Factoring in the Cost of Supplies, Shipping and Labor

When determining the price, don't forget to factor in the cost for supplies, shipping and labor. Supplies would be things like glue, tape, materials and any other item that is necessary for you to create, purchase and package your item. For example, if you are selling jewelry, don't forget to factor in the jewelry box you will need to store and ship the item in as well as any additional supplies such as glue for setting the stones. Some people even include a little extra for overall costs like electricity and major supplies like machinery (obviously at a small percentage with each sale- you can't charge someone an extra $200 for that new bench grinder you just bought!) If you are purchasing wholesale, keep in mind your storage costs and any extra fees you paid for items. Shipping is another thing you will need to factor in as the shipping containers and packaging material cost you money. Determine how much the supplies, such as packing tape, boxes, wrapping paper, peanuts and labels, cost per order. It may vary with each order as the size of your items may be different, but you can average it out. It may take a couple times of shipping products for you to gauge how long your supplies will last, and how much you use for each item. The last factor is labor. If you don't have any employees, you will still need to make sure you are not working for free; the time you put into something is just as valuable as the item itself. For example, if it only cost you $3 to make something, but it took you 8 hours to make, you most likely don't want to charge only $10 for the item as you would only be making pennies an hour, and you're worth more than that! So factor in how many hours it took to make the item as well, or if you are selling someone else's items, how long did it take you to inventory, prepare and package the item? In the end it really does come down to what you are comfortable charging along with what someone will reasonably pay for an item.