By Michael Priest — festival vendor and small-business owner
Yes. If you are actively working to make the product, that labor belongs somewhere in your pricing math even when you own the business. Owning the business does not make the hour disappear.
That does not mean Festival Geeks is going to tell you what hourly rate you must pay yourself or what your final selling price should be. It means the business should be able to see the work instead of pretending the work is free.
Owner labor and business profit are not the same thing
This is where handmade pricing gets confusing.
You make the product. You own the business. The money left after a sale eventually belongs to you in some form, so it can feel unnecessary to put labor into the cost.
But labor is payment for work performed. Profit is what the business produces after the costs required to operate it are carried.
If those two ideas are blended together, it becomes easy to believe a product is highly profitable when much of the apparent profit is actually compensation for hours of unpaid work.
Start with active hands-on production time
Count the time when you are actually doing the work required to create a sellable product: cutting, sewing, assembling, painting, finishing, packaging, mixing, shaping, printing, sanding, or whatever your process requires.
The exact categories will be different for every maker. The principle is the same.
Your time is one of the resources the product consumes.
You do not need perfect timekeeping to stop ignoring labor
The goal of Know Your Number™ is not to turn every craft business into a time-study laboratory.
Time a normal production batch. Use a representative work session. Break the total active work across the number of sellable products produced. Then review the number as your process improves.
A reasonable estimate that gets reviewed is more useful than a fake zero because tracking felt too complicated.
Production efficiency changes the labor cost per item
If it takes four hours to produce 10 sellable items today and later you improve the process enough to produce 15 in the same active time, the labor carried by each item changes.
That is one reason understanding your own numbers is more useful than copying another vendor's price.
Two makers can sell products that look similar while having completely different production times, equipment, waste rates, and business costs.
Counting labor does not force you to raise the price
Knowing the number and choosing the price are two separate decisions.
You may discover that the market will not support the price you hoped for. You may decide to improve production, redesign the item, buy materials differently, change the product mix, or accept a lower return for a strategic reason.
Those are business decisions.
But if labor was never counted, you are making those decisions without seeing one of the biggest resources the product uses.
If the business only works because you work for free, know that
Sometimes an owner intentionally works below a target rate while building a business. That may be a conscious investment.
The problem is not choosing it. The problem is believing the business is producing a return that only exists because your labor was assigned a value of zero.
If your business only works because you work for free, your price is being subsidized by you.
For the full pricing framework, read How to Price Handmade Products for Festivals: What Your Price Has to Carry.
Next, read Does Drying, Curing or Waiting Time Count as Labor? to separate active work from passive process time.
Get the free Know Your Number™ Pricing Workshop
For the full production-cost lesson, see Episode 5: What Does It Really Cost to Make Your Product?.
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