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## earnings per hour (was wholsale pricing)

### Geoff Walker on sat 24 oct 98

Wholesale pricing is one of the most difficult of tasks for a potter. I
am thinking more here in terms of domestic ware, as art pieces I would
think would be more likely to be sold on consignment in galleries.

Over the years, I have been through many exercises in this vein, some of
them with accountants, but most just hard number crunching. But which
numbers? That is the part that is hard, and Olivia T Cavy's note should
have opened some eyes to the numbers that are important. One must know
what it costs to produce any given item to start with.

Knowing it was impossible to work out the cost of producing an
individual pot, I decided on three different methods. The interesting
thing was that no matter which of the methods I used, the cost of
production came out almost identically. Here they are (without much
elaboration at this point, but if you would like me to post in more
detail, I will be happy to do so):

a. I priced to cost of a kiln load. I calculated how many, say, mugs I
could get into a gloss kiln and went backwards from there. I did this
with 15 different items covering most of the sizes of pots I made, and
most of the pots that required appendages such as handles, spouts, etc.

b. I assumed for this analysis that I would work what was an average
week for me, and, assuming that I would finish all the pots I started,
tried to work out what I could produce comfortably, and costed all
aspects.

c. For this one, I took a tonne of clay, and worked out how many of each
type of pot I could make from that tonne, costing all aspects. E.g. One
analysis for mugs, another for breakfast bowls, etc.

A long, but interesting exercise. As Olivia pointed out in her post,
spreadsheets are brilliant for this, as you can change and re-analyise
any data and it's effect on the result without having to bother with
endless calculations.

One word of caution. You must include EVERY COST! This includes the
proportions of such things as electricity, gas, insurance, telephone,
workers' compensation, bank charges, rents, freight, time spent
invoicing, on the 'phone, at the computer, etc. plus any payments to
staff or assistants associated with the production. Look to your
accountant's figures for the year, and divide accordingly. Looking at
the items that are listed as part of the costs of production will also
bring to mind costs that are not immediately apparent.

Only one other thing comes to mind, and that is that the figures
resulting from the above do not take into account the fact that some
items which are expensive to produce are often the best sellers, and
vice versa. In working out wholesale prices, there thus has to be a bit
of give and take.

I hope this is of some help to someone out there.

Geoff Walker,
Cronulla Pottery,
Gold Coast,
Australia.