Can I earn from my craft?

Can I make money from my crafts?

The answer to this is different for everyone so no single article could hope to address it fully. I hope that this short article will set you on the path to answering this question for yourself and give you ideas of things you need to consider for your own craft.

Hobby or business?

Most of us know people who love their crafts and sometimes sell what they make just to make room for more. Usually, they charge little more than the cost of the materials they use. While this is an acceptable way to help finance a hobby, it is not the way to go if you want to make a living at your craft.

So, what do I need to do?

In simple terms, what you need to do is earn back all your costs and pay yourself an acceptable hourly rate. Easy! Er….maybe not.

What exactly do I mean by costs?

Some people become a little confused when considering their costs (overheads). What do these include? Put simply, these include all the costs that are involved in producing and selling your craft items. These can be split into 3 categories.

Physical – the actual things you will use to make what you sell.
Hidden – the stuff you can’t see but you still pay for.
Salary – well, you do want to pay yourself, don’t you? And certainly you will be unlikely to find anyone else to work for you without pay.

Since we have already mentioned quilts in the previous article, then let’s consider hand made quilts.

Your physical costs

This includes fabric, batting, thread, and any embellishments you may use such as ribbon, lace or beads. For our example, imagine that you have got good deals because of bulk buying. The materials for each quilt will be counted as £15.

Is that your lot? Not by a long way, you also need to consider packaging, price/information tags, business cards, and any other promotional material and stationery. At some point you may need a new sewing machine, or overlocker, or any number of new tools

Your hidden costs

This iincludes the electricity and heating fuel that you use because you work at home. If you sell online, then internet access and a decent computer are important costs, as are website hosting and fees you pay to accept online payments. Remember that using your car and home for business purposes may affect your insurance premiums and you may be unable to make a claim if you have not informed your insurers. You may need a van to transport your items to craft fairs.

If you attend craft fairs then you may require public liability insurance, but most organisers do include this as part of their fees. Craft fair fees and advertising can be costly, too. Don’t forget your tax and National Insurance. You may also require membership fees of craft organisations in order to gain access to their journals with information about events, offers, and craft fairs suitable for your craft.

All these costs are variable according to how you sell. You need to make a guess along these lines.

Electricity 10% of total.
Heating 20% of total.
Fuel for a private car used for business 50%.
Designated business van, running costs and insurance, 100%.
Internet access and computer for home and business use 50%.
Increased insurance premiums you can count only the extra amount.
Craft fair fees and advertising 100%.
Membership fees (eg Quilters’ Guild, Embroiderers’ Guild)

These are what you should allow when working out your prices and you should keep all the proofs of these costs as you will need them to give to the Inland Revenue so that you can claim tax relief on these costs. This is very important, not only do you need these for tax purposes but you need to be able to see for yourself if you are on the way to making a profit or if you have miscalculated and need to alter your pricing to avoid making a loss.

For this example we will say that you work these amounts out over a month and divide by the number of quilts you expect to make in a month. For the sums we will say you think these extra costs are £50 per month and you expect to make 10 quilts per month. The cost per quilt is £5.

Salary

You need to work out how long it takes to make the average item. In this case a quilt. You may streamline a process such as cutting out or piecing together so that some items take longer and others less time. Just an average time is what you require. Say you think it is 10 hours.

But you spend time on your business other than actual quilt making. You need to shop for materials, in person or online, book into craft fairs or maintain your website, attend craft fairs, (including packing, travelling, setting up, taking down, and unpacking back at home) pack and post your quilts if you sell online. Many people believe that you need to add 25% to 50% extra time to the actual crafting time to allow for all this.

Do the maths!

Now you can see that you need to allow 12.5 to 15 hours working time for each quilt. If you want to earn about minimum wage you need to charge at least £5 per hour plus the cost of the materials (£15) plus something for the hidden costs (£5). So that is £62.50 to £75 you need to charge for each quilt (minimum).

Don’t be tempted to charge less, and if at all possible, charge more. Remember checking out your competition earlier? Resist the urge to undercut their prices, just try to offer better value for the same money.

You will find loads of information online or at your library. Inland Revenue offer free booklets about becoming self employed and how to pay your tax and National Insurance. They are very helpful and can save you money in the long run.

The main thing is to be honest with yourself about how long your items take to make, and how many you could realistically make in a month. Try to allow for all your costs, especially the hidden costs. Work out the price you need to charge and then compare this to the prices you researched according to the previous article.

If, after considering all this, and it is a lot to consider, you are still confident that you would like to give your business a chance, then there’s no time like the present.