Profit, as mentioned in an earlier essay, is what’s left between what you sell something for and what it costs to make it.

If you sell a physical album recording for $15 and it cost you $5 to create the CD and the packaging, then your profit is $10.

However, you have to think of all of the costs, not just the costs to produce the physical product.

My wife is selling these great art pieces of butterflies encased in reclaimed wood and glass frames.

Her hard costs are only about $6 per frame, so in one way she could charge $10 and be “profitable”.

However, that’s not taking into account the ~30 mins or so it takes to cut the wood, assemble the frame, and glue in the butterfly.

If she values her time at $40/hour, then she would need to charge an extra $20/frame to truly be “profitable”, but even then she would only have a profit of $4 per frame. That doesn’t even pay for another piece!

So, to be profitable from the start, she would need to account for the cost to make the product, the time it takes to make it, and profit.

$6 cost + $20 labor = $26. To have a profit of 30%, she would need to charge $37.

So, from the onset, she decided to price the pieces based on size and type of butterfly, and they range from $40-$100 each. She created a very profitable (and fun!) business from the start.

If you’re struggling to have any money at the end of each month, look at your pricing and determine how you can create more profit in the work that you’re creating and selling.

@darentsmith | daren.blog

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Learn the principles and secrets to building a resilient, profitable creative business at daren.blog/build