What do you pay yourself when figuring costs

[classylady71118]

I have my candle costs figured out, but I have NO idea how to come up with a figure on my labor costs? I have a wholesale inquirey and need an answer asap? I have gone thru 7 pages here trying to find an answer?

TIA,

Beverly

[BLSoaps]

Honestly, you can pay yourself whatever you're comfortable with. There are a number of ways that I've seen people calculate their 'labor' pay. If you work a day job, pull the same pay over. So if you make $15 an hour in your current job, pay yourself at least $15/hour. What kind of pay would you NEED to be making to leave your full time job?

If you wanted to do this full time, what kind of pay would you expect/want? Let's say 40k/year. Divide that by 50 weeks (give yourself two weeks off a year! LOL!) and 40 hours, and you get $20/hour.

When you get to the point that you need to hire help, what kind of wages are you planning on offering them? If you pay minimum wage, you're gonna get minimum wage type help.

I will often divide my labor costs into two tiers. One is Master Level. Things only I can do, or someone who has basically apprenticed under me (which I wouldn't do without a heck of a lot of trust). This wage is quite a bit higher. Then I have an Employee Level. These are the things I'd pass on to an employee. Things pretty much anyone can do, like packaging stuff. I still pay this level well, because I'm gonna want to be able to hire good help when I get to that point. But it's lower than my level.

So for making soap, I divide the time it takes to make a batch into two levels. The actual soap making is Master Level. The clean up, cutting, wrapping, etc, is Employee Level.

It takes a little longer to calculate, but it works out well, I think.

The biggest thing is to make sure you pay yourself well. I figure I've self taught myself several degrees over the last few years! I'm a master soap maker, lotion maker, marketer, book-keeper, web designer, copy writer... and so much more.

Also, there's another great thing in knowing what your time is worth. If you've got something you need done (design work, book-keeping, whatever), calculate how much you'd have to pay yourself to do it. If you can hire someone else to do it for less (and still get a good job done), then it's worth hiring out. I hope that makes sense!

Anyway, good luck with the account! I hope this all helps!

[cozyaromas]

Good answer SoapersWorkshop, I need to keep your answer in mind.