PROFESSIONAL OR HOBBY
I used to attend various craft fairs and farmers markets events and it was an endless battle of being undercut. Anyone who has ever dabbled in the craft fair market will know this only too well. If you’re doing things right then your product will be priced accordingly. And then you would have the hobbyist. Not that I’m knocking anyone side hustling because you know how much I love a good side hustle. But still, for something like soap, you need a cosmetics license and insurance to be able to make and sell such items. Many of the hobbyists I encountered didn’t have such things, thus didn’t have the costs either. Often they would forget about tax, NI and paying the electric bill all has to be factored into your pricing. They would sell their products, often similar to mine at £1 cheaper. Naturally, the unsuspecting buyer would always go for the cheaper product.
THE STRUGGLE IS REAL
It’s much the same in my business today. There is always someone willing to do the job cheaper. I see so many adverts for people willing to sell social media management for £50 a month! And there will be a never ending supply of people happy to pay that. Which makes my job harder when I have to tell these people that £50 per month is an unrealistic figure for me to work for. Managing a celebrities social media is very different to a business account and requires a different approach. There will always be a super fan or random admin person in the agent’s office who is willing to do the job for free.
As I’ve talked about before, cheap or free is not professional. It’s not what a professional business or public figure should be looking for.
So with all that in mind I’ve put together a list of 5 things you need to consider when setting your prices. And undercutting your competitors isn’t one of them!
5 TIPS TO ENSURE YOU’RE CHARGING ENOUGH
TIME INVOLVED
If I had factored in my hourly rate for doing this, my bars of soap would have been selling at £10 each. There is no way they would sell for that. No amount of sales patter and pretty packaging would make up for it. So, my time had to take the hit. The craft makers amongst you will understand this pain.
SKILL INVOLVED
TAXES
You can read the UK Governments guide to VAT MOSS here
* I have no idea if these rules will change post Brexit
BANK AND CARD FEES
Likewise, banks love to lure you in with their free banking periods when you first start but after the initial 12 months, you’ll soon realise how banks are making their money. When you can be charged for just depositing money into your account it’s worth keeping an eye on ways you can keep these costs down.
COVERING ALL THE COSTS
If you use your car for your business are you taking all the costs into account? Or are you offsetting the depreciation at year end if you own the car outright and it’s a business asset? It’s not just the fuel you put in. What about the oil? The headlight bulbs? The valeting? It all mounts up.
Computers can be costly little items when you add in all the software, apps, subscription services. Are you accounting for them all?
And don’t forget inflation is real not just a news headline. Keep an eye on your costs as the years go by. I’ve noticed the past year that the cost of many of the subscription services I use have gone up quite a lot. This is due to the poor exchange rates we now have to suffer in the UK. Granted we don’t have a crystal ball so we don’t know what the future holds, but as Brexit looms, I suspect these rates will change a lot. Keep an eye on anything you pay in dollars or euros.
WHAT DID I MISS? HAVE YOU BEEN CHARGING ENOUGH?
