Price Your Craft

Lesson 4 of 8

Find Your Base Price

 

Price Your Craft

Lesson 4 of 8

Find Your Base Price

 

Lesson Info

Find Your Base Price

We're going to move on to less than three, which is all about finding your base price, your base profitable price that price that insurers you can reach, your personal goals, your business goals and have some money left over at the end as well. Does that sound good? Cool, so I wouldn't. I want to start this lesson off, but they really hard truth every year. Businesses that make lots of money go out of business every year. Businesses that make lots of money go out of business. We're talking about businesses from the biggest you can imagine to a smallest you can imagine every year businesses that make a lot of money go out of business, making a lot of money. Bringing in a lot of revenue does not mean your business is working. Its sales is the on ly number that you are using. Tio take the temperature of your business to figure out the health of your business. You're missing a lot of information and you could have some really unfortunate surprises coming up, and so figuring out your base p...

rofitable price helps you make sure that when you're making a lot of money, you're also running a healthy business now it's not the only thing, but it's what we're talking about today. Just because a business makes money and sells a lot of product doesn't mean it's working, you go on at sea and you see shops that are making thousands of sales every month now thousands in sales, thousands of sales it doesn't mean they're making a lot of money, it doesn't mean they're flying first class every time they go somewhere, it doesn't mean they've got a million dollar mansion it might or it might mean they are days away from bankruptcy and that stinks. But it's, true and it's why this is so important, so let's do some math now I think about all of them out ahead of time because I don't like doing math on the fly, so I just want to preface this whole this whole bit here, hopefully all the math that I did is actually correct. I'm pretty sure it is, but this is stuff that you can take home with you and think about for your own, for your own business on your own time, we won't be doing a lot of math on the fly today. This is one of the most common scenarios, and so this is why this is the scenario that I really wanted to break down, we're going to talk about a business selling business with slim margins, as in not a very large profit margin selling retail, so what does that look like? What that looks like what I see most often is someone selling say on at sea or on their own website, you know, selling through some other marketplace where they are on ly selling retail, they're not selling wholesale, they're not selling to other retailers and they've got a a legitimately low price on their profit on their product, their products price doesn't account for much profit at all, which is why they're selling retail so that's probably the scenario I would guess for at least eighty five percent maybe ninety five percent of people who are watching if you're in this camp, this is this may be what your numbers look like if it's not this kind of this math can still help you get an idea of where your at, where your business is that where your prices are so let's, take a look at this. I literally broke this down point by bullet point, so in this business that we're considering the price does cover materials overhead and even labor we're not even thinking about a business where someone hasn't accounted for labor and I know you're out there too. Then they're adding a five percent profit margin on top of that, ok, so they are accounting for profit just not a whole lot of it they're calculating their labor at fifteen dollars per hour and each product takes ten minutes to make this sounds a little familiar, I thiss isn't my first rodeo, I think that I am I we've got some pretty good numbers that are pretty true to reality. The price for the product is twelve dollars that works out to two dollars and fifty cents for labor, five dollars and ninety cents for materials, three dollars for overhead and sixty cents for profit now here's where things get interesting you're like yeah okay, terrible hopefully the math all works I understand that that all look it's good you followed the formula which we will get into in a minute, but we're following the formula this all looks right what's the problem here's the problem ah, thousand unit sales per month is twelve thousand dollars in gross revenue that works out to one hundred sixty seven hours of labor that's over for a full forty hour work days are working weeks, which earns twenty five hundred dollars in labor pre taxes and six hundred dollars in profit. Now that six hundred dollars is the money that is either yours awesome or if the money that you reinvest into the business to grow to grow beyond that twenty five hundred dollars a month in labor now all sorts of things they're going on here, but we're going to look at this just for a little bit more twenty five hundred dollars in labor now that could be your labor but it also would need to account for a production assistance labor if you needed to pay someone to help you make a thousand units. Would you have enough? Take home money at the end of every month is twenty five hundred dollars a month even enough take home money in and of itself? I think for most people it's not especially when you factor in taxes, which your employer is not paying payroll taxes into so much money. So much math twenty five hundred dollars a month is not a lot of money, it looks great on paper. Twelve thousand dollars a month in revenue twelve thousand dollars a month in revenue is eight that sounds awesome, but when you break it down, is it worth it? And that's, the next question we need to ask is it worth it if the prices you're coming up with even if the mass all works out? Is it worth it? Are you willing to work for plus forty hour weeks per month to make twenty five hundred dollars pretax and six hundred dollars in profit isn't worth it? How would you even generate that many sales? Are any of you selling a thousand units a month right now? Would any of you know how to go about selling a thousand units a month? So I love the faces of sheer terror in the audience right now and could you grow your business? Could you grow your business on six hundred dollars of profit per month? So now maybe you're not selling your product for twelve dollars apiece? Maybe you're not spending fifteen dollars in a knauer on labor? Maybe your numbers are higher than that? How much higher do you have to go to get to a point where it's worth it? How many units per month do you have to sell to make it worth it when it comes down to it? The prices that we put on our products if they're not right it just makes our business is not worth it you can have a hobby, you can make the things that you love to make if you want to run a business, make sure it's worth it and that's what we're going to talk about, we're going to talk about the math that it takes to make sure it's worth it. But before we do that, I want to talk about the wholesale meth because like I said, that example with someone selling it retail and that's very common what I hear all the time is I'm selling at retail because I can't afford to sell at wholesale here's the thing you can't afford to sell it wholesale you can't afford to be in business period full stop if you can't afford to sell it wholesale, you can't afford to be in business the other thing that I hear is I can't imagine giving half of what I make a way wholesale selling at wholesale is not about giving away half of what you make it's basically about hiring a new team member retailers are an incredible asset to you. They do so much of the work that you spend your precious time and energy doing right now, how much is that worth it to you? And the fact of the matter is we're the pricing formula that we're going to use accounts for profit at wholesale so that you can make the money you need to make selling wholesale so you can so they can pay themselves the retailers compay themselves two fell to actually sell your product, and we're going to talk in just a second about all the different things that they can do for you. Selling at wholesale does not mean giving away half of what you make on a product. Retailers do a great service to you, let's look at all the different things they do, they merchandise for you, they market for you, they maintain sales systems like, you know, pos systems. Those six are really expensive have you ever price those out there, much money, they hire sales, people, they do so much, they do community events, they they put ads in the newspaper. They bring people into their stores and all sorts of different, expensive ways. Retailers, do you a service? The more they market, the less you have to. If you're selling predominantly wholesale, you might need to show upto all three trade shows a year. Does that sound like a nice amount of marketing to do for your business? That's? Not a lot, it's. Probably a whole lot less than what you're doing right now. Are you paying yourself for that time? So bringing retailers into your business selling at wholesale can actually help you become more profitable, not less profitable. So let's, look at how you actually do this. Let's do the math. This is how to praise for profit at wholesale. First you have to account for materials. How much does it cost to buy the supplies that each product each unit requires? Then we have to look at overhead. Overhead is basically every other expense that it takes to run your business. It's the electricity. The king turns the lights on. It's. The marketing that goes into your business is the advertising that's over that it's pretty much everything else except labor labor is the cost of what it what it takes to actually make. What it is that you're selling and that could be your labor or it could be someone else's labor and don't worry, I'm gonna break these things down a lot more in just a minute. But let's get through the pricing formula then we have to add profit. You have to account for profit. Labor is not profit. Let me say that again. Labor is not profit. If you want to hire a production assistant, you need to pay them laborer. And now that money is not going into your bank account. What is the money that's going into your bank account? Profit alright materials plus overhead plus labor plus profit equals wholesale that's how you find your wholesale price when you price for profit at wholesale, you account for profit so that if you never sold another piece of retail you'd be happy with the profit you make selling wholesale any of you imagine never selling at retail again and still being happy with the money that you bring in. Yeah, yes, really selling retail is expensive, it's time consuming that is a great goal. The have now selling a resale is also great because sure, it does pad your bank account a little bit or it can, but we want to make sure that your business is completely function of functional and sustainable at wholesale all right, the other thing that's selling a reprise pricing for profit at wholesale does is that you can use profit to adjust your price for the way you want to position it in the market don't worry, we're going to come back to positioning in the next lesson but process it isn't a set number it's a variable it's something that you can use to make sure that your accounting for some profit there but it's also this number that changes that fluctuates based on what we actually want the price to be because like I said, this is just a base price it's not the final price so now let's talk about how you get to retail materials plus overhead plus labor plus profit equals wholesale times two equals retail this formula gives you a base price, not a final price. Your final price is determined by so much more than what an item costs to create remember that's our big fear refer today so our final price is going to be based on things like positioning, value story and overall business strategy or pricing strategy. But this formula gives you that base price that price that you know my business works at. So if your goal to this point has been making sure your business works, this is the formula that you need I'm here to tell you you can want so much more than that we're going to go beyond how it works and make sure that it's thriving but this is how you figure out it makes how it makes it work this formula give you the price as a function of cost and price isn't a function of cost so this is all of the disclaimers every ever because otherwise I could just end this class today you could do the math or right now I could end it right now you could do the math and you'd be set right but that's not how it works that's why I have a whole day to talk about price all right so so that's where we're at let's break it down each piece of this formula here's what to consider when it comes to materials materials is every single supply that goes into making your product it is that straightforward now what are some other things that you need to consider? Is it possible to get a lower price on materials? This is where big businesses spend a lot of time and energy right? How can I get the cost of my materials down? How can I reduce the cost of this so I could make more profit and still sell the the product at the price I want to sell it at? Is it possible to get a lower price on materials? This is something I don't think enough maker and croft businesses spend time on spend energy on it's worth sourcing it from the right place now I'm not saying do things that go against your personal values or do things to go against your business values they're the positioning and your your business in the market, but you do want to make sure you're getting a really good price that might mean picking up the phone and negotiating you're a business owner that's part of your job? Do the quality of the materials you're using reflect the quality of the product that you want tohave to the quality of the materials you're using reflect the quality of the end product you want to have now this goes both ways sometimes I see people trying to sell amore a accessible product with high quality parts that doesn't make a lot of sense if the math doesn't work out and of course, vice versa is true as well, and that I also see if that if you're using kind of mass manufactured or cheap parts cheap materials and you're trying to sell at the high end, you're going to run into trouble there's things you can do to mitigate that, but you're probably going to run into into trouble on then finally, is it possible to use a less expensive supply to get the same results? This is another thing to think about what I mean here is can you swap something out, for instance I use megan's examples all the time because the examples that I'm closest to the's hearings, what do you think they're made out of you? People are too smart, they are broads, but to the untrained eye, which apparently you all have I mean, you have a trained eye, but everybody else probably the people who are watching they look old, right? How would you know the difference? So she's not selling these is gold obviously she's selling them is bronze, but she's selling them at a much higher profit margin and a higher price point then you know, would be then you'd figure out from this cost, right? So bold doesn't give her a high enough profit margin, even though she can charge more for it. That's what I'm trying to say gold doesn't give her a high enough profit margin, even though she can charge more for it. Sometimes you can charge less and actually have a wider profit margin. And so that's what goes on with her bronze line? The similar thing goes on with her steal lie in her steal line is black and speyer blackened steal it also looks a lot like oxidized silver, while oxidized silver would be profit prohibitive, but the steel pretty much means for profit margins are their ludicrous in the best possible way. All right so that's what I'm looking at here is it possible to use a less expensive supply to get the same result and thereby up your profit margin? Those are questions you need to be considering it's not just how do I praise this product in front of me but how could I just this product to get to the pricing and profit margin that I really want to get to questions about materials wonderful what to consider when it comes to overhead like is that this is everything all your home studio expenses rent internet service phone electricity water insurance talk to your accountant but there is a certain percentage of all of those things that you can take as a business expense and if it's a business expense than it's going towards your overhead and so you want oh you want to work that into your prices as well so part of this is tax strategy part of this is pricing strategy okay advertising how much it costs to get a new customer so I mentioned before the break or in the previous lesson that advertising is something that I think more makers crafters designers should be spending more money on so make sure that your accounting for that in your overhead costs life ince's do you meet a business license or are you there's lots of different kinds of licenses are you do you need a business license or are you licensing images are you licensing brand names aa lot of maker and craft businesses have that to consider as well or they get in trouble and go out of business even though they've been making a lot of money so think about those things to make sure they're built into your business packing and shipping time are you paying yourself for packing and shipping and of course are you paying for your packing and shipping supplies? Publicity I mentioned that with korean parker from evolved financial a lot of maker and craft businesses really depend on hiring people to do publicity npr for them are you factoring that into your overhead? What else? What else can you guys think of goes into overhead travel anything else really? Tiffany yeah why don't you talk about that way lawyers on here and now I feel terrible okay, I'm keeping the stately I run a block called the artistry d that makes the lawless scary for creative business owners are missing a lot of web site costs as well yeah the website and maintaining all of those and plug in and all of that you could see I ran out of bullet points so yeah legal fees absolutely and then all of those e commerce fees trade show these trade show booths like all the stuff that you buy to put in the booth so that was all go into overhead everything you spend on your business that not materials and not labour goes into this figure. All right now, how do you calculate overhead per piece? Because if you don't know what the urban overhead per piece is, how can you account for it in pricing at the end of the year is just one giant number or the end of the month? It's just one big number we need to actually get down and figure out what your overhead works out to per piece now this number is constantly varying, but you want to you want to run a calculation like this, you take your non material, non labor expenses, non material, non labor expenses and you divided by the total number of pieces sold for the same time period. So if you're taking your non material non labor expenses for a month, you're going to divide that by the number of pieces that you sold in that month to come up with your overhead per piece. Now let's, talk about fixed costs versus variable costs per minute now we could literally spend all day talking just about this one thing. This is another thing that we talk about a little bit in that cash flow plan that's in the little bundle that you get when you are svp but fixed cost versus variable costs or it doesn't always cost more money to make more or it doesn't always cost less money to make less does that make sense? Way? Say you have to spend money to make money, which implies that the more money you spend, the more money you make that's not always true fixed costs are the cost that you have no matter how much you sell, okay, your home studio expenses largely fall into that category, especially when you're working from home, as opposed to working from an actual studio. What else falls into that category? A lot of your e commerce stuff is going to fall into that category your cost of web of hosting every month your cost of web design, those air all fixed costs, it doesn't matter how much or how little you sell, you still have to spend that money, either on a monthly or yearly basis variable cost are the costs that change depending on how much you're selling so sure materials are you're like biggest variable costs. We're not really talking about those, but advertising advertising is a variable cost. You can spend more on advertising to make to sell more so you can eliminate advertising from your budget, and then you're going to spend less right that's? What variable costs are questions about fixed costs versus variable costs? You guys are awesome, all right, let's, talk about what it comes, tio what it can't talk today what to consider when it comes to labor because this is a place where a lot of people get very stuck so your labor is the cost to make a peace whether it's your labor or whether it's someone else's labor all right that's important it includes production assistance so if someone is making, say, the component parts for your product or if someone is canning your sauce or jarring your sauce that kind of production assistance needs to be accounted for under lever you're paying an hourly rate for that there's time associated with it that goes under your labor costs I stole a tweet from someone about this particular one we actually a lot about taxes today who knew you need to think about taxes when it comes to what you are paying yourself or someone else when it comes to labor for yourself, you need to take what korean parker mentioned anywhere from twenty to forty five percent of your labor costs or plus profit in this case but let's talk about labor costs and account for that in terms of taxes so sure making twenty dollars an hour sounds might sound great but then come along and remember that uncle sam is going to take at least five dollars of that and that's fine but now you're left with fifteen dollars an hour is that acceptable to you that's something you need to think about it? It might seem like common sense but for a lot of people it's not and then you got to think of what is a reasonable hourly wage? Let me tell you something you're reasonable hourly wage is not what you made in your last day job it never ever is I mean, maybe if you were a neurosurgeon and now you're making jewelry that might be appropriate but by and large you're reasonable hourly wage is not what you made in your last day job why? Because you are only going to be able to bill labor for maybe twenty hours a week if you're working in your business forty hours week probably closer to ten and so you need to make sure that your salary the yearly income that you bring in is based on laboring for ten hours a week, fifteen hours a week, twenty hours a week tops ok, so if you're figuring out your hourly wage, make sure that your expenses are covered by an hourly wage calculation for ten to twenty hours per week. Questions about that yes is a questions about labor in general or though early we could be labor in general ok, I'm daisy church, I'm an artist and illustrator deasy church dot com and my question is so in my case I make artwork in illustrations has so when I think about the cost going into making a piece, I sort of have two different things to think about because I sell reproductions in prince of my yard, so I have the original time that it cost to make an original illustration or piece of art and then there's the time that takes me to print it on, you know, package it and ship it and those air much different. So it's really difficult for me to look at a piece and go, how do I take the time and labor that took into making the regional peace? But then maybe I'm selling at twenty, thirty, forty times how to kind of balance how to balance that out. Yes, ok, so that's a fantastic question in that it allows me to talk about something really important that I will get to in just a second. But what I would say specifically to answer your question is that so original artwork does not fit into this kind of pricing formula, right? You're going to price something, it three, five thousand dollars more than that, maybe and, you know most the vast majority of that is profit, right? That's price that comes from positioning, which is what we're going to talk about next when it comes to selling reproductions. I would encourage you tow absolutely still run this kind of pricing formula I think about how much the paper costs, how much your printer costs inc all of those things and then in terms of time think about literally how much time it takes to run off one of those pieces on but that maybe two minutes but factor that in because it might be it might be end up being important and a lot of times, especially in a business that can really scale like illustrations can that could be the difference between having a profitable month and not having a profitable month, so make sure make sure you do think about that now to get back to this far larger overall theme I know you all tuned in tow learn this pricing formula stuff, but like I said in the beginning this is the least important part of pricing and what that also means is that probably for a majority of you, this kind of formula doesn't apply. Okay? So this kind of formula is super important when you're running with little slim margins when you're really figuring out how many people can I hire to make this stuff so that I don't have to said I could run the business or market the business or all those other things, but by and large this is matthew need to dio but it's actually math that's not that important it's one of those balancing things right I want you to make sure your business works and then I pretty much want you to forget this number yeah ok so so that's where I'm coming from and that's such a great illustration artists designers uh any service providers who happened to be watching my my folks this pricing formula doesn't really apply to you um but it's still a good way to think about you know, just making sure each piece of piece of the puzzle works yes that's a question terror that goes back teo the materials on this the question is my material costs are extremely low this seems to produce a very low base price should ipad the materials cost or just go with the actual that's what profit is for okay, we're going to talk all about this in like about ten minutes because we're going to talk about positioning and about how none of this actually matters if you want to position your product as high end but it's still only cost you five dollars to make you could do that yeah and you could make a lot of profit. Okay. All right. What comes with yeah let's talk about profit what what do you consider when it comes to profit? This is the money that either returns to you as the owner of the business or the day owner I guess or is reinvested into the business for growth this money is your fund money it's either your fund money or is the businesses fund money because I think growing businesses this fun um it's also highly variable depending on your base price and you're positioning so no, I wouldn't pad materials I wouldn't pad labor I wouldn't pad overhead what I would pad is profit because actually assigning that category two that money is really important because that that is your fund money that's the money that you get to make the decision about ah big part of the the strategy for your business is decision making, and we need to make sure that you are empowered to make decisions about how you're going to grow your business about, you know, the different the different things that you're going to do to maybe improve the way that it works if you put that money under materials it's under materials and that might be semantic but it's also highly psychological if that money is profit now you're in control it's not just extra money you have to buy materials it's extra money you have to do whatever you want to move your during your business in the direction you want it to go let's workshop this a little bit I need a hot seat so I'm looking for someone who creates a product where there are specific material costs or specific labor costs specific overhead costs and yes, a new tribe is thinking of you why don't you come on up and remind us who you are where we can find you online what you do all that good stuff and then let's talk about how you price your products my name is anitra terrell and I designed vibrant to core for the culturally inspired and you can find me at reflection design dot com and also on instagram that reflection design costumes so tell me more specifically about your products are you making them are you designing them and having someone else make them tell me about like right now my primary products are throw pillows and floor pillows a swell is some textiles so much to buy a large piece of mud cloth for example on its a combination some of the items I make myself most of them I have a seems just make ok fantastic and are you importing the materials? Are you making the materials importing them? Okay, so you you're a great example you're really going on in your business not all of which we will be able to to cover today but let's talk all the way through it. So first of all let's talk about labor because that's the biggest headache for everybody so why are you paying yourself in our these days? Nature let's start with not nearly enough probably probably about minimum wage way so let's talk about minimum wage would you work a minimum wage stopping never know ok, so here's what I want you to dio I want you to rework all of your prices uh paying yourself at least sixty dollars an hour nice. I like the way you say yeah so I think that even on the low side but that's what I want you to work it on even the products that you have being outsourced because there's a lot of expense and energy that goes into outsourcing as well that's much harder to account for so if we just make it your hourly wage across the board then we know those things are covered ok, ok um yeah sixty dollars an hour that sound good that means you know, maybe twenty dollars of that for hours going to taxes which means you're keeping forty dollars an hour if your billing you know, twenty hours a week for labor than that's it that's it maybe not quite middle class but it's much better than where you're at income lies so that's kind of that really, really is the kind of hourly wage calculation everyone needs to be making. I would say sixty is a minimum for just about everybody are you guys ok with that? Okay, I know that's also really for scary what would it do to your prices? Do you think to raise your hourly wage that much they would increase significantly and that's exciting and scary ok at the same time yeah hopefully we can take a lot of scary out of that in the next lesson when we talk about positioning I don't know your business but I have I sneaking suspicion that that's a huge area of opportunity for you so yes so we'll talk about that let's talk about profit what kind of profit margins are you factoring into your prices right now right now it's the normal issue the normal equation adding the materials they were wholesale and then I multiply that times two okay to get the oh so your profit right now is your retail margin yes the difference between wholesale and retail is so you can't wholesale right now I'd love to right but you wouldn't make any money if you were wholesaling right frank okay, this is a problem so that's another thing that I need you to change immediately and I would love for you to do some calculations over our next break didn't that works for you but let's say let's just have you start off just to come up with a price at let's say a fifteen percent margin ok, so you're going to add up all of the materials overhead and labor and on and then come up with a price and then add another fifteen percent on top of that that's going to be your new wholesale price and then retail is going to be double that how are you feeling right now? Um I'm I'm accepting and that but it's not easy to walk into that yeah but I know that's what I need so I'm willingly but scarily stepping into that so this is another reason why the class doesn't end after this lesson because like I said at the very beginning if you're not confident about your prices your customers know and that stinks I'd like to use a stronger word but I won't it's really bad eso we're going to spend the rest of the day getting confident about the price that you're going to come up with over the next break andi I want that that goes for all of you if you find yourself in a similar situation where you're charging your you're paying yourself minimum wage I want you to significantly bump up that hourly wage and like I said I truly believe about sixty dollars an hour is your new minimum wage s so that's that's gonna be your baseline you want pay yourself more than that be my guest that I want you to add at least another five to fifteen percent in profit just to come up with a price we can adjust it from there but you need to come up with that based price so somewhere in the neighborhood of five to fifteen percent you could go higher again be my guest but that's that's, where we're going to start that's going to give you that base price, that then we can go and use throughout the whole rest of what we're doing, and so coming up, I want to come back to you specifically and talk about positioning in the next lesson and see, you know, what is a reasonable price for your market? What market do you really want to be in? How can we communicate about your product in a way that really fills in all the gaps in from the price that you're at now to the price where you need to be? Okay, any other questions about the prices for your products? Um, I think for me, a lot of it is thie fear of inventory, how much is too much? Is he often here? If you buy too much, you may not sell it now, it's just sitting there, or if you don't buy enough and you have a rush of orders, you're scrambling because you'll have enough inventory to make the stuff that you need. So when figuring out by pricing, do I sell it? You know, these are one of a kind, limited edition, so that when the fabrics gone is gone, or do I buy enough of the fabric so that I can say my prices now at this level, because I have plenty? Of materials to make what I need to make yeah, so this is a great question because it's a strategic question the answer is you can do either. So what kind of business do you wanna have? Do you want to have a business where you make a run of products and baby it's still limited edition? But you've got a run of things. You know how much inventory you have you're ready to ship all the time? Or do you want to have a one of a kind, super limited edition business? Which one's more appealing to you? I do a limited run. Okay, so where you're where you do have a more inventory on hand, okay, great, because you can do the math. Either way, you can base your prices based on marketing basic all of your business on either decision. But you have to make that decision to be able to figure that out, eh? So then, if it becomes, it starts to become a question of cash flow. What do you need to invest to make those kind of to get to that point of inventory? And then how much do you need to spend to make sure you blow through that inventory? Those that's really important, right? And so that's going tio cost per customer cost per new customer on dh that's going to be accounted for in your overhead but it's something that you want to work into your business as well is that you know you have the actual math on that one way you could do that is through advertising so platforms like google adwords and facebook you can run an ad and they can tell you in your dashboard how much it costs to get a new customer from that ad and now you have an actual number tow work with the number in actuality is probably lower because there's going to be word of mouth and there's going to social media and stuff you have that hard and fast number that you know if so if this is if my number is five dollars for instance and I spend a thousand dollars on uh wait if I spent five thousand dollars on advertising I'm going a thousand new customers in each customer is worth x amount and so now you can actually start doing math math for your businesses super empowering but you have to make those strategic decisions or those the spending decisions as well so that you can get the numbers you need to do the math that you need to make sure your other numbers work out I hope I didn't just over that I overwhelmed no okay great okay austin of anything else okay, thank you so much that was such a great example yes kenna I do have a question to this regard that a couple of people are asking online when you talked about the sixty dollars an hour minimum wage and earlier running for president, you talked earlier about that, maybe that ours is ten to twenty hours a week versus a forty or sixty or eighty. Yes, are you talking about that ten to twenty? What I'm talking about the ten to twenty? So yes, don't don't multiply your sixty dollars an hour times forty and think you make so much money. No, you wanna multiplied by that ten to twenty? Because part of why that is your minimum wage is that you need to account for all the other time you have to spend in your business. Now some of that's profit some of that's overhead. Now we start getting into murky waters here, where different things you can account for it in different ways. But for most of the people listening who are doing most of the production on their project of products, if you account for that type of hourly wage, then you're also accounting for time you're spending on facebook, you're spending on instagram, you're spending doing photography for your products, all of that kind of thing called great, so those are the so the basic elements that come into that ten to twenty hours. Can you remind us again yes is the ten to twenty hours is just production just production so at the time you spend on production that's the amount you're getting paid per hour or just that time great thank you yeah absolutely absolutely now as I said before you figure out that base price so that you're sure the math behind your business works how much do you need to sell at this price to achieve your business goals your personal goals we need to keep bringing all of this back to those goals that you said at the very beginning of this class and lessons one and lessons too how much do you need to sell at your new price to achieve your business goals in your personal goals because then you can tune in to megan's class at the end of this week and create your marketing plan so that you can sell that much so you can reach your personal goals in your business goals all of these things are intertwined all of these things are co dependent on each other so we need to know how much you need to sell at this price to achieve your business goals and your personal goals yes remind me your name and your message I am fanny of living richie on a budget do you have any guidelines for like people do digital products no digital products so this is going back to daisy's question again where art digital products any kind of information products, service based products those prices are large are almost exclusively really a function of the value and a function of positioning. So for instance, I'm releasing this new book called the observation engine it's nine thousand words it's a teeny tiny book too big value I'm choosing not to price it on value because personally I think it could transform your business and then I could say this is my new ten thousand dollars nine thousand word e book that's not helpful instead I'm choosing to position it on our price it on positioning, which is those kind of super small compact really strategic slashed tactical business e books are largely selling a around two, ninety nine on amazon right now, so guess what the prices to ninety nine also, amazon told me that's how I'd make the most money like that that's literally built into the calculation that they do for you or that they're starting to do for you so that was that's how I price that kind of thing when it comes to selling my high end programs, then I'm pricing largely on value some on positioning if I was selling it, if I was pricing exclusively on positioning, I could go way higher with it there are similar programs that cost ten or twenty thousand dollars buying cost thirty, five hundred I also you know the value of a tent it's. The same value, too. But still, I'm communicating value. I'm talking anyhow, there's. A lot that goes into it. Not much of it is related to this.

Class Description

Pricing your products isn’t just about covering your expenses and making a profit. Learn how to set a pricing strategy that tells a story about your business and helps you reach your goals in Price Your Craft with Tara Gentile

Tara is a respected strategist and author who helps her clients make their businesses more profitable and brands more compelling. In this class, she’ll explain both the tactical and strategic aspects of pricing. You’ll learn how to: 

  • Set a price that positively impacts how your brand is perceived 
  • Identify buyers who are into your products 
  • Uncover how your products are really used and why they are purchased 
  • Set prices based on your personal and professional goals 
Tara will share her must-use pricing formula and help you tailor it to the way you do business. She’ll help you account for the many details that go into fine-tuning your price story and help ensure that you turn a healthy profit on every sale. 
Your price matters! Learn how to develop a pricing strategy you can apply to everything you produce in Price Your Craft with Tara Gentile and achieve your big financial goals.


Click here to download the Kickstart Your Profit Bonus Material.

Lessons

  1. Price Your Craft Intro
  2. Invest in Yourself
  3. Invest In Your Business: Plan for Growth
  4. Find Your Base Price

    Find the price that ensures you can reach your personal goals, your business goals, and have some money left over.

  5. Position Your Product
  6. Create Your Value Story
  7. Negotiate Your Numbers
  8. Create Your Price Strategy

Reviews

a Creativelive Student
 

Excellent. This class is about much more than just a formula for determining your prices - Tara goes deep into detail about how your pricing affects every aspect of your business and brand. She explains how to price for the business you want and the goals you want to achieve. I'm so glad I bought this one. I'll be referring back to it as I work my goals this year. Don't miss it.

a Creativelive Student
 

Excellent. This class is about much more than just a formula for determining your prices - Tara goes deep into detail about how your pricing affects every aspect of your business and brand. She explains how to price for the business you want and the goals you want to achieve. I'm so glad I bought this one. I'll be referring back to it as I work my goals this year. Don't miss it.

user-fcf308
 

Excellent course! Tara is a brilliant teacher and this course was jam-packed with take-aways. I finished the course understanding what I need to do and with a clear plan for going forward with my new pricing strategy.