Tracking costs of little parts and pieces that go into your final finished handmade creations can be totally mind boggling! Here are some tips which we talked about in a live Facebook video this past week.
If you are a yarn dyer you have the cost of baking soda, crochet thread, guar gum, litmus test strips, etc. If you make amigurumi you might have things like hand sewing thread, little sprigs of silk flowers, felt to put behind the eyes or to make eyelids with. No matter what you make there are always going to be items such as this that are hard to track.
There is no absolute science to pricing your finished creations – sure keeping track of the cost of some items is pretty easy and straightforward – I paid this much for a skein of yarn, child safe eyes cost this much a pair, or this dye cost this much. But the other stuff – whew – you know you use it and you know what you paid for it, but it seems you never use the same amount twice.
There’s three schools of thought on tracking the costs of little parts and pieces
1. Track absolutely every penny
Some people will track absolutely every penny they spend – which is great because you do get an absolute cost of your finished item – but it’s a LOT of work and a lot of math. So here is a couple of examples:
Let’s take felt. Say you pay .95 cents (plus 6% sales tax) for a 12 x 12 square of felt, so that’s a total of $1.007. I can get 144 one inch by 1 inch pieces so that means those little 1″ squares each cost 0.0069930555555556. So if I use a 1 x 3″ piece of felt for eyes and eyelids for an a small amigurumi and a 1″ x 4″ piece for a medium sized amigurumi and a 2 x 4″ piece for a large amigurumi – that’s 0.0209791666666667, 0.0279722222222224, and 0.0559444444444448 in costs.
2. Track and round the costs
Again, let’s work with the felt. Say you pay .95 cents (plus 6% sales tax) for a 12 x 12 square of felt, so that’s a total of $1.007 now we’re going to round that up to $1.01. I can get 144 one inch by 1 inch pieces so that means those little 1″ squares each cost .00701, which I’ll round up to .01 each. So if I use a 1 x 3″ piece of felt for eyes and eyelids for an a small amigurumi and a 1″ x 4″ piece for a medium sized amigurumi and a 2 x 4″ piece for a large amigurumi – that’s .03, .04, and .08 in costs. By rounding it up, you’re capturing a little bit of revenue for the time you spend doing all that math…….
3. Average or close enough
Again, working with our felt example. We pay $1.01 for that 12″ square of felt. We can get roughly 33 sets of eyes & eyelids out of that square so we’ll say that it costs on average 0.0306060606060606 or .03 cents each.
No matter what method you use to track the individual costs you have to have a (bigger and better) method of tracking the total costs in place. That’s where my Project Pricing Worksheet will come in handy.