With a home based business it could be frustrating to figure out a way to pricing your own work. When selling your product, price is determined by what you put into making it such as material, supply cost, time and labor. This means keeping records of everything and how much time it took to make each product.
I find pricing according to your location is a good way to start. For example: The cost of living is higher in New York, therefore your work is priced with that of others in your field. Let us say you are a photographer and charge $375 for a photo package. Yet, your competition prices are at $500. The customer chooses you because your price was lower but are you getting what you put into your materials. With a home based business you don’t want to break even and not have enough money to recoup your inventory or your time.
Another way to determine price would be to follow a formula. An example of a formula was found in James Dillehay's book The Basic Guide to Pricing your Craftwork. This formula showed a basic way to determine a fair price for your customers that consisted of Figuring a percentage of your Fixed Costs +Cost of Materials + Your Labor = wholesale price x 2 = Retail Price. Fixed costs are your tools, equipment, rent, utilities, travel expenses, etc. Material is what you use to create your product and labor is wages you pay yourself.
In a regular nine to five job you are paid wages for a service you've completed and the same should hold true with your home based business. When using James Dillehay's formula you may not agree with the outcome of the price. Yet, it's one of the easiest ways to determine what your quality of work is worth. A rule of thumb to remember is that pricing is an art form which takes time and patience. The price must attract the customer and in the end give you a profit.