The Puppet Pricing Calculator is simply an excel spreadsheet that provides a method that puppet builders (or anyone producing a handcraft item) can use to price their work. I developed this spreadsheet several years ago after the subject of how to price puppets came up in numerous threads on different puppetry message boards.
Pricing is really tricky – as I’m sure most of the people who sell puppets know – and a lot of artists don’t know how to price properly. There’s a number of factors to consider, including:
- The cost of your product or service
- The prices of your competitors
- Your sales volume
- Your company’s competitive/creative advantage
This spreadsheet will work best for someone who makes and selling puppets on a regular basis as their primary source of income or they want it to be, but it can be applied to pricing in almost any type of business. Keep in mind it’s meant to act as a general guide to pricing.
Here are the instructions:
Step #1 – Calculate Your Fixed Expenses
Fixed expenses are expenses you pay no matter how much you sell. Examples would be:
- Telephone/cell phone (if it’s for business only)
- Office supplies
- Web Hosting fees
- Anything else I’ve missed
You should also include in your fixed expenses a salary for yourself – what you pay yourself should not come from your profit (more on that below). You should determine a realistic salary that you would like to earn every month.
Once you add up your fixed expenses next you have to figure out how many products (puppets, workshops, or whatever) you can realistically do in a month. Then divide your total fixed expenses by the number of products you can produce in a month. The result is your fixed expense per puppet sold.
Step #2 – Determine Your Variable Expenses
Variable expenses include anything you pay per puppet you sell (foam, eyes, etc.). Don’t include shipping costs because they should be added on top of your selling price. Add up your variable expenses for one puppet and add them to the fixed expense per item sold. The sum is your True Cost.
*Once you calculate your true cost, you can’t sell your puppets for any less than this amount…otherwise you loose money every time you sell something!
Step #3 – Determine Your Selling Price
Once you know how much each item you sell costs (your True Cost), you can determine your actual selling price. Basically, you have to decide how much of a profit margin you want. For example, in the spreadsheet the true cost of each puppet is about $585. If I wanted a profit margin of 10% then my selling price for each puppet would be about $645 and I’d make about $58.50 in pure profit after every puppet sold. That doesn’t sound like a lot, but remember I’ve already calculated a monthly salary for myself as part of my monthly expenses.
The puppet price in the spreadsheet varies according to the profit margin you enter.
Calculating your profit margin is more art than science and it usually takes some time and experimenting to decide what will work for you. The really important thing financially is that your profit either goes in the bank to be saved or gets re-invested in the business. Always make your salary one of your expenses!
I hope this is helpful!
*Special thanks go to Andrew Patricio of BizLaunch for originally teaching me the basics of product pricing many years ago!