Craft Venture: accounting for direct costs, part II

Nosotros've been talking well-nigh calculating your expenses as part of your production cost. Final calendar week, we started talking about straight costs. In theory, your direct expenses – the materials and supplies used to brand your produce or perform your service – are straightforward and hands identified.

Or are they?

Don't forget "hidden" costs, easily overlooked, like fees charged by your particular venue(due south) and Paypal or other online payment and banking systems. Are there sales taxes that you're non charging your customer outright, but that you're still liable for?

You might exist using vintage or heirloom supplies handed downwardly to you, such equally your mother's push stash or beads from your grandmother's jewelry. Consider assessing each a "price" based on current value or using another methodology, which will help your prices remain fair, consistent, and (almost importantly) ensure some level of profit for you.

How do y'all business relationship for the cost of a major component when the toll varies depending on when and where purchased? Do you lot use an average expense for that component, to continue your prices for those items consequent, or do you vary the price of each detail as it's fabricated, by the actual component use and cost?

How do you handle an unexpected increase in supply expense? Do you enhance your ain prices accordingly? Or decrease your turn a profit margin in order to maintain your current prices?

The answers to these questions aren't very straightforward, and vary from creative person to artist. I can make a valid argument in either management for each case! I encourage you to think through all of these and how each affects your business and artform. Many of us are in business for some form of fiscal proceeds:  to brand a living or cover the cost of your materials and supplies or to give to charity or to have a picayune pocket money.

In order to realize financial gain, your prices take to embrace your direct and indirect costs and then some (e.grand., "profit margin"). It is perfectly alright – truly it is – for you to both want to make and achieve a turn a profit!

Share with us what you lot learned by examining your own hidden direct expenses? Do you take additional questions about direct costs?

Image credit:  1. Encaustic sampler set of 5 handmade paints, by Jamie Ribisi-Braley; 2. Vintage sequins, metallic dark emerald, by narceine

Encounter you next calendar week! Brenda from Phydeaux and Phydelle

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