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Pricing



I would like to thank Jack Fitterer for is attempt to lay out a pricing
tactic. There are , unfortunatly, several flows in the way numbers are
presented. The first mistake is in confusing business and personal
income.
Jack speaks of an hypothetically  needed NET income of $35000 annually,
on which he bases is calculations. The flow in Jack analysis is that he
does not allow , althought he speaks of it , tax due on the $35.000 net
income. Let's say that Uncle Sam puts Jack in the 20% tax bracket, his
business has to generate$7000 more a year to stay in the black. To
correct Jack's calculus, to bring home a net salary of $35.000 a year,
your gross business income has to be $71.900 or $49.93 an hour.
Of course, this calculation is based on the 25% non productive time
suggested by Jack. If we calculate the hourly fee on the higher 30% non
productive time also suggested by Jack, you have 1344 billable hours at
$26.04.This adds $1650.00 to your gross income pushing it to $73550.00.
I have got to tell you Jack, I envy your low overhead. To be able to
restrain your monthly business expenses to only $2000.00 a month,
including supplies, health insurance, you've got to be a wizard. I know
that my expenses are higher, in part because I insist on working only
with the best material available, in part because I constantly put money
back in the business by acquiring tools and books on the trade, and in
part because I like to have a comfortable environment to work in.
Actually, my business expenses are more than $3000.00 a month. In my
previous post, I choose that figure in hypothesis and it is a figure
that is closer to reality when we speak of an average business engaged
in bookbinding on a full time basis. Now, if we accept that in reality
it takes $12.000 more a year to pay for business expenses, your business
will have to gross $85.550 and charge your clients $63.65 an hour for
you to take a net income of $35.000 a year.
On this salary, you may not go to Katmandu for R&R, just a trip to
Kalamazoo pearhaps, if you take a vacation instead of using the time to
catch up with the unpaid bills.

Denis Gouey

Denis Gouey Bookbinding Studio
PO Box 383 Norfolk CT, 06058

860 542 5063

http://w3.nai.net/~bbliopeg


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