours of labor per week will be involved. If you are willing to invest 40 hours per week in your work at home business, multiply the hourly wage by the number of hours you plan to work:

Your cost of labor is: 40 hours X $11 per hour = $440 per week

How Much Will You Pay for Supplies to Work at Home?

Determine how much supplies will cost to produce one finished product. If you buy products in bulk, estimate how many finished pieces can be created with one bulk purchase. For example, say you buy one large bottle of red acrylic paint for $2.99. Say you can paint 10 wooden Santa sleighs with that one bottle.

The cost to paint one red wooden sled is: $2.99 (the cost of one bottle of paint) divided by 10 (the number of sleds you can paint with one bottle) = 29 cents per item.

Add the costs of your materials together to determine the cost-of-supplies for one finished product.

How Much Can You Produce While You Work at Home?

Time yourself to see how long it takes to make one product from beginning to completion. Multiply the cost of supplies-per-piece by the number of products you can produce in one week.

The weekly cost of your supplies is calculated like this: $1.50 (the supplies required to complete one red sled) X 75 sleds per week = $112.50.

Now add the cost of labor and supplies together: $440 (weekly labor) + $112 (the cost of supplies) = $552 (the weekly cost of producing your products).

Divide that number by the number of items you can produce each week: $550 (the total cost of producing your product) divided by 75 (the number of products you can produce) = $7.36 (the wholesale price of this product).

Multiply the wholesale cost of your product by two to come up with a retail price: 2 X $7.36 (the wholesale cost) = $14.72 (the retail price of your product).

Can You Afford to Work at Home?

Compare the estimated retail cost of your product to others similar to it. How do you compare? If products like yours are selling for far less, you may have to reduce the price to compete. If the retail price of your product is far less, you might be cheating yourself.

You can work at home and make a good living doing something you love, but proper pricing is critical in the overall equation.