Costing and pricing guide: aimed at creative product makers - micro-business and includes table and excel mini-spreadsheets to help you calculate. Learn to understand how to effectively and simply cost your products and ensure you are not losing money produced under the OAS Femcidi Craft Enhancement Training, Saint Lucia: Written by Finola Jennings Clark for the Cultural Development Foundation, Saint Lucia

1. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
COSTING & PRICING
No, it’s not your worst nightmare!

2. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Exercise before you get up and running!
Take a moment and write down 5
things you think you need to include
in your
cost of production

3. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Exercise before you get up and running!
COST OF PRODUCTION

4. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Exercise before you get up and running!
Do I really need to take
EVERYTHING into account before I
can sell anything???
Well…yes…and no….

5. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Exercise before you get up and running!
Understanding the process is very
important
You need more than a ‘Guesstimate’
KNOWLEDGE is POWER

6. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Direct or Variable Costs / COG
What is COG? Cost of Goods -
EVERYTHNG that goes directly into making an item –
such as
 Raw Materials used in your products
Inward Shipping for anything you import to use
in your production
Import Duties for anything you import to use in
your production
 Labour – the time you take to make your products
 Packaging & Labeling used on your products

7. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Indirect Costs / Overheads CODB
What is CODB? Can you guess?
Cost of Doing Business
EVERYTHNG that has to be paid whether you produce
items or not – such as
 Rent / Mortgage
 Annual Insurance for premises
 Internet
 Admin Staff
 Your wages when you are not in production

8. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Semi-Variable Costs
 These costs vary as your
business expands or from time
to time – so they are neither
fixed, nor variable, but Semi-
Variable
 Why do you think these costs
are semi-variable? Lets go
through them
 Production Staff costs
 Electricity & Water
 Telephone
 Transportation
 Professional Fees
 Outward Shipping
Costs
 Contingency / savings
for expansion
 Equipment Purchase &
Repair

9. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
You need more than a
‘Guesstimate’
Able to PAY YOURSELF!!!
Taking the time to get to
know your costs will
ensure you are actually…

10. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
OKAY so let’s do a costing
Do you know what
your materials cost?

11. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Those old beads…?
Let’s start with MATERIALS

12. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
HOW DO WE COST MATERIALS?
 Well first of all NOTHING is for FREE
 Eg things people give me, free design, waste materials – they do have actual costs to you
 What do you think the cost of FREE stuff is?
For example, did you drive to pick up ‘free’ materials?
Did you spend time posting on Facebook to see if you could get ‘free’ stuff
Did you have to store all this ‘free’ stuff in your studio/home until you used it?
Then there are costs to this free stuff

13. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 NOTHING is for FREE
You drove to pick up ‘free’ materials?
Your time taken to drive
Your gas to get there and back
Wear and tear on your vehicle
Did you spend time posting on Facebook to see if you
could get ‘free’ stuff
Your labour cost for the time it took to post and
follow up

14. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 NOTHING is for FREE
Did you have to store all this ‘free’ stuff in your
studio/home until you used it?
Storage space costs rent
If I had to pay for it cost
Use substitute costs – eg online
 So, you were on HOLIDAY?
Can you order some more from
Walmart?

15. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 The beads were on 70% sale
online– GREAT!
What happens if you get a big
order and need more?
cost the cost of replacement not what you
did or didn’t pay for it!
Always think ahead! Think like the business person you are – any savings you
make getting ‘free’ or bargain inputs is great – that profit – but your COST is
what it would cost if you had to pay ‘full’ price

16. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Costing Imported Goods
Usually when you import you shop for a variety of things at once – how do you make sure you have accounted for
the true LANDED COST of the goods?
Quant Item Unit cost Total
10 2oz paint $5 50
2 2 oz paint $8 16
1 Pk brushes $20 20
500 Headpins $10 10
250 prs Ear wires $50 50
Sub -Total 146
Shipping 60
Customs 110
Total 316

17. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Costing Imported Goods
Add up the shipping and customs (insurance too if applicable) = $170
Your purchase price online is $146 so TOTAL PRICE = $316
To the real cost of each item, 316/146 x the price of the item
or 2.16 x price of each item
Quant Item Unit cost Total Ship & Cust total Price / item
10 2oz paint $5 50 X2.16 108 10.80
2 2 oz paint $8 16 X 2.16 34.56 17.28
1 Pk of 5 brushes $20 20 X 2.16 40.32 8.06
500 Headpins $10 10 X 2.16 21.60 0.04
250 prs Ear wires $50 50 X 2.16 108.00 0.43
Sub -Total 146 312.48
Shipping 60
Customs 110
Insurance
brokerage
Time to order
Total 316

18. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Costing Imported Goods
What are the important takeaways from this exercise?
Nothing is for free
Pay yourself first
It is your business so LEAD IT!
Learn to calculate your risk
Know when to outsource
Learn to say NO
Do what is right for the business
Know your true / full cost
Include labour cost
You may notice the adjusted cost is a little less than the real total – so in this
case, you could round UP the adjustment figure to make sure you have covered
everything – so use 2.17 instead

19. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Costing Imported Goods
Homework
Cost at least 3 of your most important materials

20. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Costing
Review
How did you fare with your homework?
Are there any areas you need to go over?

21. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
I make LOTS of money from
my Crafts!
 Let’s figure out what you should be charging for
your labour / for your time
Which one is you?
Many crafters and artisans don’t charge for their time
or charge an arbitrary figure –which usually isn’t
enough!
I don’t make enough money
from my Crafts!

22. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Figuring out what to charge for your time
There are a few ways to look at this, first
 Do you have, or did you have another job?
 What is/was your hourly rate?
Monthly salary x 12 mths / 52 weeks / 5 days / 40 hrs =
hourly rate (use 45 if you normally work 45 hrs per week)
 Decide if you want to earn the same, more or less
 What are the things that affect this decision?
Continue on to calculate your time charges using a
job earnings comparison

23. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 How many weeks/days will you work a year?
 Will you take Holidays?
 Divide the AMOUNT YOU NEED TO EARN by number of
working weeks
 eg if the total you need to earn is $30,000
 and you will work 47 weeks a year, then you need to earn
30,000 / 47 = $638.29 per week IN SALARY/WAGES
 If you work a regular 40 hr week (8 hrs / day) then your hourly
wage needs to be $15.96 / hour
 BUT if you only work 6.5 hrs a day (1hr for lunch ½ hr breaks)
then you need to earn what? – calculate it
Figuring out what to charge for your time

24. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 If you don’t have a job – do you know what you’d
like or need to earn?
 To calculate this – decide first is this just for you or
1) do you have to consider cost of kids too; or
2) do you have someone else contributing?
and
3) Do you have personal plans to travel, build a
house or have a medical procedure or…?
Figuring out what to charge for your time

25. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 Now start to list all the things you need money for
 Rent/mortgage
 Utilities
 Food
 Transport – bus & taxi / car loan, fuel, service, insurance
 Clothing & Personal items
 Entertainment - Movies, parties, presents, hobbies, books
 Health
 Savings
 Home repairs
 Unexpected
 Anything else
 Total all these items per month and then x 12
 = AMOUNT YOU NEED TO EARN
Figuring out what to charge for your time

26. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 Do you have another source of income (eg Job)
 if yes, you can deduct that amount from your annual needs.
 The balance = what you need to earn per year
 Using the method described in the previous slides - What
would be the hourly rate for someone who
 Needs to earn $50,000 per year
 Has a job that earns $35,000 per year
 Can only work part-time on evenings, weekends & holidays
which totals 500 hrs per year
Figuring out what to charge for your time
See our COSTING YOUR LIFE powerpoint for useful Excel tables for this costing exercise

27. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
ARE WE THERE YET???
 Ok, in a big business, a professional will do all
the calculations of overheads, COGs, variables
etc and figure out production quantities
etc…we are NOT going to do all that –
we can do an estimate with what we
know
 You’ve already made some decisions
and know
 Hourly cost of your labour
 How you will cost your materials

28. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 Ok, so here’s what most people to so all
these costs are covered
 Add a percentage on top of your COGs to
cover these kinds of things and all those you
can’t foresee - how much do you think we
should add? Well, we’ll take a look in a few
slides, but for now…
 Let’s take a step back now – what goes into
COGs?
Let’s list all the things? For the bracelet

29. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Direct or Variable Costs / COG
What is COG? Cost of Goods -
EVERYTHNG that goes directly into making an item –
such as
 Raw Materials used in your products
Inward Shipping for anything you import to use
in your production
Import Duties for anything you import to use in
your production
 Labour – the time you take to make your products
 Packaging & Labeling used on your products

30. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Cost of Goods for the Bracelet
ITEM UNIT PRICE QUANTITY TOTAL
Red bead 50 4 2.00
Silver bead 75 6 4.50
3mm cord /cm 10 20cm 2.00
Lobster claw 75 1 .75
End caps 25 2 .50
chain 50/inch 1” .50
Pink bead 50 1 .50
TOTAL 10.75

31. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 Indirect Costs / Overheads CODB
What is CODB? Can you guess?
Cost of Doing Business
EVERYTHNG that has to be paid whether you produce items or not –
such as
 Rent / Mortgage
 Annual Insurance for premises
 Internet
 Admin Staff
 Your wages when you are not in production
Now remember CODB (see below) – where you add in the
overheads. NOTE – if you don’t have staff and separate
business premises, you can just include these in working out
your labour rate (see Costing Your Life) – just MAKE SURE it is
covered somewhere!

32. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
If you DON’T want to include it in your cost of
labour, you will need to make an estimate of
overheads
First add up all the things you have to pay in a year for in your
business that are NOT part of COG
Don’t forget to consider things like ‘Depreciation’ &
Breakage
How often you need to replace tools and equipment etc?
 For instance, your computer – how many years can it last?
 Your car – how long before you need to replace it?
 Approximately how many tools get broken each year
For our purposes you can estimate how long it will last then
divide the purchase price by the number of years

33. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
 Eg: a computer costs $2400 and lasts 4 years, therefore it costs
$600 per year: you can now add in this cost to you annual costs of
your wages or, spread it across all the items that you make
To apply it to your production costs, start with the
total $-value of goods you make in one year –
E.G. $30,000 in goods at wholesale prices, and total
annual costs of overheads is $2,000, gives:
2,000 / 30,000 = 7c per dollar to my COG
 So if an item costed $10 before, you would now add 10x 7c =
70c and it would cost $10.70
Do a thorough check of what you need to take into account?
List them all, add them up and then lets move on…

34. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
From Costing to Pricing the bracelet
COSTING - Items Value
Cost of goods 10.75
% for overheads etc 20% 2.15
Subtotal 12.90
% for contingency 5- 10 % @5% 0.65
Subtotal 13.55
% for profit 30% 4.07
WHOLESALE 17.62
Wholesale Cost

35. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
From Costing to Pricing the bracelet
COSTING - Items price units
WHOLESALE for the MAX price break 17.62 100
WS for middle price break 18.50 50
WS for small price break 21.00 10
Single unit WS 25.00 1
Wholesale Price $25.00

36. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
TYPES OF PRICING
 Wholesale Price: Price to a reseller
 Bulk Price: Wholesaler quantity discount or
 Direct to customer buying quantity****
**** - discount of RETAIL Price

37. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
From Costing to Pricing the bracelet
PRICING - Item Value
Wholesale Price 25.00
SRP – usually minimum of 2x Wholesale 50.00
% allowed for consignment 35% off retail
Price break for retail multi-item purchase
reseller
% discount for retail direct from maker
Price break for retail multi-item purchase
maker

38. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
ARE WE THERE YET???
 Almost…
 In an ideal world this formula for PRICING would put you
right on the mark – But …
Why are you in Business?
Use up free time?
Pursue a Hobby?
Make money?
 Should we price at the formula price or

39. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
ARE WE THERE YET???
 Almost…
 The costing part needs you to follow a formula to make
sure you are not WHAT….. ?
Pricing, now that can be done differently
Market testing
Comparative pricing
Setting your price
 What do you think each of these involves and what are
the advantages and disadvantages?

40. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Market Testing
 How / What’s needed?
 Advantages
 Disadvantages / Challenges / Dangers

41. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Setting Your Price
 How / What’s needed?
 Advantages
 Disadvantages / Challenges / Dangers

42. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Comparative Pricing
 How / What’s needed? Tough low cost competitors
 Fair trade
 Superior quality
 Visual Appeal
 Packaging as well
 Buy Local loyalty
 Customization

43. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
Custom Costing & Pricing
 How / What’s needed?
 Advantages
 Disadvantages / Challenges / Dangers

44. Author:
Finola Jennings Clark
for the Cultural
Development
Foundation, Saint Lucia
cdfstlucia.org
YES!!!!
 But there’s HOMEWORK 
ARE WE THERE YET???