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A Glass Blower’s Companion with Jason Michael -Helping Today's Glass Artist Think Like an Artistic Entrepreneur

Feb 18, 2016

Episode 84- How to calculate baseline cost of goods and why
 This episode covers some basic business 101 when it comes to calculating your baseline cost of goods. There are many important reasons for doing this no matter how big or small your business is.  By making these simple calculations you will not only be able to figure out how much it costs to manufacture an individual item but also set yourself up to maintain your budget, forecast how much material is needed to fulfill an order plus figure out whethr or not you are charging enough for the product. If you plan on scaling your business by bringing on help this will help you calculate and set pay. 
Example on how I calculated the margins
time- 15 min per item
material(formula) 3"-32mm hvy wall and 3"(10g) color
clear $.75                                                                                  material $1.75
color $1.00                                                                               overhead $0.63
cost   $1.75                                                                                   total    $2.38 per 3"W.G.
Rent  $550/month(30days)- approx $15.00/day
Propane $60.00/month        -approx $2.00/day
Oxygen   $255.00/month      -approx $2.50/day
daily/hourly total (8hr day)  -approx $20.00/day or
                                                             $2.50/hour  $.63/15min
50-3"wyzguy = 12.5 hrs to manufacture @4/hr
Distributor cost $15.00 each(50)       =$750.00 (GROSS)
approx baseline cost to manufacture=$118.75 (@$2.38 per unit)
                                                               $632.00 ( PROFIT before labor)
if you pay yourself or an assistant $5.00 per unit= $250.00 labor
$632.00 (post labor profit)
-$250.00 (labor costs)
$382.00 (NET)       SUBTRACT 15% TAXES ($58.00)