The Puppet Pricing Calculator is a handy excel spreadsheet that provides a method that puppet builders – or anyone else producing handmade items – can use to price their work
Pricing your work can be really tricky – as most artists already know – and it’s surprising how many self-employed creative people don’t really have any idea how to price their work properly.
When calculating prices for your work there are a number of factors to consider, including:
- The cost of your product or service
- The prices of your competitors
- Your sales volume
- Your competitive/creative advantage
The spreadsheet below uses a pricing method that work best for someone who is making and selling puppets on a regular basis as their primary source of income (or someone who wants it to be their primary source of income), but the basic formula can be applied to almost any type of business.
Step #1 – Calculate Your Fixed Expenses
Fixed expenses are expenses you pay no matter how much you sell. Examples would be:
- Telephone/cell phone (if it’s used only or primarily for business)
- Office supplies
- Web Hosting fees
- Any other expense you incur directly for your business
You should also include in your fixed expenses a salary for yourself. A big mistake that a lot of artists make is that they pay themselves out of their profit (more on that below). If you are self-employed it’s very important to determine a realistic salary that you can live off of every month.
Once you add up your fixed expenses next you have to figure out how many products (puppets, workshops, or whatever) you can realistically sell per month. Next, divide your total fixed expenses by the number of products you can produce in a month. The result is your fixed expense per puppet sold.
Step #2 – Determine Your Variable Expenses
Variable expenses include anything you pay per puppet you sell (foam, eyes, etc.). Don’t include shipping costs because they should always be added on top of your selling price. Add up your variable expenses for one puppet and add them to the fixed expense per item sold. The sum of these two types of expenses is your True Cost per puppet.
Once you’ve calculated your true cost, you can’t sell your puppets for any less than that amount, or else you will loose money every time you sell something.
Step #3 – Determine Your Selling Price
Once you know how much each item you sell costs (your True Cost), you can determine your actual selling price. Basically, you have to decide how much of a profit margin you want. For example, in the spreadsheet the true cost of each puppet is about $585. If I wanted a profit margin of 10% then my selling price for each puppet would be about $645 and I’d make about $58.50 in pure profit after every puppet sold. That doesn’t sound like a lot, but remember I’ve already calculated a monthly salary for myself as part of my monthly expenses.
The puppet price in the spreadsheet varies according to the profit margin you enter.
Calculating your profit margin is more art than science and it usually takes some time and experimenting to decide what will work for you. The really important thing financially is that your profit either goes in the bank to be saved or gets re-invested in your business.
The most important thing to remember is to always make your salary one of your expenses. Save your profit or reinvest it, otherwise you’re probably going to end up broke!