ADVICE SHEET 1: Business vs Hobby & The Pricing Dilemma

I think one of the most important things though is to understand why you are crafting?  Is it a hobby or a business.  If it’s a hobby then you have to be prepared to make a loss because when a hobbyist who loves fly fishing goes to do what they love they pay for petrol, wet gear, bait, rods, beer, lunch, a wee seat etc etc….and most of the time they won’t catch a fish worth ordering some chips for BUT they got real enjoyment from what they did and go home happy fish or no fish!

If it’s a business you have started then you need to look at investing in your business, it is suggested by business experts that no business tends to make real profit in it’s first year never mind it’s first 3 years, therefore covering enough to attend events and market your wares may be all you can hope for at the beginning and this timeframe is estimated for people who are working full time at their business.

When it comes to pricing your decision as to whether you are a hobbyist or an artisan crafter is extremely important.  As a hobbyist you should be happy to make back enough to cover your materials and a little expenses because after all the fly fisher will most likely never make any money off his/her hobby.  

As an artisan business person you need to have a real business plan and be clearly focussed on what you want to achieve, be careful not to produce for production sake and go to fairs just to make you feel like you are doing something.  You must analyse every decision in the same way any business would.  

Coca Cola and Cadbury remove product lines every day, week, year due to them not making enough profit let alone any.  There’s nothing harder than admitting your stuff isn’t commercial enough to sell.  I know, I am also a crafter.

So aside from everything comes the question of pricing.  I use a very simple template:

* The minimum wage is £6.31 for adults in the UK.  I take this as my absolute minimum hourly rate.

* So for example take a very basic item:
– Cost of manufacture, this includes a small percentage for delivery or transport to get the items – for our example I will say £6.25
– Hours to make – For our example I will say 40 mins
– Intellectual Property, this is if the design came from your own head, in other words you didn’t copy a pattern etc…. I usually say anything between 10-30% depending on how unique the idea is, for our example I will say 15%

So the cost of our example is:
– Manufacture £6.25
– Time £4.21
– Intellectual Property = £6.25 + £4.21 + 15% (£1.57) = £12.03

At £12.03 there is a good chance you can now increase this price to £12.50 minimum and £15 maximum and still be within a good earning range.  Now this is great if you are a fast worker and your craft is easily made.  People who spend a lot more time on their work may need to look at alternative earning potential from one item as well as taking a hit on their hourly rate or profit percentage.  

However, no matter what this template will help you to determine what your potential for profit might be.

And lastly don’t forget that being commercial is not a sell out if you have decided to craft for business. This is exactly what you should be doing, looking at market trends, fashion colours and trends and styles, what are the celebs doing, what are the homewares and fashion TV channels saying and what is crudely available on the high street.

Avalon Arts will be running a number of workshops in pricing, marketing, publicity, image/branding etc….over the coming months if anyone wants to pre-register for these (£10 for 2 1/2 hour workshop) let me know, avalonbelfast@gmail.com.

ADVICE SHEET 1: Business vs Hobby & The Pricing Dilemma By Tina Calder
(c) Avalon Arts & Crafts