On this episode of The Sew Much More Podcast: 30-Minutes with Workroom Tech, Ceil
DiGuglielmo and Susan Woodcock introduce the first study topic for the Workroom Accountability and Mentoring group. You do not need to be part of the WAM group to
participate! Follow along on your own with the information included on the podcast and blog.
Listen to Episode 33 of the podcast here: Pricing and Your Hourly Rate
Pricing Basics
Owning a business has a purpose. The purpose is to profit! As a new workroom business you may not be profitable (yet), but you are rich in time. Put that time to good use by working on business practices that will help you to be a success.
Pricing is a challenge for any business owner. Pricing custom services (like window treatments and upholstery) can be especially difficult because of the unique nature of hand-crafted products and services. Don't be tempted to just charge what others charge - price is influenced by where you live, your experience, clientele and much more.
This month the Workroom and Accountability Mentoring group will be working together to determine hourly and daily rates. It’s something all workroom businesses need to do whether annually, or more often.
Ceil and Susan are learning along with you. They are not business coaches or accounting experts, but they are passionate about helping others, and supporting small business owners. Working with a business coach is recommended for a deeper dive into your financials, and business goals. Ceil and Susan recommend Michele Williams with Scarlett Thread Consulting. Michele is is a certified Profit First coach. As a former workroom owner, Michele understands the unique challenges of owning a workroom or design business.
Susan's Story
"When I started my workroom business, I priced by the piece. I didn't even think about an hourly rate until I was in a car accident. I had to provide the insurance company with my hourly rate to be compensated for time lost from work to receive medical care and physical therapy. That experience helped me to look at my business in a new way, and inspired me to learn more about pricing"
Determining an Hourly Rate
What’s included in your hourly rate:
1) Overhead expenses (insurance, utilities, vehicle maintenance, rent, continued education, marketing, taxes, workroom and office supplies, rent/mortgage, internet, phone and more). Savings and retirement... which includes an emergency fund (do you have a cushion if you can’t work for a period of time?)
2) Salary. This is regional, based on cost of living in your area. Look at hourly pay for other service providers. You are just as valuable!
Hourly rate = overhead + salary
Where to start?
Start by setting what you think is a fair price but don’t be married to it! Price the best you can, keep records of whether the price was low, break-even or profitable, and then use that knowledge for the next project. You have a responsibility to your business, yourself, and your family to earn a good salary and enough profit to invest in your business.
Research and Learning, Hourly Rate
Profit FIrst by Mike Michalowicz, www.profitfirstbook.com
Price Your Work with Confidence by Kitty Stein available from Sew Easy Windows.
(Exerpt can be found in Drapery & Design Professional magazine, 2011, Issue 4, Ann K. Johnson, available on the Curtains & Soft Furnishings Resource Library.)
Profit Sheet by Sharon Greiner, Custom Home Furnishings magazine, 2007, Sept-Oct, pages 50 - 52 can be found on the Curtains & Soft Furnishings Resource Library.
What Are You Worth, recorded webinar with Jeanelle Dech in the Curtains & Soft Furnishings Resource Library archives
Time Studies
Time studies are necessary for pricing workroom labor. Knowing how long it takes to make something will help you to estimate a price by multiplying how long it takes by your hourly rate.
Different ways to price:
Pricing units – swags or pillows by the piece, draperies per width, cornice board by the running foot, shades by the square foot and etc.
Base price plus (add on for interlining, trims, extra length or width, etc)
Base Price Plus: Build the ice cream sundae
Time studies can also be used to work smarter. Where are the wasted minutes? Timing helps you to work with a purpose.
Time studies help you with scheduling.
Research and Learning, Time Studies
Workroom Time Studies, recorded webinar with Jeanelle Dech, Drapery & Design Network Webinar can be found on the Curtains & Soft Furnishings Resource Library.
Method Share: Time Blocking with Donna Skufis can be found on the Curtains & Soft Furnishings Resource Library
TimeSheet app
Time Study Poll results on the Drapery & Design Network – interesting to see for reference, available for members of the Curtains & Soft Furnishings Resource Library.
Price Your Work with Confidence, by Kitty Stein (includes worksheets for time studies) available from Sew Easy Windows.