PRICING MY TURN

By

Terrance Frank Lazaroff

INTRODUCTION

This page has been developed to discuss pricing strategies for potters and ceramic artists. The author, Terrance Frank Lazaroff, is a practising potter who has some experience in logistic field. Although he still considers himself a student of ceramic art, He has had a great deal of experience when it comes to determining the cost of making a product. He has learned over the years that there is a cost of doing business and that this outlay must be the bottom line before anyone can begin to consider breaking even let alone making profit. He knows that there is no such thing as a loss leader when it comes to loosing money because of selling something below the production costs. Undervaluing your work will not only invite financial disaster, it will make it difficult for you to do what you like best: That of making clay art.

Have you ever noticed that whenever potters discuss pricing strategy with fellow artists, the discussion becomes ambiguous and blurred? We never seem to get a straight answer. Some ceramists speak of retail prices. Others talk about wholesale prices. Some potters use terms such as inventory turnover and others state that they let the boutiques determine the selling price. It all seems confusing and mixed up. Maybe it seems this way because we are not asking the right question. Perhaps we are not using the right terminology.

We have to admit that most ceramists are great at forming their own methods to determine their pricing strategy. There are those who price in the same range as their peers. (Wow! What happens if their peers go broke)? Other potters have established formulas that were derived over years of trial and error (Lets see, today the sun is shining so the public will pay more. Some potters have established complex formulas such as multiplying the weight of the finished pot by a magic figure. (Who cares what it looks like, it weighs a lot). The sad fact is that many potters don't really know if they are breaking even, or loosing their shirt, until it is too late to do something about it.

The question, "How much should I charge for my work?" is a dilemma facing all of ceramic artists today. It is a question that each of us agonises over. No matter how many exhibitions we do, we rework our prices. Before visits to boutiques and galleries, we recheck our prices. We are continually asking ourselves if we are charging too much or too little.

We are artists. We studied art when we attended school. We didn't study marketing and pricing techniques. We didn't study cost analysis. So it is natural for us to be unsure of our prices. Sadly, most of us do not have the know-how required to keep our craft business and our art production financially viable. Let's face it. We don't know how to analyse our operation adequately to cover costs of our, overhead, materials, equipment. Many of us have little knowledge on how to price our work to ensure ourselves a fair wage. I believe that this is a major reason why many of us quit the field.

I have given this question a lot of thought during the past few years and I have come to realise that we are not asking the right question. The real question that we should be asking ourselves is, "How much should I not charge for my work?"

When discussing the price of an art object, we can say that there is no limit, when it comes to establishing the price upwards. This is especially true when the work is quality and in demand. There is, however, a limit when it comes to establishing prices downward. For example, if you set a price on a "one-of-a-kind" mug at $35.00 and the market is willing to pay the price, then life is great. If you find, however, that the market is not willing to pay this amount, it will be difficult for you to reduce your prices without loosing some creditability. Imagine the clients, who paid 35 dollars for the mug, suddenly finding that a similar one, made by you, is now available for $15.00. I am sure they would feel a bit disappointed and would probably never buy a piece from you again. If, on the other hand, you set your initial price to low, possibly below the cost to make the mug, you could be placing your profession in jeopardy. You will, in time, be asking yourself, why are you working so hard with so little return. You may find that, although you are producing great quantities of work, you are still having difficulty paying the operating costs associated with your studio. You can always re-establish your prices higher, but will you know that you should, soon enough to avoid financial disaster?

I like to use the mug as an example, whenever I discuss pricing strategies. It is one of the best forms, available to emerging ceramists, which can be used to generate funds. The mug can be highly decorated, carved or could be simply covered with traditional glazes. Some ceramists do not do production pottery. They may feel that the method, for analysing costs doesn't pertain to them. I say that it does. A good pricing strategy will also help those who produce, "one-of-a-kind", work.

THE BREAK-EVEN POINT

Working out a strong selling price for our mug will require us to find the BREAK-EVEN POINT, associated with the making of that object. The break-even point is arrived at when enough of a manufactured product is sold to cover those costs that were incurred to develop and fabricate the object. Finding the break-even point is most important. Without it, we will be continuously guessing at what to charge for out work. Even if we wish to sell the mug below the break-even point, as a loss leader, it will still be necessary to know what it costs to make the object. Then we will be able to better evaluate the loss and make it up by applying the difference to another object more in demand. Finding the break-even point is a process similar to the one used by a shoe manufacturer analysing the cost of producing a shoe, an automobile manufacturer, working out the cost of making a car fender. It is the method used by thousands of other business that manufacture objects for sale. You cannot stay in business and compete unless you know this figure.

There are those of us that wish to rely on prices that were established by other potters. We have to ask ourselves if we are sure these other potters carried out a solid analysis. We can accept the selling price figures suggested by our galleries and boutiques but will these figures reflect your production costs let alone guarantee that your work will be profitable? The only way we will be able to be sure of our price is to determine the break-even point. Once we arrive at this figure we will be able to establish a selling price that will be fair for the consumer, the gallery and for ourselves. Pricing above the break-even point when the market will bear it will allow our enterprise to benefit from greater profits. Pricing below the break-even point with out a full understanding of what we are doing, will find our pottery facing financial losses. Finding the break-even point will give us the confidence needed when pricing our inventory.

THE ANALYSIS

Our analysis, at this time, will be to find a break-even point for a mug, nothing more, nothing less. In order to determine this figure we will have to research a great deal of information, such as costs and quantity of clay that is required to make the mug. We will have to determine the cost of glazing. We will have to record the cost of, rent, heat, electricity, telephone and other related expenses. We will need information on the energy costs required to fire out work and finally we will have to decide on our labour costs. I am sure the latter subject will make for a great deal of discussion.

The best method to proceed with finding the break-even point is to group the information required for the analysis into two categories. They are fixed costs and variable costs.

Fixed costs

 Variable costs

COST ESTIMATES

Lets look at some yearly fixed costs. For the benefit of the exercise I will use fictitious figures. The reason for this will become evident as we read on.

YEARLY EXPENSES including sales taxes

Rent ................................................................$2500.00

Office expenses.................................................$*250.00

Insurance .........................................................$*200.00

Stationary and Stamps .......................................$*250.00

Journals ...........................................................$**50.00

Utilities .............................................................$*250.00

Equipment Maint. And Parts................................$1200.00

Interest Costs......................................................$*500.00

Conventions/Workshops ......................................$*700.00

Taxes and Licenses...............................................$*500.00

Equipment Less than $200.00................................$*200.00

Travel Costs /Hotels/Tickets.................................$*500.00

Advertising ..........................................................$*600.00

Meals and Entertainment.......................................$*250.00

Associations and Guilds.........................................$*300.00

Motor Vehicle Expenses ........................................$5000.00

Salaries and benefits...............................................$25000.00

Total .....................................................................$38,250.00

 DISCUSSION OF FIXED COSTS

You might have noticed that I did not include some cost items such as kiln firings (gas or electric), clay expenses and, glaze costs. These data will he handled as variable costs.

The above figures may not reflect your business costs. You may feel that you can operate your studio without some of the bells and whistles. Just remember that in order to produce a quality product, (art), you will need to have quality, working conditions, good equipment and sufficient material available to you. Of course you may also elect to earn a higher or lower salary.

LABOUR COSTS

Our labour costs are a reflection of what we think our time is worth. It will be one of the most difficult decisions, for us to resolve. Before you make any decision about your salary, take a good look at the average income in your area and adjust your wages accordingly. Remember that, just because you are a potter/artist, there is nothing to say that you cannot earn a decent living and that means more than a minimum wage.

Some experts might say that salaries should show as a variable cost. This would be true if we were paying production employees. However, I am assuming that we are working entirely alone. We are present all the time, even when we are not producing. The only time salaries come under variable costs is when the employee is directly involved in the activity or process of making of the object or when employee is being paid, piecework. In summary, the fixed costs are those expenses required just to open the door and operate the business,

RENT

Some people say they work out of their home and don't have to pay rent. They feel that they are more competitive because they do not have to include rent in their costs. Others put the rent into their costing model because they know that although the selling price will rise, the increase will be pure profit. Whatever you decide, remember that in reality, you are paying for your home studio by giving up space that could be put to other use. You may be giving up some quality of life such as a possibility of having a recreation room, if you are using the basement of your house. It could mean giving up storage space, if you are using your garage. If we use our home we are incurring a cost to our standard of living and thus this cost should be reflected in our costing model.

INSURANCE

Purchasing insurance is a personal decision. If you have buyers coming into your pottery there is always the chance they could fall or become injured. If you have a gas kiln then there is the possibility of a fire. If you are in a large industrial complex, the fire could affect other businesses. The amount shown here is not realistic, if you are paying the total bill yourself. However, if you are a member of a co-operative you could see a similar figure. A more realistic figure, if you are working alone, could be $500.00. In many cases business insurance covers your product in case of liability. If you are working out of your house, you may have to inform your insurance company that you have a home business. If you declare that you have an electric kiln you may find that your home insurance rates will increase. To get an accurate cost of insurance I would suggest you speak with your insurance agent.

EQUIPMENT MAINTENANCE AND PARTS

I have put $1200.00 a year against this item because I believe that to have an effective pottery you require a good wheel, and a good kiln. These two items along with other start-up costs could require you service a $5000.00 debt

INTEREST COSTS

This is the amount of money required to pay the interest on your loans and credit margins.

CONVENTIONS/WORKSHOPS

I used figures equaling what I spent to go to NCECA in Rochester, NY. I am sure this will change with different locations and inflation.

MOTER VEHICLE EXPENSES

This figure may be a bit conservative. I have read somewhere that it cost approximately $8000.00 a year to operate a car.

SALERIES AND BENEFETS

I discussed this point earlier. I feel that it is very important to understand the need to pay oneself a decent wage. This figure should also include your wages for non productive time, (the time you are away from your wheel doing other necessary things, such as working at shows, packaging, shipping, administering, repairing and cleaning), to mention a few.

It is easy to see that fixed costs will form the largest part of our model when we look at the bottom line We could say that the first mug we make will give a fixed cost $38,250.00 plus the variable costs. If we make two mugs, the fixed costs would be $19,125.00: 4 mugs would have fixed costs of $9587.00 each, and so on, until, let's say, we produce 8192 mugs at a fixed cost of $4.68 each. Can we produce and sell this many mugs? We will find this out when look at methods of collecting data required to determine our variable costs

VARIABLE COSTS.

ANALYSING DATA

When we talk about variable costs, we are discussing material, energy, and production capability. We may be wondering, at this time, how will we be able to take the time to analyse all this data. Where will we find the time when we are struggling just to make pots? I agree that analysing data is time consuming and the calculations can be quite tedious, but it is something that has to be done, even is it is in your head while you make your pots. Some consolation can come from the fact that once you figure out your fixed costs, they will remain fairly constant, requiring a few minor adjustments, each year. The same can be said for variable costs. For example, once you calculate the volume of space required in your kiln to fire 25 mugs, the figure should remain fairly constant until you change your kiln size.

CLAY COSTS

Variable costs depend upon your economical use of production material. For example if you know that you require 14 ounces of clay per mug, you will be able to determine the number of mugs per 44 pound box of clay by using the following calculation; (44 X 16)/14 to equal 50 mugs. Allowing the cost of $20.00 CDN per box of clay, the cost of clay per mug would be approximately $0.40 using 13 ounces of clay per mug will save the potter approximately $0.03 a mug. Finding this information was fairly simple. The other information may prove more elusive and thus require some form of organised data collection.

TRANSPORTATION COSTS

Transportation costs of raw material will have an effect on the cost of your clay. We bring our clay in from a supplier that lives approximately 600 kilometres form out studio and the resulting transportation costs are $4.00 per box or $0.09 per mug.

DATA CHARTS

In order to gather the other information it may be a good idea to make up a few data collection charts. These charts do not have to be complicated but they should be prepared so that we can read and record data easily. In other-words, don't make a form with a thousand little squares. Design the data forms using large print and large writing areas.

The data forms don't have to be fully completed with data the first time through a production session or series. They should however, be updated or filled in as often as possible. Sometimes we may forget to record a specific action. Don't worry. Clay is a repetitive task and actions repeat themselves many times over. What we miss today, we will be able to record tomorrow. This does not mean, however, that we can be lax at recording information. We must always-record information because there are stages in our production when we must wait until the clay has reached a certain state before we can continue. It is also important that we acquire a good clock and we place it in view. If we do not have a good idea of time, we will not be able to record accurate data.

PRODUCTION CAPABILITY FORM

One of the first data forms we should consider initiating is one that will help us to determine our production capability. We will use this form, to determine the maximum number of mugs that we could produce in one year. We will do so by sampling, our production capability over a short periods or sessions, and expanding the results to give an approximate yearly figure. The following is a suggested form.

Product: Mugs
Planned Task	Production time in minutes	Production count as each	Unit average in minutes	Running total in minutes
Prepare and wedge 20 balls of clay	20	25	0.8	0.8
Throw 25 cylinders	125	23	5.4	6.2
Make 25 handles	20	25	0.8	7.0
Trim and handle 23 mugs	45	23	2.0	9.0
Quality check at green-ware Stage	30	23	1.3	10.3
Load bisque firing kiln	30	140	0.2	10.5
Unload and quality check Bisque firing	35	140	0.3	10.8
Glaze and fettle 125 mugs	60	125	0.5	11.2
Load glaze kiln	60	125	0.5	11.7
Unload and quality check glaze firing	30	125	0.2	12.0

We may be analysing more that one product line at a time; therefore, our form should include a header to identify the item under production. We will, in this specific session, require a table of five columns and approximately 12 rows. We will include a space at the bottom of our chart for additional comments and to give us a place to register other data that may help. The four column headers should read PLANNED TASK, PRODUCTION TIME IN MINUTES, PRODUCTION COUNT AS EACH, UNIT AVERAGE AS MINUTES, and RUNNING TOTAL IN MINUTES.

The planned task column should show activity such as: wedging, throwing, trimming, wet decorating, appendage forming, appendage attaching, bisque decorating, glazing, kiln loading, and of course, quality control or work evaluation time. There may be more steps than mentioned here, but be careful not to include concurrent or parallel activity. Examples of these activities are actual bisque and glaze firing. These activities can be carried out simultaneously while throwing, or decorating. The set up time and cleaning time will be calculated in the daily routine.

Let us say we arrive at our studio at 07:30 am and start immediately to work. We set about arranging our wheel and bats. We get clay from our storage area and gather our tools, warm water buckets, our towel and what ever else we need in order to begin to throw. Even though we do not enter the time spent setting up on our production capability chart; we should maintain this data daily, as it will be used in our analyses later. We open our production page and enter MUGS as the product line. The next task we begin may be, wedging clay. We will be the one deciding our initial production targets. Let us say we plan to make 20 mugs in this production period. We wedge and prepare our clay. When finished, we check the time we spent carrying out the task and enter the appropriate information in the action time column, beside the task. Let's say we took 20 minutes to wedge 25 balls of clay. (We wedge more balls of clay than production targets, as there will surely be some cylinders that fail to achieve our quality standards). Twenty is what we would enter in the planned task column, along side of the task, wedging clay. We would enter 20 into the production time column and finally in the average unit time column, we would calculate and enter the average time that it took to wedge enough clay for one mug. In this case one wedging one ball of clay took an average time of .8 of a minute/. The calculation is as follows: 20/25 = .8 Minutes

Planned Task	Production time in minutes	Production count as each	Unit average in minutes	Running total in minutes
Prepare and wedge 20 balls of clay	20	25	0.8	0.8

 

We will assume that we have taken 60 minutes to throw 14 clay balls that have resulted in 12 successful cylinders. Someone phones, and we stop what we are doing. We check our time and make a note of where we were. When we are finished with our telephone call we check our time and complete our throwing session using the remaining 11 balls of clay which takes 65 minutes. We then enter out data as shown above. Calculating the unit average time in minutes, the results would be as follows: 125/23 = 5.4 minutes We would continue to assess the production time, production count and unit average in minutes, calculations for each task. Once we go through a complete cycle of making the mugs we will be able to see the running total which is a picture of the average time that it takes to make a mug. After we do two or three sessions of data collection we will be able to figure out and average hourly production capability for all of the tasks. Let us, for the sake of time and space, say that our production capability of finished, ready to sell mugs, averages out to five per hour. I know there are potters out there who can turn out 50 mugs per hour but we will not pretend to be a super potter. We will use the 5 mugs per hour figure to estimate our yearly production capability.

DETERMINING OUR YEARLY PRODUCTION CAPABILITY

Finding a projected production capability for the year follows. Before we begin this exercise, however, we will have to make some very critical decisions. We must ask ourselves if we want to work weekends and national holidays. We must ask ourselves if we wish to take two weeks vacation with our families each year. We must ask ourselves if we wish to take a one-hour lunch break and two 15-minute coffee breaks. There will be the decision as to how many days a year that we will dedicate to R&D, as well as the number of days we wish to spend standing around our work doing Christmas shows. Once we determine this information we can begin the task of projecting our production capability.

Let us, for the sake of argument, decide that we will work 365 days less 104 days, called weekends, 11 Canadian national holidays, and 10 working days for vacation, 10 days for R&D and 25 days for Craft fairs or shows. Our daily working schedule will be 8 hours less 30 minutes for lunch and 30 minutes for coffee breaks.

You may remember when we were recording our production data we did not talk about set-up time, and cleanup time. Well we can account for this time now. If we do we will take 30 minutes per day for set-up and cleanup.

Now we can estimate our daily production capability for ready to sell mugs, working for 6.5 hours per day, time 5 mugs per hour to be 32.5. When we use the daily production figure and multiply it by the maximum yearly production days we arrive at (365-(104+11+10+10+25+)) * 32.5. We could theoretically produce approximately 6662 mugs per year. I emphasise theoretically, as I am sure that we have no intention of making this many mugs. At least I don't. These figures are necessary, however, in order to solve our calculation. We should also take into account that our production capability will improve with practice. So we should perform this analysis frequently.

If we stop and take stock of where we are in this discussion we will see the following figures

Fixed costs	38,350.00
Material cost for clay	$0.45
Cost of transport	$0.09
Production capability	6662

 

FIRING COSTS

You may recall from earlier discussion, that I mentioned that some figures would remain fairly constant even though they appear in the VARIABLE COSTS part of the computation. One of these constants will be the firing charge for our mugs. The figures will remain fairly constant providing our mugs remain constant in size and providing we fire a similar schedule each time. Firing normally consists of two schedules. Some people may schedule a third firing for over-glaze or luster application but for our example we will stick to the standard, two firings. Determining firing costs for the bisque is relatively simple. You simply count the number of mugs it takes to fill the kiln. If you cannot fill the kiln with mugs and want to complete the firing with other pieces then find the percentage of the kiln space taken by the mugs and use this figure when calculating the cost. Do the same computation when you load your kiln for a gloss firing. Record the number of mugs that you can place on each shelf. I have established my bisque firing to be between 110 and 125 mugs and my glaze firing to be approximately 88 to 100

mugs.

We must record the electric meter reading at the beginning of the firing and again at the end of the firing. We then figure out the difference of the two-meter readings in order to determine the electric kW consumption. Finally we will multiply our kW consumption by the Hydro cost per kW, in our area.

For the sake of discussion we can say that when we fire 125 mugs in cone zero-six bisque, we use five units of electricity at $1.15 per kW unit, including tax. The overall firing costs would come to $5.75 or approximately $0.05 per mug. A cone nine glaze firing of 100 mugs consumes approximately 12 kW of electricity. This equates to $13.80 per kiln of mugs or approximately $0.14 per mug. We combine the two firing figures and arrive at a total firing cost of $0.19 per mug.

Remember to read the meter before and after each firing to determine your firing costs. Keep your firing costs separate from your day to day operation as firing expenses are calculated as a VARIABLE COST. The day to day electricity consumption should show under FIXED COSTS. Study your kiln capacity for full loads and calculate part loads as percentages of your kiln capacity. For example, If you have only 40 mugs to fire then they will use approximately one third of a full kiln.

GLAZE COSTS

Glaze costs are another item that must be calculated when determining the production costs of our mugs. Finding them can be a bit complex especially if we glaze numerous different size pieces from the same bucket. For our discussion we will determine our glaze recipe size; cost the recipe; mix the glaze to a standard gravity, and then weigh the entire batch before glazing our mugs and again after glazing them. We will find the difference in weight of the two figures as a percentage of the original weight and multiply the results by the cost of the entire glaze batch. Dividing this number by the number of mugs glazed will give the unit glazing cost.

For example, we make a glaze batch that costs $3.20 to produce. We record the gravity and then weigh the entire batch. Don't forget to take into account the weight of the glaze container and adjust the weights accordingly. We then glaze our mugs. In this case we can glaze 20 mugs. We then re-weigh the glaze batch. In our example we find that we consumed 50% of the entire batch. Multiplying the cost of the entire batch ($3.20) by 50% we can determine that $1.60 worth the glaze was used. Dividing this figure again by 20 we calculate our unit glazing cost to be $0.08 per mug.

Be aware that some glazes are very inexpensive and the cost will be negligible. However, if we work with material such as Albany slip and cobalt, our recipe may be very expensive. It is therefore, important that we calculate our glaze costs every once and a while to ensure we know what our mugs costs to glaze. Once we establish the cost for a specific glaze batch we should record the information in our notes for future references.

Another important point to note here is that by knowing the gravity of our first glaze dip we can approximate future glaze costs without having to go through the weighing process. All we have to do is ensure the glaze batch is at the same gravity as our first calculation. Looking at our data at this time show the following:

Fixed costs	38,350.00
Material cost for clay	$0.45
Cost of transport	$0.09
Production capability	6662
Glazing cost per mug	$0.08
Firing Costs per mug	$0.19

 We can now determine our BREAK-EVEN COSTS. We simply divide our FIXED COSTS by our production capability and add the VARIABLE COST of one mug to the results. The formula looks a bit like, ($38,350.00/6662) + $0.81. We thus arrive at a BREAK-EVEN COST of $6.56 per mug. What ever we do, we should not sell our mug for less than this amount.

PROFIT

But wait a minute! There is more. We are a business, and as such we must consider profit. Profit is the amount of money we put aside to act as a buffer when times get tough. Profit is the money we set aside for our retirement. Profit is the amount of money we would get if we were investors in our company or if we invested the value of our business and time into a stock market or into a mutual fund. It is also the money we use to pay for us to undergo additional education and training. Profit is also the money we give ourselves as a grant or as a gift in support of our ceramics guild. Companies must make profit in order to pay shareholders a dividend. You are the shareholder of your company.

How much should we determine as our PROFIT? This is a good question. According to Wendy Rosen, The author of "Crafting As a Business", a good profit margin, should equal one third of the wholesale price. If we represent our wholesale price as $X then $6.56 would represent 2/3 of $X. To find $X all we have to do is divide $6.56 by 2/3 or multiply the figure by 3/2 and subtract $6.56. In our case the PROFIT margin will be $3.28 per mug. When we add this to our break-even costs we arrive at a final wholesale price per mug of $9.84.

When we look at this figure and calculate the final retail price, we may be a bit reluctant to put the resulting price on the mug because it may seem too high. It is at this stage that we have to determine if we are ready to give up our profit to keep the price down or if we are willing to work for less money per hour. It is in these two areas that we will be able to reduce the retail cost of our mug. In our case we would have to suggest a mug sell for $19.00 to $20.00 when we sell wholesale and $16.00 to $17.00 when we consign at 60%.

Reducing our hourly income may seem a good idea because we want to sell our product. We may see people selling their mugs for less and ask ourselves, why? The answer is simple. They may be able to sell their product for less because, they can produce faster; because they are using the mugs as lost leaders to encourage clients to buy sets of dinner ware, or they have simply have no idea as to what they are doing.

If we decide to produce faster in order to reduce our costs. We will have a real challenge. For example if we double our production to 10 ready to sell mugs per hour, (double our initial calculation) the wholesale price for our mugs would be equal to (((($38.350.00/ (6662 *2)) + $0.81) * 1.66) = $6.12. This will give us a retail-selling price of $12.00 to $13.00. The main point being made here is that we can reduce the selling price, but at an expense to our well being. Doubling the production capability will mean that we will be working ourselves into the ground. Remember we are craftspeople not machines. That is why we must take care and make a good piece and charge a fair price for the product. If the client doesn't want to pay the price then let him buy a machine made product. Remember that it is making the object by hand, that makes us different.

Now someone asked me if it was possible for me to sell 6662 mugs per year. The answer is no. There is not a market for this many mugs in my area and furthermore, I am not interested in just producing mugs. However I am confident that when I make and sell 100 mugs, I will get fair value for my efforts. Even if I only sell 10 mugs I will get fair value.

CONCLUSION

Before I close this page, I would like to point out that this exercise would work for all forms and all types of ceramic art production. Once we perform the basic calculations we will be able to apply most of the figures to determine the production costs for other objects

are also easy to determine. They are associated with the activity of actually producing your mug. You will have to think about what you are doing. You will have to develop and maintain some data records. These registers will assist you to analyse the cost of the activity and will also serve as a history of your productivity. are relatively easy to determine. If we already operate a studio or if we have maintained records of our income and expenses required for tax purposes, we can look up our last year's balance sheet and we will find most of the information required. Those who have not maintained a balance sheet of expenses and revenues will have to estimate or try to work out the past expenses. I recommend those in the latter category to begin to maintain some form of expense and revenue ledger as soon as possible. You cannot decide where you are going until you know where you have been.

THE MUG

"How much should I charge for my work?"

THE QUESTION

Terrance Frank Lazaroff