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> in a first world country ... I’d estimate $50/hr is the floor That's $100K/yr, well above the median. My pricing strategy is to start with your needs. $50/h

> in a first world country ... I’d estimate $50/hr is the floor That's $100K/yr, well above the median. My pricing strategy is to start with your needs. $50/hr might be reasonable, but it varies by person and life circumstances. Figure out how much time it takes to produce the second (or later) work product. Do some hand wavy math over the amortization of research, design, and first product over the quantity you could produce in a few months, if that was your only product. This will be a larger factor in new work than in iterations on previous work. You now have a selling price, which the market may or may not bear. This can be tested, and you can use the results to inform your decision on whether to continue production. Most of this can be estimated early in the design phase. My premise is that starting from anywhere else (COGS, market price) and working backwards to compute valuation of your time is .. well .. backwards. Accepting a temporary, or introductory, devaluation is reasonable. Just know what your targets are, so you know when things are not working.

rdtwo 5y ago
At 50$ an hour basically nothing is viable especially in the beginning so do you just do nothing?
- quesera 5y ago
  No, initial devaluation of your time might make sense, as noted. But my larger point is that $50/hr is more than many people need. And not enough for others. This is important to decide before you start depending on the income.
- medion 5y ago
  Wrong. You have to start somewhere and usually that will mean months or likely years working as a hobby or making next to nothing. You can't just setup shop and expect people to pay $50 an hour - bringing up the plumber as an example again: could a completely untrained plumber turn up at your doorstep and request $50/hr to do plumbing? You'd laugh. They work for peanuts for 4 years while doing a night class a week until they are qualified.
  - rdtwo 5y ago
    That’s kind of my point. You made it more eloquently than I did. While you are learning you have to work for below your target sometimes just cost it materials to get your skills up. Similar to how we all had to pay for 4 years of college in both time and money to get good paying jobs
    - quesera 5y ago
      I tried to be clear about that in my initial comment -- apologies if not. But it's not because you lack the skills to produce, it's because you lack the market knowledge, marketing savvy, and brand awareness. If you lack the skills to produce, you should not start selling products. All of the learning process is a prerequisite and it is not reasonable to price it in.
vharuck 5y ago
>That's $100K/yr, well above the median. The median is gross personal income. It doesn't include insurance plans, unemployment insurance, taxes, or any other costs of doing business beyond materials. I haven't done the self-employed thing like others on HN, so I'll leave it to them to say if $100k/year is enough to earn the equivalent of a median salary. But anyone who aims to rake in that median is in for a rude surprise. Edit: I'm not saying you'll be paying all those costs yourself. You don't have to budget for HR training on not stealing from your own supply cabinet. My point is that companies pay a lot more per employee than just salary.
- quesera 5y ago
  > My point is that companies pay a lot more per employee than just salary Of course, but the person who is paid $50/hr is also paid $100k/yr for a 2000 hour work year.
medion 5y ago
You are multiplying the hourly rate as if it were a fixed salary, while also forgetting about taxes etc. I don't know a single craftsman that works 8-9 hours a day, 5-6 days a week on "chargeable hours" - most craftsman can realistically work perhaps half that on full-concentration crafts, not only because of the attention and detail required, but also because there are so many other things to do in a single day for a solo craftsman in todays craft market - customer enquiries, marketing, shipping, etc. 100 years ago the Japanese swordsman was not inundated with much other than making swords. Today it's much different.
- quesera 5y ago
  Agreed, but this is effectively true of all self-employed people. So the administrative work has to be billed also.
panzagl 5y ago
Generally salary is about a third of billed rate- the plumber billing $120/hr is making $80K, someone billing $50/hr would be in the $30K range.
- quesera 5y ago
  > someone billing $50/hr would be in the $30K range. This might make sense for the service industry. It doesn't sound right, but I don't know the math there. But it is not the same for producers. If you can do productive work (i.e. resulting in a product) at a full-time equivalent level, the math is straightforward. Of course like all self-employment you need to "bill" for the administrative work as well. And you need to make sure there is a market for your time/production.
  - panzagl 5y ago
    It was the standard in the printing industry for a small shop, things like graphic design time or press setup. A third goes to labor (just the skilled individual, not including CSRs,mgmt,etc), a third goes to overhead (the people not accounted for in the first category,rent,etc), a third is 'profit' (though mostly re-invested if the owner is paying themselves as labor or overhead). An individual producer can say it's all labor, but then they're doing overhead for free (marketing, resupply, maintenance) or skipping it, and any reinvestment comes from personal funds instead of the business (new tools, outsourced services). Of course materials and equipment time was marked up similarly. And this was just a rule of thumb- you'd have to adjust from there depending on market. But if you were charging less than that you were probably going to hurt the business long term.
    - quesera 5y ago
      This sounds like a different scenario to me. A production house billing out their employees time is very different from a handmade crafts producer pricing their work. The first has many more variables to consider, but the process is well-established in many industries. The second is actually very difficult, all the more so because small-scale individual makers often don't think like small business owners!
pessimizer 5y ago
>> in a first world country ... I’d estimate $50/hr is the floor > That's $100K/yr, well above the median. That's under the assumption that you're fully booked. The reason plumbers, mechanics, etc. charge so much is because they're not fully booked. They are experts who are available for you to book; you're paying for their availability. If your car breaks down, you want to book an appointment tomorrow if possible, not six months from now. If you're going to stay in your profession, you have to charge for downtime. It's far better to have 6 mechanics who are available for $90/hr than to have one mechanic that charges $50/hr, but is booked 2000 hours a year - in the latter case, you end up on a long waiting list. If enough overflow business is available that another mechanic puts out a shingle, and now they're both booked for 1250 hours a year, then they're going to have to charge $90 to stay in the profession. That's going to be the equilibrium. And especially when individual jobs are only a handful of hours, people are going to be a little less price sensitive: $500 is not as different from $900 as, let's say, $50K and $90K. If independently bookable bespoke craftspeople aren't sitting idle a good portion of the time, demand is not being met. > My pricing strategy is to start with your needs. tl;dr: I agree. But your availability is also an input. You have to charge for downtime.
- throwaway0a5e 5y ago
  >The reason plumbers, mechanics, etc. charge so much is because they're not fully booked. They are experts who are available for you to book; you're paying for their availability. If your car breaks down, you want to book an appointment tomorrow if possible, not six months from now. These businesses are generally booked enough that they decline a lot of potential customers. The reason they charge so much is because the nature of their business means they have orders of magnitude more capital and compliance costs than office work.
- quesera 5y ago
  I agree with all of this. Downtime is administrative overhead, which you have to bill for. I tried to be clear about that but I think I failed. However, not all handmade producers are working on spec, or by commission -- i.e. they do not match the reactive manufacturing model you describe above. Many of them produce at full capacity and find markets for their products. They manufacture proactively and sell constantly (Etsy, craft fairs, etc). There will be some overproduction, which has to be priced in too. Sometimes you have to hire people to handle fluctuating demand. You have to train them on your production methods. This is overhead too, but of course your production capacity goes up. I have a friend who sells consistently over the year, but demand more than triples in the holiday season. She can't always predict which products will drive the demand "this year", so she can't always manufacture proactively. She hires friends to help her get orders out the door in Nov/Dec. Maybe my lack of clarity is because there are many different kinds of handmade products. Someone selling custom cherry dining tables for $10K+ has different concerns than someone selling small sewn gifts for under $50.

rdtwo 5y ago

At 50$ an hour basically nothing is viable especially in the beginning so do you just do nothing?

quesera 5y ago
No, initial devaluation of your time might make sense, as noted. But my larger point is that $50/hr is more than many people need. And not enough for others. This is important to decide before you start depending on the income.
medion 5y ago
Wrong. You have to start somewhere and usually that will mean months or likely years working as a hobby or making next to nothing. You can't just setup shop and expect people to pay $50 an hour - bringing up the plumber as an example again: could a completely untrained plumber turn up at your doorstep and request $50/hr to do plumbing? You'd laugh. They work for peanuts for 4 years while doing a night class a week until they are qualified.
- rdtwo 5y ago
  That’s kind of my point. You made it more eloquently than I did. While you are learning you have to work for below your target sometimes just cost it materials to get your skills up. Similar to how we all had to pay for 4 years of college in both time and money to get good paying jobs
  - quesera 5y ago
    I tried to be clear about that in my initial comment -- apologies if not. But it's not because you lack the skills to produce, it's because you lack the market knowledge, marketing savvy, and brand awareness. If you lack the skills to produce, you should not start selling products. All of the learning process is a prerequisite and it is not reasonable to price it in.

vharuck 5y ago

>That's $100K/yr, well above the median. The median is gross personal income. It doesn't include insurance plans, unemployment insurance, taxes, or any other costs of doing business beyond materials. I haven't done the self-employed thing like others on HN, so I'll leave it to them to say if $100k/year is enough to earn the equivalent of a median salary. But anyone who aims to rake in that median is in for a rude surprise. Edit: I'm not saying you'll be paying all those costs yourself. You don't have to budget for HR training on not stealing from your own supply cabinet. My point is that companies pay a lot more per employee than just salary.

quesera 5y ago
> My point is that companies pay a lot more per employee than just salary Of course, but the person who is paid $50/hr is also paid $100k/yr for a 2000 hour work year.

medion 5y ago

You are multiplying the hourly rate as if it were a fixed salary, while also forgetting about taxes etc. I don't know a single craftsman that works 8-9 hours a day, 5-6 days a week on "chargeable hours" - most craftsman can realistically work perhaps half that on full-concentration crafts, not only because of the attention and detail required, but also because there are so many other things to do in a single day for a solo craftsman in todays craft market - customer enquiries, marketing, shipping, etc. 100 years ago the Japanese swordsman was not inundated with much other than making swords. Today it's much different.

quesera 5y ago
Agreed, but this is effectively true of all self-employed people. So the administrative work has to be billed also.

panzagl 5y ago

Generally salary is about a third of billed rate- the plumber billing $120/hr is making $80K, someone billing $50/hr would be in the $30K range.

quesera 5y ago
> someone billing $50/hr would be in the $30K range. This might make sense for the service industry. It doesn't sound right, but I don't know the math there. But it is not the same for producers. If you can do productive work (i.e. resulting in a product) at a full-time equivalent level, the math is straightforward. Of course like all self-employment you need to "bill" for the administrative work as well. And you need to make sure there is a market for your time/production.
- panzagl 5y ago
  It was the standard in the printing industry for a small shop, things like graphic design time or press setup. A third goes to labor (just the skilled individual, not including CSRs,mgmt,etc), a third goes to overhead (the people not accounted for in the first category,rent,etc), a third is 'profit' (though mostly re-invested if the owner is paying themselves as labor or overhead). An individual producer can say it's all labor, but then they're doing overhead for free (marketing, resupply, maintenance) or skipping it, and any reinvestment comes from personal funds instead of the business (new tools, outsourced services). Of course materials and equipment time was marked up similarly. And this was just a rule of thumb- you'd have to adjust from there depending on market. But if you were charging less than that you were probably going to hurt the business long term.
  - quesera 5y ago
    This sounds like a different scenario to me. A production house billing out their employees time is very different from a handmade crafts producer pricing their work. The first has many more variables to consider, but the process is well-established in many industries. The second is actually very difficult, all the more so because small-scale individual makers often don't think like small business owners!

pessimizer 5y ago

>> in a first world country ... I’d estimate $50/hr is the floor > That's $100K/yr, well above the median. That's under the assumption that you're fully booked. The reason plumbers, mechanics, etc. charge so much is because they're not fully booked. They are experts who are available for you to book; you're paying for their availability. If your car breaks down, you want to book an appointment tomorrow if possible, not six months from now. If you're going to stay in your profession, you have to charge for downtime. It's far better to have 6 mechanics who are available for $90/hr than to have one mechanic that charges $50/hr, but is booked 2000 hours a year - in the latter case, you end up on a long waiting list. If enough overflow business is available that another mechanic puts out a shingle, and now they're both booked for 1250 hours a year, then they're going to have to charge $90 to stay in the profession. That's going to be the equilibrium. And especially when individual jobs are only a handful of hours, people are going to be a little less price sensitive: $500 is not as different from $900 as, let's say, $50K and $90K. If independently bookable bespoke craftspeople aren't sitting idle a good portion of the time, demand is not being met. > My pricing strategy is to start with your needs. tl;dr: I agree. But your availability is also an input. You have to charge for downtime.

throwaway0a5e 5y ago
>The reason plumbers, mechanics, etc. charge so much is because they're not fully booked. They are experts who are available for you to book; you're paying for their availability. If your car breaks down, you want to book an appointment tomorrow if possible, not six months from now. These businesses are generally booked enough that they decline a lot of potential customers. The reason they charge so much is because the nature of their business means they have orders of magnitude more capital and compliance costs than office work.
quesera 5y ago
I agree with all of this. Downtime is administrative overhead, which you have to bill for. I tried to be clear about that but I think I failed. However, not all handmade producers are working on spec, or by commission -- i.e. they do not match the reactive manufacturing model you describe above. Many of them produce at full capacity and find markets for their products. They manufacture proactively and sell constantly (Etsy, craft fairs, etc). There will be some overproduction, which has to be priced in too. Sometimes you have to hire people to handle fluctuating demand. You have to train them on your production methods. This is overhead too, but of course your production capacity goes up. I have a friend who sells consistently over the year, but demand more than triples in the holiday season. She can't always predict which products will drive the demand "this year", so she can't always manufacture proactively. She hires friends to help her get orders out the door in Nov/Dec. Maybe my lack of clarity is because there are many different kinds of handmade products. Someone selling custom cherry dining tables for $10K+ has different concerns than someone selling small sewn gifts for under $50.