Updated: May 25, 2020
I've had a lot of creatives and others stay at home moms ask me how I price myself. I know that my price point is higher than a majority of crafters out there. But the reality is, is most crafters are also hobbyists and their goal is not necessarily to survive off of the income that they are making from their creations. Whereas my creations are my business and they're my life and I look at them in that way. Because of that, I also price in that way. Not only that, but there are other factors that come into how I price the way that I do. I want to walk through those various topics with you. That way when you are working towards creating your own business, or if you ever get to that point of wanting to be a stay at home mom and running a business you need to have a mental shift before you go into that endeavor.
When I begin my tapestries, I knew that this was the form of income that I wanted to be, the thing that paid for all of my expenses, and then some. I don't want to just cover expenses. I want to have a profit at the end of the day. To feel like I have truly succeeded and that my time has been worthwhile and that I'm not just putting things out there. I want to thrive. Not just survive.
So when you are pricing yourself, you have a lot of things to think about. One of the first things is what are your essential expenses? How much is your rent? How much are your utilities? How much is your phone? Gas? Website? Taxes? Email? How much is that going to cost you? All of those expenses add them up.
Taxes (30% of income)
The second thing that you need to think about is what is the cost of your materials? So if your job requires you to purchase materials. For me, it's yarn or the cloth that I use to punch into, the boxes that I send my products away in, marketing expenses. All of those things. You also need to add that up.
The next thing is what is the cost for your time. When you work a 9 to 5 before you begin your creative passion, you're paid by the hour or perhaps salary. So when you switch from a hobby to an actual job, you need to think of it that way. You don't get the luxury of deciding that today you don't want to work because you're just too tired, or you didn't sleep enough, or you're just not feeling it. That's not how it works. You have to change your mindset from hobby to job. You are working a 9 to 5 essentially or more, especially when you're starting a business. In the very beginning, you're working more than 40 hour weeks. You're constantly thinking about that job. You're having to reach out to people, set things up, prepare things.
When pricing yourself, if you think about the average minimum wage, I think it's around $10 here in California. So make that your starting point. If you are creating something and it takes you two hours to make. Think about your time. So that's at minimum wage that's $20, $10 an hour. Then add on top of that the expenses for your materials and then also add on top of that, your essential expenses. Once you've done that, you need to divide all of that information and then based off of how much money you need to make in order to survive and how many pieces you're going to make or how many counseling sessions are going to book or coaching sessions you're going to book. That way you can break down. OK, this month I have to make $3,000 minimum to cover my expenses and you only want to have 10 sessions a month. That means that you need to charge $300 dollars a session. So let that sink in.
( Essential Expenses + Materials + time) = Total expenses
$2,000 + $400 + $200 = $2,600
Desired yearly profit / 12 = Desired Monthly profit
$50,000 / 12 = $4166
(Total expenses + Desired Monthly Profit) / Number of products you plan to sell per month
($4166 + $2,600) / 50 products = $135 minimum
Each product you sell would have to average $135 to allow you to reach your income goal.
I think that we have a misunderstanding when it comes to pricing yourself. It's very hard for us to own that power and to step into that power and say, I am worth this much. My time is worth this much. My skills are worth this much. And I also do believe. Yes. When you're starting now, your time and skills are not worth as much. How much time have you spent learning to master your craft? How many years of schooling have you had? How many years of an apprenticeship have you had? Or perhaps you're just delving into the work and even been doing it for a year or two years. Take that into account as you price. That's why people who have been doing things for 10 plus years can price so much higher because they've been practicing this and they've had all the struggles that you are going to possibly be going through at some point in time. They are pricing for those struggles that they've already gone through. You're being paid for all of the time it has taken to acquire the knowledge you now have to make the product that you sell.
So what's your income goal for the year? Don't just put a small number, but like put a number that feels like it's out of reach, but still relatively achievable. Maybe right now you're making nothing, but you've gone to school. You're starting to put yourself out there in regards to clients and marketing. And people are starting to come your way slowly. Give yourself a big goal. Say like $50,000 this year. I don't think that's that big of a goal. But it's large if you're going from practically nothing to something.
As you step out into the zone of business and not just a hobby, you need to have a mentality of abundance because it is so easy to have a mentality of scarcity. When you put yourself out there, if you have a scarcity mindset, you begin comparing yourself to others and it becomes a battle where you are fighting with people who are in your lane. But the reality is, is everyone can win. Everyone can make their dreams happen if they work hard enough and smart enough and if they have the passion and drive to make it possible.
You should be cheering on the people around you who other people would consider your competitors and cheering on your customers. The people who are coming to you and spending the money on you and showing you that, yes, you are worth my time and energy. Thank them for that. You can't have a business without customers.
So when you put yourself out there in a new way, it can be scary, but you need to own it. When you feel unsure of your prices and unsure of yourself your customers can feel that. In the beginning, if you are uncomfortable with it, but you know that that is the price that you are worth and that you deserve. Keep going. Push through the discomfort and eventually, you will get to a point where you can stand in confidence and tell a customer. I am $125 an hour or I am $300 an hour.
There are people who are $10,000 an hour and people flock to them. There is not a shortage of money in the world. You have to find your confidence and your strength and put yourself out there and persevere and also know your "why". Because if you don't have a "why" behind what you're doing, if you're just wanting to make money, when it gets tough, you're going to back out and move on to something else.
So know that you are worthy of success and you are worthy of financial freedom and that you deserve it. And if you put in the work and effort and the time and the energy, then you can make it happen. Overcome all of those hurdles that life is going to throw at you and just keep going and hold on to that "why" that you have in your heart and keep pushing forward because the sky is the limit.
Your mind is your limitation. If you don't believe in yourself, your customers won't believe in you. Your investors won't believe in you. First practice pretending to look at yourself in the mirror and say, I am worthy. I can do this. I am worth this. Eventually, your mind will begin to listen and agree. You will overcome that mental hurdle and you'll be onto the next one that's the way that business works.