How To Price Your Products & Pay Yourself
Can we just declare 2015 the year of "Charging What You're Worth"? I've struggled a lot in the past with this topic. I would price my products well under what they were worth because I was terrified that higher prices would run away my customers. It wasn't until I had a chat with Jess + began noticing that I was putting out way more than I was bringing in that I decided to make a change.
So how exactly do you price your products so that you're making some money? Get out your calculator folks.
You take the amount it costs you to make the product and add it to how much you will pay yourself for your time, if you actually make your products yourself (this amount is completely up to you). You then take that amount and multiply it by 2 to get your wholesale price. For your retail price, you would take that original amount and multiply it by 3.
For example, lets say it costs me $6 to make a necklace and I pay myself $8 per hour to make it.
$6 (cost of materials) + $8 (an hour to make the product = $14 (original amount)
Then I'd take the original amount and multiply it by 2 for the wholesale price and then by 3 for the retail price.
$14 (original amount) x 2 = $28 (wholesale price)
$14 (original amount) x 3 = $42 (retail price)
East right? This way you are covering cost of materials, getting paid for your time + also making a profit that you can actually live off of. Now, if you're selling services + not a physical product then it will be a little different. You will have to base your price according to how much of your time goes into providing the service + the value you are providing to your clients. Try checking out what others in similar fields are charging + take it from there. Also think about how much you need to bring in per month to cover your living expenses + bills.
Ok so now that you have priced your products correctly + bringing in tons of cash you're probably wondering how to distribute your earnings + pay yourself. Well that's pretty simple too.
Told you it was simple! If you're not physically cutting yourself a check make sure you're documenting on your expense sheet that you're paying yourself.