After the show, Rosanna counted her money: $900. She told me she was pleased with this. It made her feel good that the scarves sold out. I saw the amount she made and had to sigh. I knew that the time and materials she used to create that $900 led to a very low hourly rate for her work or even a loss. I looked at one of her scarves and said, “Rosanna, just the bead work alone is worth $45 dollars. You basically have five earrings hanging off each scarf. You could have made more selling them alone!” I could tell she had not thought of this. I then asked her to write down all of the hours she spent on the project, even the ones she considered a regular part of her business such as social marketing. I then asked for all of her materials costs including the booth.
The hours came to over 80 hour when she truly factored in everything she did to create her product and promote the event! Her costs were over $200. She was naturally shocked. I asked Rosanna her hourly goal with her business. She said $50 and I said that was too low, but it was a good place to start. The reality is that Rosanna made less than $10 an hour for her work! I said, “If you truly want to make $50 an hour for your work, you must find a way to work much, much less or raise your prices high enough to reflect the time you put into a project. “ She got the idea and admitted she had to completely rethink her craft business. She now thinks of the time something will take, assigns her hourly goal to the time and sees if it’s the right project for her. This has been a big and often scary change, but she feels much about her business now that she is making money.
I love it when people use the strategies in Better, Smarter, Richer!