Originally Posted by sawdustfactory
I'm assuming when folks are saying you can't make /sell a $2 kit for less than $10, they are factoring in more than just kit, blank and finish used.
Labor is the issue. You have to think of it if you were running a company.
Price for pen should be:
Hourly wage of what you want to be paid (min wage is $7.25)
So if you have a $2 kit, and a $1.5 blank, and it takes you an hour to make the pen. (Cut, drill, turn, finish, assemble) You have $10.75 into that pen.
Ideally, anything you sell that pen for should be counted as gross profit. If you sold it for $15.00 you'll have $4.25 in gross profit. At the end of the year, you'll take that gross profit. At the end of the year you'll take that gross profit, and subtract all the other cost associated with running the business.
This includes new sand paper, finishes, rags, safety shields, new tools, power used to power the lathe / drill press.
gross profit - cost = net profit
Cost gets to be tax deducted.
Most hobbyist lump their labor cost into gross profit, since they are the their only employee. Since the time spent turning the pen isn't "work" it's fun. (that's why it's a Hobby!) But I think it's important to at least calculate into your prices like it's part of the cost of making the pen, and not remove it. If you do, you'll never really make money do this. (and for a lot of Hobbyist out there, that's okay! This is fun!)
Please note, that while It doesn't take an hour to turn a pen, I most certainly feel my time as a craftsmen is not worth minimum wage. Those numbers were just picked for easy of the example.