Anyone who has studied business should be aware of how to cost a product. However, for some makers that are usually hobbyists or makers for friends or for anyone who is baffled, here is the ultimate low-down on how to cost that quilt.
A few guidelines to start with, which should go without saying but you’d be surprised! Ensure you are actually proficient enough to make a product for sale. Many times I have seen posts on social media saying ‘My friend wants to buy this. How much should I charge?’ Sadly the accompanying photo is one of a crumpled, badly made object.
Be professional. If you are not up to making a quilt at ‘for sale’ standard, then do not accept payment. If you can do it, then charge accordingly. Never think this is pin money or a hobby.
Far too many people think they can sell without telling the tax man. Do not do it. Even if it is for friends and family, you could be in violation of business law. Ask the taxman, they will tell you if you are taxable. Be aware that selling on Etsy, eBay, Facebook and other social sites means you can be found. Be honest.
Accepting A Commission
1. Can you produce exactly what the person is asking for?
2. Who is providing the materials? If it is the purchaser – you need to ensure they are providing you with top quality materials, or you need to exempt yourself from the results of washing etc with regard to different materials that shrink at different rates; thin, worn materials that might fall apart; material that might colour bleed. I much prefer to select materials myself.
3. Delivery – is it a realistic time schedule? Ideally you want to set the delivery date yourself but it must be agreed. If it is imposed upon you and you cannot meet the deadline, you could be in breach of contract.
4. Ensure you know what is being asked of you with regard to size, fabric, binding, and any other requirements.
4. You will need to be specific about cost. There is no reason, if you are producing a professional product that you should not charge accordingly. Quilting is a skill that is often under-rated. Some quilts are quicker to make than others.
5. Get it in writing and produce two copies, one for the buyer to keep and the other for your records. Ensure both copies are signed.
Working Out The Cost
There is much more to costing a quilt than one thinks (especially buyers!), so ensure you factor in everything.
A. Materials – fabric, wadding, quilt label, thread, one sewing needle, rotary cutting blades. Anything used in the quilt, which cannot be used is charged at cost. Some makers might factor in a small profit margin here. You have taken the time to purchase these goods and need to add shipping costs too. Things that are purchased but can be used several times over such as sewing machines and tools are assets and for these you would factor in a percentage of the cost of the tools and machinery you have had to buy to make that quilt – that specialist ruler, the longer machine. My advice is use the best fabrics available and charge accordingly. You are producing a heirloom, something that will last a lifetime and beyond. Include any embellishments such as buttons etc.
B. One day you will have to replace that machine. Factor in a percentage of your running costs, including servicing and repairs. Also factor in a cost for electricity and any other running costs. If you have a website or pay for advertising or exhibitions, then factor a percentage of these in too. It is a matter of working out how many quilts you will sell a year, dividing your running costs by that number and finding out the running costs per quilt.
C. Design cost if applicable including any meetings and delivery time.
D. Time to make the quilt – again be professional, charge the going rate. The minimum you should charge is the minimum hourly rate for your age. You might wish to add more for experience, complexity of design. If you are a slow quilter, you might like to charge the bare minimum. If it takes you 3 hours to do what it takes most people one hour, then one hour would be the charge. What I would not advise anyone to do is just charge 50 pounds or just times the materials by two or whatever nonsense someone has told you. This undermines professionals and demeans quilting as a whole.
E. Are you taxable? Take into account the amount you will have to pay in tax.
F. Do you belong to any quilting associations that you have to pay for? Factor a small percentage in.
G. Add delivery costs if the quilt is not being collected in person.
H. Profit margin? That’s your time spent quilting at the hourly rate you have set. If you are embarrassed about your hourly rate when questioned, then just give the price for the quilt as a whole. You might want to factor in a small percentage for extras.
I. What if things go wrong? So you thought that quilt would take 20 hours and the machine was not working right and you had to unpick. The truth is that it is hard to cost this in – your buyer is not to blame. It is however wise to factor in a couple of hours extra on every quilt so that over time, if things do go wrong or simply take longer than you thought, you are covered.
J. You cannot price-match major retailers and mass-produced quilts, so just concentrate on providing a unique quilt with a personal service, made with love. At the end of the day there is a limit to what the market will pay, but this may be much higher than you think if you have identified your market correctly.
Be aware of what is tax deductible when you declare your income:
If you are using part of your home to make a living, you can claim a percentage of heat/light/telephone etc. Know that if you use part of your home exclusively for business, such as a home studio that has no other purpose, that you can be liable for Capital Gains tax when you sell your home. So sometimes it is better to use the kitchen or spare bedroom. The products you buy to make the quilt are tax deductible as allowable expenses. The assets, you are allowed to take a percentage until such time that they are defunct, sold or replaced.
Copyright Karen Platt 2018