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## cost of a mug (not price) macroeconomics

### Brad Sondahl on sat 1 may 99

Several astute readers pointed out that I forgot to factor losses to
seconds in my original post. This is what I've added to my article,
now available on my website at
http://www.camasnet.com/~asondahl/potthots.html (I've also added 4 or 5

"Loss of pots as seconds must also be factored. Of 100 mugs, 7 became
shelf stuck on them. Some of these can be refired to be mended, others
will be sold at half price or less. The loss here is variable, and not
included in the cost of the pot, as it is more related to the price
charged.

Also here is a way to do a macroeconomic analysis. Don't be scared
off by the big word. It just means looking at it from the top down. If
you take the cost of goods sold from your records (1040), plus the cost
of business expenses (same source), and divide them by your gross sales,
you will have a ratio of expense to profit. This figure will show you
what decimal fraction of each dollar you receive is expense. In my case
last year the decimal is an absolutely astounding .76, which is 76%. If
you have a figure similar to mine, you may want to consider another
occupation. It means that 3/4 of the value of whatever you make is
going to materials, overhead, car expense, etc. So I checked back, and
the figure fluctuates significantly. Two years ago, it was 34%, one
year ago 49%. From extrapolation, it's clear I'll be out of business by
the end of next year. :-) However, being a small business, major items
like repairs can fluctuate widely from year to year.

Even this analysis doesn't take into account the cost of taxes,
since that's figured after the profit.

I always knew I wasn't into pottery for the money, and now I think I've
proved it...
I developed a theory a year ago that every artist needs a designated
responsible significant other, sort of like having a designated driver
when out partying. I came up with the theory talking to a musician
married to an artist. They have a tough time making ends meet...
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