# Pricing Time



## BrewerGeorge (Apr 19, 2017)

For several months, my daughter has been after me to start selling a few things - primarily lotion bars - to her friends.  I've been resistant, but she has asked me enough times to get me looking in this sub-forum.  Reading about what is required to "do it right" for even the smallest sales presence has pretty-much affirmed my resistance.  But I'm still curious about how you value your own time.

I've read the threads about properly pricing items for sale, including materials, labor and overhead.  I have a business and technology background, and work with cost justifications all the time in my real job, so it's second nature for me to include all that.  The tough question is "How much am I worth?"  I know how much I'm worth in my daily job, but I've got degrees and 25 years of experience informing that.  I know how much people who work for me are worth, because I know how much they produce, the local job market, all that stuff.  But I have no similar basis for how much I might be worth making a lotion bar or a batch of soap?

So how much do you pay yourself when you calculate COGS?


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## Viore (Apr 19, 2017)

I pay myself $10 an hour because it's easy to figure out. With inflation and minimum wage going up (at least in California) I might have to start paying myself more!


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## dixiedragon (Apr 19, 2017)

I've sold a bit at a few small craft shows. I usually charge around 2X materials. This is because I like making soap, etc and I am happy to send it to a new home to make more. For something like a lotion bar I usually tack on about $1 for packaging, assuming it's in a roll up tube.


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## DeeAnna (Apr 19, 2017)

Speaking from the experience of my day job of leather working -- What number I use for labor depends a bit on what I'm doing. If the work to be done is something my co-worker can do, I use her labor rate adjusted for FICA-medicare -- that ends up being about $13 per hour. If the work to be done is something only I can do, I use my higher labor rate. If the work requires both of our talents, then I'd use a labor rate somewhere in the middle. 

You could argue that low-skill tasks should only be paid at minimum wage, but here in Iowa, the minimum wage is stupidly low and inequitable. I can't do that and still like the face I see in the mirror. On the other hand, I have advanced degrees in engineering and a fair bit of professional work experience, but I can't put a value on my labor using that basis. (Wish I could, though!)

I also make adjustments for the time needed for each task in a project. If I'm new to a task, it will take me longer than if I'm an old hand at the work. I generally don't expect the customer to pay for time spent learning to do my job, so I usually figure the labor cost based on the time needed for a moderately experienced person to do the work.


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## SheLion (Apr 19, 2017)

I don't have a specific number for you but I did want to say don't sell yourself short. Consider the expertise you've gained through all the time you've spent doing R&D to create and perfect your recipes. That experience and knowledge should be reflected in your labor rate.


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## Susie (Apr 19, 2017)

My recent research into this very subject said to charge double whatever you would pay untrained labor as the cost for yourself.  I wish I could remember where I read it, though! (Of all the things I've lost, I miss my mind the most!)


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## cmzaha (Apr 19, 2017)

dixiedragon said:


> I've sold a bit at a few small craft shows. I usually charge around 2X materials. This is because I like making soap, etc and I am happy to send it to a new home to make more. For something like a lotion bar I usually tack on about $1 for packaging, assuming it's in a roll up tube.


I am like Dixiedragon, I love making soap and what do you do with tons of soap but sell. It is a small cash business so I simply do not stress at pricing and keep the accounting very simple. I get $7.00 per 5.5-6 oz bar and know I am not losing money. My little business buys my groceries and all my supplies, plus it makes me happy.


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## CaraBou (Apr 20, 2017)

I don't sell, but it seems to me the price of these types of products is pretty well established. Around here it's $5-7 for handmade bar soaps; not sure about lotion bars but a little market research should tell you. It seems doubtful there's a wide range in what you can get unless you're willing to purposefully undercut others in the biz. Go too high and it stays in your bins.

If you're still interested in pricing it out, to me the bigger question is not hourly rate, but how to get back the amount needed for insurance. That has been enough disincentive to me. But I suppose that would be a non-issue if you already have business insurance in place.


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## PuddinAndPeanuts (Jun 11, 2017)

I know this is the wrong way to think about stuff like this, but here goes:

I price things based on the maximum the market will bear.  If I want to make a B&B product or a piece of jewelry that could not sell for considerably more than it cost to make it- I opt to make something else instead.  A very few things I make 2x materials.  Others are 5x, 10x or 20x or more (my jewelry supplies are often upcycled "junk" and just as often, dirt cheap).

As for how I think of valuing my time, it's similarly highly thought out, but informal. I want to make more profit on some things than others.  My time is worth less to me when I'm making something I enjoy.  When it feels like work, I need to make more money if I'm going to do it.  

So- as an example- I make typewriter key bracelets (I know it's not bath and body stuff, but I hope it illustrates my point well).  I feel that at $49 I'm pretty maxed out at the upper end of what they could sell for.  They have approximately $13  worth of materials in them, and about an hour of labor to make.  Once upon a time, that was fantastic!  Then it was great- but maybe I quit wholesaling those suckers.  Now...  meh.  I'm SO FLIPPIN TIRED OF MAKING THESE.  I may discontinue them.  On the other hand, if I can find a way to sell these babies for $99- I'll be back in business with that design and super enthusiastic about the whole thing.


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## The Efficacious Gentleman (Jun 12, 2017)

For starters, you shouldn't be thinking in terms of 2x or 5x material costs. Wholesale is 2x ALL costs. Materials, time, overheads (power, rent, insurance etc) and retail is 2x wholesale. That's a general rule of thumb, if the end price is 6.37 then you might round it to something more useful. 

For many people that might well price them out of the market, which means that their costs are too high or everyone else is under pricing. 

If costs are too high, lower the material cost or decrease the time taken.


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## PuddinAndPeanuts (Jun 12, 2017)

The Efficacious Gentleman said:


> For starters, you shouldn't be thinking in terms of 2x or 5x material costs. Wholesale is 2x ALL costs. Materials, time, overheads (power, rent, insurance etc) and retail is 2x wholesale. That's a general rule of thumb, if the end price is 6.37 then you might round it to something more useful.
> 
> For many people that might well price them out of the market, which means that their costs are too high or everyone else is under pricing.
> 
> If costs are too high, lower the material cost or decrease the time taken.




There's no question that you're right.  In my case I have a hobby that became a passion that became a business.  For myself, I'm a better hobbiest than business person.  I probably could have aptly titled my reply "What Not To Do"


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## The Efficacious Gentleman (Jun 12, 2017)

But you do make a good point - many people enjoy making soap and so the time is far lower in their calculations, if it's there at all, when pricing. It makes it much harder for people who do it as a living rather than as a side hobbysiness.


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## DeeAnna (Jun 12, 2017)

"...many people enjoy making soap and so the time is far lower in their calculations, if it's there at all, when pricing. It makes it much harder for people who do it as a living rather than as a side hobbysiness...."

That is so very true. I can't count the number of times what I do in my day job has been dismissed as "mere craft" and "too expensive" just because it involves leather rather than clay, fiber, paint, metal, etc. Little kids make things in leather, so just "how hard can that be?" In the consumer's eye there is little difference between leather as a hobby and leather as a profession and as art. 

I try my best to price my "hobby products" comparable to how I would price them if I was doing the work for a living. If people don't want to buy items for a fair price, I've learned that this extinguishes my interest in making such products. Better to make and give them away or make them for myself just for fun. That keeps my interest alive.


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## Dahila (Jun 12, 2017)

Soapmaker 3 is excellent for this reason.  I do not pay myself at all,   cost of my product times 5, gives me enough.  some are times 6 but others are to fiil the space and sometimes it times 3 . 
I am like Czmaha, whatever I make , it keeps me happy and a bit for the bills. At least making my products pays for booth rent, supplies


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## dixiedragon (Jun 12, 2017)

Most manufacturers actually do use 2 or 3 times materials as pricing. There are more sophisticated ways to track things, but should a soaper try to calculator how much energy is used to melt oils and run their stick blender? Power their scale? Calculator the storage rates of the stuff on the shelves vs the stuff in the fridge? That's not do-able on a small scale.

So 2x or 3x material is a good rule to use.


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## The Efficacious Gentleman (Jun 12, 2017)

But that completely ignores one of the most expensive costs - time! One can at least work out how much it would cost to heat the same amount of water and that is a step in the right direction. Not to mention the cost of insurance needs to be factored in. 

As I said elsewhere, a soaping business is much more than just soaping, it's also running a business. If it's not done well, it can be worse than having a bad product


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## BrewerGeorge (Jun 12, 2017)

dixiedragon said:


> Most manufacturers actually do use 2 or 3 times materials as pricing. ...



Not in my experience they don't.  What's the cost of materials for a silicon chip?  Maybe you meant 2 or 3 times CoGS?


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## wetshavingproducts (Jun 30, 2017)

In answer to the OP, your time is worth what someone is willing to pay you for it. So, basically whatever your day job pays you. And if you don't have one, then whatever job you think you could keep would pay you. And barring that, minimum wage.

But really, the time factor is important because to run a real business, you yourself cannot make the soap anymore. You'll have lots of other things to occupy your time, so you ain't going to be making soap. And even if you want to and set aside the time, you need to have an assistant and you'll be paying them. So, figure whatever the prevailing wage is in your neck of the woods and go from there. For reference, a cosmetic compounder's average wage is $15 an hour nationally.

And all that said, if this is a hobby, just charge the little girls whatever they can comfortably afford or give it to your daughter and let her sell it. Maybe she'll learn some skills. Or "sell" it to her on credit. I dunno. You don't have to sell soap.


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## BrewerGeorge (Jul 1, 2017)

To be clear, my oldest is 30,and she's talking about her fellow teachers. She's an ESL teacher at a school for immigrant students.


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## wetshavingproducts (Jul 5, 2017)

BrewerGeorge said:


> To be clear, my oldest is 30,and she's talking about her fellow teachers. She's an ESL teacher at a school for immigrant students.



Oh, I see. Well, do what makes you happy. Life's too short to be sad. Don't turn your hobby into a job if you don't want to. Job's aren't fun.


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