What Should I Charge for My Laser Cut Projects?
So often in Facebook Groups I see, “what should I charge for my laser cut project?” And, often times you’ll see responses like you should charge this. Or, someone spews out all this jargon about expenses and leaves the person hanging not really knowing how to figure any of that out. So I thought I’d tackle the What Should I Charge for My Laser Cut Projects topic for you.
Watch the Video What Should I Charge for My Laser Cut Projects
In this video I go through a specific formula to understand how to price your laser cut projects.
The Formula For Laser Cut Project Retail Price
Materials X Profit Markup + Labor + Overhead + Shipping Supplies = Retail Price
Okay, Holly, what does that mean? Let’s go over each item.
Material Costs
What are your material costs? Determine how much it costs for:
- wood, MDF
- paint
- paint brushes
- paint holders
- extra materials like ribbon or hangers
Let’s say it costs you $3 in wood, $2 in paint brushes and holders, and $.60 in ribbons. So that cost per product is at $5.60.
Labor Costs
Consider your labor costs. How much time are you spending per project? Figure out your state’s minimum wage and how much it takes you to make one product and that will be your labor cost. Find that here. I live in Colorado and my minimum hourly wage is: $12.56. That comes down to about $.21 a minute.
If it takes me 20 minutes per product I’m at $4.20.
Some crafters will use a $12 to $20 hourly rate to calculate, but figure out what works for you. Don’t skimp this! It will affect your bottom line.
Overhead
I can’t say it better than Paper and Spark. She covers a lot of this, so check out this post. I’m going to skip for the ease of this tutorial, but factor in these things. You can determine a monthly flat rate and use it to estimate number of products sold per month and divide it. That would give you a good idea.
Shipping
Shipping and postage is something a lot of people forget to include in their expenses. Factor in your box cost, shipping labels, ink any packing materials like bubble wrap or tape and a postcard if you send that.
So say I spend about $.97 on a 14 in pizza box and another $1 in packing materials, plus the cost to mail it is $4.50, etc. I’m at $6.47. I’m going to build that into my pricing and offer free shipping. If you are not, you’ll want to adjust that as income.
Plugging Your Laser Cutting Expenses Into the Formula
The first part of the formula mentions the Profit Markup. For this you have to determine how much profit markup you want to bill to your materials. The best markup on that would be a 4. This will cover the costs plus make you the profit! If you find that is too high, don’t go lower than a 3.
So let’s figure out my pricing based on all the numbers above and my formula. Overhead is for things like rent and utilities. I’m going to leave that out since I work from home and I cover this as a whole in my business for taxes.
Here’s the formula again: Materials X Profit Markup + Labor + Overhead + Shipping Supplies = Retail Price
Materials X 4: $5.60 X 4 = $22.40
Here’s that that formula looks like plugged in:
$22.40 + $4.20 + $6.47 + Overhead = $33.07 <— that’s what I should be charging. Here you can round this number up or down to make it seem more enticing. There is talk about doing the .99 cent ending, but do what you like. $33 sounds good to me.
So if I’m charging $33 for my project, that’s pretty decent.
Profit for Laser Cut Projects
Let’s look at our profit. We can use this formula:
Retail – Materials – Labor – Shipping Supplies = $16.73
Now let’s figure out our PayPal fees (calculate this based on your store’s payment fees if you use something different. Paypal charges 3.49% + fixed fee. That fixed fee in the US is $.49. You can find those here.
That fee should be applied to your retail price. 3.49% of $28 is .98. So my fees are: $1.64.
If I subtract that fee from my profit I get: $16.73 – $1.64 = $15.09. That’s my profit.
For Stripe fees, you can do that here.
Finding Etsy Fees for Laser Cut Projects
For Etsy fees, they can fluctuate a litte. So the Etsy Hunt Calculator is nice. If you use my free spreadsheet to total it all that will help you know what to plugin where.
My Free Spreadsheet
I talk about my free spreadsheet that you can use to determine your retail price for your laser projects. It’s Google, so tap here and it will ask you to make a copy. Only enter in the green highlighted fields not to mess up the formulas. Please note I am using US based locations for fees, so you’ll need to adjust the formulas if you are in a different country.
***UPDATE***
I made a few modifications to the spreadsheet since making the video, so you can see Etsy here too. But again, adjust formulas for your country as these are US based.