Thursday, 16 June 2016

How To fix the Right Selling Price for your Crafty Project | Customisable Template for Download

Hello, everyone!

For today's post, I'm not sharing a project, but some information. Very early into my paper crafting journey, I realised the need to develop a system that would help me calculate a reasonable Selling Price for my cards and scrapbooks. And when I say reasonable, I mean something that would help me recover my cost and make a profit, while at the same time not ripping off the customer. While the profit is easy to determine, it's the cost that was a problem.

Thankfully for me, I could apply whatever little I knew about Costing into creating a formula. During my five years as a crafter, I have been asked this question by a few other crafters and I have shared my calculator with them, but I guess just sharing the file without explaining what it is and how it works would be useless. So today, I have decided to not only explain how the file works, I will also explain how you can make it suit your needs. At the end, I will also give you a customizable excel sheet that you can start using immediately. And of course, if you still have any questions about how the hell the damn file works, I am right here to answer them. :)

So are you ready? This is going to sound like a Costing lecture and it may be long, so why don't you grab something to sip or munch. And while you're at it, even though this post is public, you might want to keep a notepad and a pen/pencil handy in case you want to write something down. So let's get started.

Basic Concepts

The Formula:

Cost + Profit = Selling Price (C+P = SP)

This is something we learnt way back in primary school and it is very simple. Once you have your Cost, you simply add your Profit to arrive at the Selling Price. But how do we calculate Cost? Well, that's what I'm going to show you.

Types of costs

Fixed Cost | In pure Costing terms, Fixed Cost is something that doesn't chang, i.e., it remains constant, fixed, irrespective of the output. For example, in a factory manufacturing spare parts, the Factory Rent will be considered a part of Fixed Cost because no matter how many units the factory produces in a month, the amount of rent to be paid will not change.

In terms of our craft costs, everything that's reusable - stamps, tools likes dies, die cutting machines, embossing folders, paper trimmers, scoreboards, etc. will be considered as Fixed Cost because whether you make one project out of the tool or 50, your cost will not change.

With me so far? Cool! Let's move on to the next type.

Variable Cost | This type of cost is directly proportional to production. As in, the more number of units you produce, the higher your cost. The simplest example is Cardstock. If you make one card, you'll need one sheet of 5 1/2" x 8 1/2", but if you make 10, you'll need 10 sheets, i.e., 10 times the cost.

To give you more examples, patterned papers, embellishments, etc. will be categorised as variable.

There's also something called as Direct and Indirect cost. Direct cost is something that directly relates to your production activities (all examples given above - fixed and variable) but indirect costs are those that cannot be directly associated with production of your finished product.

For example, the electricity in my craft room is an Indirect Cost. Of course, I consume electricity while I work on my craft projects. I also use my phone to call customers. I use the internet for my business marketing. But all of these costs are also incurred for my personal activities.

Can I segregate and identify what percentage of my electricity consumption is towards my craft activities and how much is towards personal use? Can I calculate what was my data usage for business and how much did I use for personal internet surfing? No! I mean, I can if I really want to, but that's not worth the effort.

So technically speaking, when we calculate our costs, even though we're supposed to include both direct as well as indirect costs, doing so in this case, it'll only lead to further complications. So let us only focus on cost of craft supplies and pray that we recover all our other costs from the profit margin. :P

Now let's see how to apply this knowledge in our calculations.

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The Groundwork

Maintaining Records

The first and most important thing you need to do is maintain a record of EVERYTHING you've purchased till date. When I made this template, I was two years into my crafting journey. Luckily, since most of the good stuff we purchase is online, we do have e-mail records of this. Initially, while you construct your framework, you may have to spend some time in going through your old e-mails and/or bank statements and make a note of all that you purchased.

Here are a few things to keep in mind:
  • DO NOT record any cost at today's market value. Record it at the price YOU PAID - that's your cost.  
  • If you have discarded any item, do not record it. You are not doing this to file your tax returns, but in order to calculate price. So if you had purchased a Cuttlebug many years ago, but have discarded that (as in, it's not with you anymore and/or you're in no position to use it even if you wanted to), don't include the cuttle bug in your list. List your upgraded tool instead. 
  • Maintain a seperate sheet (in the same file - refer video for this) for each type. That is, one sheet for Papers (you can create separate ones for 6x6 and 12x12 too if you want), stamps, inks, embellishments, dies, embossing folders, etc.

Updating Records

Keep in mind that if your craft stash grows (who am I kidding with 'if'? :P) - when your craft stash grows, you need to remember to update the sheet. If you have new products that you can use, you need to add them to the file as soon as you receive the products so you can include them in the cost of the projects. 

Calculating or Apportioning the Per Unit Cost

The next step is to determine the cost per unit. The way in which you'll do this will depend on the type of cost. Let's start with the variable cost, because that's easier. I'll use a few examples to make it easier.

Variable Cost per Unit
This is extremely simple and I'm sure the examples are enough to help you understand what I mean.

Example 1
Patterned Paper
Cost INR 360
No. of sheets in Paper Pad - 36
So cost per sheet = 360/36 = INR 10.
So for each sheet you use on a project from that paper pad, you need to add INR 10 to the cost of your project.

Example 2
Twine - Embellishement
Cost INR 200
Length - 100 inches
So cost per inch = 200/100 = INR 2.
So for each inch you use on a project , you need to add INR 2 to the cost of your project.

Example 3
Die Cuts - Embellishment
Cost INR 450
No. of pieces in collection - 50
So cost per piece = 450/50 = INR 9.
So for each piece you use on a project from that collection, you need to add INR 10 to the cost of your project. Now there may be some large pieces and some smaller pieces. But let's not nit pick and have a blanket rate per piece.

Because you can identify the exact quantity of a particular product used in your project, finding the cost per unit becomes very, very easy.

Fixed Cost per Unit
For Fixed costs, detemining the cost per unit becomes slightly complicated. Because most tools can be used multiple times, we have to rely on an estimate. So what we arrive at will not be the per unit cost, but the apportioned cost.

Example 1
Paper Trimmer - Tool
Cost INR 2,000
Estimated number of projects that it can be used for - 500
(As this is an estimated number, if you don't plan to use it for long, you can recover its cost over 200 projects instead of 500)

So recovery rate per project = 2000/500 = INR 4 if estimate is 500 projects,
OR 2000/200 = INR 10 if estimate is 200 projects.

In short, you'll have to make 500 projects (or 200, as the case may be) before you can recover the amount you've spent on the Trimmer.

Example 2
X Brand Stamp Set
Cost INR 900
Estimated number of projects that it can be used for - 50
Again, as this is an estimated number, if you don't plan to use it for long, you can recover its cost over 30 or even 80 projects instead of 50)

So recovery rate per project = 900/50 = INR 18 if estimate is 50 projects, and so on.

Now remember that whether you use ONE stamp or three stamps from the same set, charge Rs. 18 per project, otherwise once again, it'll be nitpicking.

So now that we have our concepts sorted out, let us start working on the file.

Tweet: How to fix the Right Selling Price for your Craft Project + Template for Download by @infniteemotions -->

Are you ready? Watch the video below.

The template is available in the website's Resource Library. If you've subscribed to my mailing list, you would've received the access details. If not, enter your e-mail address below gain access. :)

Tweet: How to fix the Right Selling Price for your Craft Project + Template for Download by @infniteemotions -->

I hope this helped. If you have any questions, do let me know. I will be happy to help you out. :)

I'll be back on Sunday with a new project (actually, it's an old project, but I haven't shared it on the blog yet :P)

Stay tuned! :) 


  1. nikkita - very well explained costing structure, this will be very helpful for the beginners. Thank for sharing it over here

  2. This is so helpful.. I have been following you on Instagram.. But I had no idea you were from India.. Till I saw INR! Your creations are so beautiful and inspiring.. I hope I get to use the info you provided whenever I get serious with my hobby!

    1. Thank you so much for your compliments! I am happy you found this useful. Heading on over to your blog to check your work out :)

  3. Very useful and informative post.... Thanks for sharing....


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