Chicken & Egg....

[JSR]

personally, I dont charge that much for labour now, as I can print a pre-designed mug quick enough, and its the one thing I can be flexible on, providing im making profit on my material/overhead costs - for now.....because Im still learning and trying to build something with longevity....as long as I make around 50% on cost Im happy...

Labour still costs you whether you charge for it or not. Uncharged labour is, in the final analysis, taken out of your profits so you may not be making the profits that you think you are.

For instance, if you breakdown the order value into 50% materials and 50% profit because you're not charging for labour, and your labour turns out to cost you as much as the materials, then you've actually made no profit - you just believe that you've made profit because you've ignored the labour costs. That's no way to build something with "longevity".

[Lee]

but it is when Im doing this in the evenings whilst working full time, its allowing me to do create something solid to build on... That aside, I charge between £4.99 - £5.99 plus postage, which is defo middle of the road as far as prices go, so compared to those guys charging less/free postage, my profits are still pretty healthy..IMO

[Lee]

* 4.99 - 6.99

[pitkin2020]

Ah, so the profit is 1/3rd of the order value, and you're willing to cut into your labour costs as well as profits. I understand better now.

Yeah sort of lol, that was just a crude example. On average jobs the profit can vary from a 1/3 to 50/50 depends on the job and the perceived value of the job too. Even 80%+ if you try to price yourself out of a job and the damn customers still wants it doing lol. Also bear in mind my prices are set irrespective of my current overheads, because my over heads are low at the moment doesn't mean I should charge less than someone with higher overheads providing the same service. It does mean though I have the flexibility to give discount to sacrifice profit margin.

What I mean by that is, too many people who work from home for example have low overheads so lets say they could charge £10 an hour for their service and still be making a tidy profit. Trouble with charging that is when you want to move your business up to the next level and take on commercial premises say and you need to charge £20 an hour labour you have a good chance of losing the client base you have built up as effectively you are having to charge double overnight to cover costs. If you charge £20 an hour from the offset you will get to the commercial premises quicker but in the early days you can offer huge discounts to entice clients in if you have to whilst still maintaining a healthy profit.

[Lee]

so, when you are pricing an order say for 20 mugs - would you work out the cost per mug - say £2.50, then think, okay that will take me 2 hours at £10 per hour - so £20 divided over the 20 mugs is £1 on to the cost - so the true cost per mug including labour is £3.50 - then you add your profit...? Seems fair enough

[pitkin2020]

so, when you are pricing an order say for 20 mugs - would you work out the cost per mug - say £2.50, then think, okay that will take me 2 hours at £10 per hour - so £20 divided over the 20 mugs is £1 on to the cost - so the true cost per mug including labour is £3.50 - then you add your profit...? Seems fair enough

I don't do mugs (just to make that clear lol). But your above sums seem to add up if your labour cost is £10 per hour and you can do 10 mugs an hour than each mug will cost £1 in labour plus the cost mug + profit % (say 40% = £4.90). Your profit margin % may change though as for mugs you could charge a higher markup for something more complex for example as it would have a higher perceived value than a mug with just an A on it.

[mrs maggot]

What I mean by that is, too many people who work from home for example have low overheads so lets say they could charge £10 an hour for their service and still be making a tidy profit. Trouble with charging that is when you want to move your business up to the next level and take on commercial premises say and you need to charge £20 an hour labour you have a good chance of losing the client base you have built up as effectively you are having to charge double overnight to cover costs. If you charge £20 an hour from the offset you will get to the commercial premises quicker but in the early days you can offer huge discounts to entice clients in if you have to whilst still maintaining a healthy profit.

pitkin, that is very well put, and hopefully some people will take it on as a guide to starting a business from a hobby, rather than a hobby being subsidised from the job they are already in

[pitkin2020]

pitkin, that is very well put, and hopefully some people will take it on as a guide to starting a business from a hobby, rather than a hobby being subsidised from the job they are already in

Trouble is it happens in a lot of industries where people see it as just an extra income so undercut and devalue the whole market, which may be great for them at the time as they earning some extra money. As they are earning some nice extra money they then think they would like to move it up a gear and into a business but find the low low prices they are charging are not sustainable, not without tripling the orders as such. Its always far easier to drop your prices then to raise them. A customer who was paying say £5 when you were doing it as a hobby isn't going to be too pleased when you have to raise it £10 as they only see the fact you could do it at £5 not so long ago!!

I'm also heavily involved with bouncy castles and my family business is full time hiring. We have a few people come into the scene locally who are doing it for beer money basically on top of their day job. Sending castles out for £35. Which may seem reasonable but take your costs out of that and the fact its a limited time frame to earn a living there is very little profit in it. That person only needs to have something go wrong with the inflatable and he will be running his business at a big loss.

[mrs maggot]

its the same for us pitkin, and most businesses,for example we have a friend who is a tattooist, fully apprentice time served over 20yrs own shop etc, now stuff can be bought on ebay for tattooing, there are now 11 tattooists "home registered" in kettering, and god knows how many others home scratching with no registration - ebay has a lot to answer to.

we also come across the "gazebo brigade" as we call them at events, turn up in hubbies company car (no fuel outlay) sell for the day and drive home with £100/£200 which they see as profit, when the wind blows and the gazebo goes, i used to feel sorry for them and watch in horror as other traders turned their back on them and went back on their stall - now i to turn my back - harsh but true, im not selling to fund a holiday im selling as its what i do 24/7

[John G]

"gazebo brigade"

I bought a gazebo for the stall I ran last week - hmm!