By Michael Priest — festival vendor and small-business owner
If you know what your materials cost, you still may not know what your product costs.
That is the starting point of the Festival Geeks Know Your Number™ workshop.
The goal is not to tell every maker what to charge. A candle, dog shirt, piece of pottery, jewelry item, wood product, and baked good all have different costs and different markets.
The goal is to understand everything your price has to carry before you decide whether a price makes sense for your business.
Start with delivered replacement cost, not just the bargain you found
If a material normally costs more than you happened to pay once, the business still needs to think about what it will cost to replace that material.
A free or unusually cheap supply can be useful, but it can also hide the real economics of the product if you assume that price will exist forever.
Count the products that never become sellable inventory
If you make 10 items and only 9 are good enough to sell, the materials and labor used on the tenth item did not disappear.
Test pieces, mistakes, failed batches, and products you refuse to put your name on still consumed real resources.
Protect the quality standard. Then put the loss somewhere in the math.
For a deeper example, read Does a Bad Product Still Count as a Cost? Sellable Yield for Makers.
Small consumables are still costs
Thread, tape, gloves, paper towels, labels, packaging, blades, masks, cleaning supplies, and other small production items are easy to ignore because no single item feels important.
Together, they can become a real category of expense.
The goal is not perfect accounting down to the penny. The goal is to stop accidentally treating a real cost like it does not exist.
Equipment and utilities support the product too
Machines wear out. Equipment gets replaced. Production uses power and other resources.
You may not need a complicated depreciation schedule to make a useful pricing decision, but you do need a reasonable way to acknowledge that the tools used to produce the item are not free forever.
Your labor counts even when you own the business
Owning the business does not make the hour disappear.
Count the active hands-on time required to make the product. Waiting time is not automatically labor, but cutting, sewing, assembling, painting, finishing, packaging, and other active work still has value.
If the business only works because you work for free, your price is being subsidized by you.
Then add the cost of actually selling it
Episode 5 gets the example product to the cost of making one sellable item. Episode 6 continues by adding the costs that appear when the product leaves the workroom and goes to an event.
Those can include:
- Booth fees
- Travel and event-day expenses
- Labor spent selling at the event
- Recurring business expenses
- Card-processing fees
- Transaction bags and packaging
- Refunds, remakes, or replacements
- Money the business needs to retain for replacement, growth, and the unexpected
A $1,000 sales day does not mean you made $1,000.
Your competitors help explain the market, not your costs
Market research matters. If similar products are selling for a certain range, you should know that.
But another vendor's price cannot tell you what it costs you to make and sell your product. Their materials, labor, production efficiency, event mix, overhead, and business goals may be completely different.
Use competitors to understand the market. Use your own numbers to understand your business.
The useful question is not “What should I charge?”
A better question is: What does my chosen price have to carry?
Once you know that, you can decide whether to change the price, reduce a cost, improve production, change the event mix, redesign the product, or accept a lower return for a specific reason.
That is a decision. Guessing is not.
Get the free Know Your Number™ Pricing Workshop
You can also browse the full Festival Geeks Free Vendor Tools library.
Start with Episode 5: What Does It Really Cost to Make Your Product? and continue with Episode 6: What Does It Really Cost to Sell Your Product?.
Related pricing guides: Learn why your own active production labor belongs in the math and how to separate active work from drying, curing and waiting time.
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