Planning for Overhead Costs

One of the things people often forget when thinking about starting a crafting business is the overhead costs.

Overhead costs are those costs not tied directly to a single art or writing project. In a normal brick and mortar business these would be things like rent, utilities, and administrative salaries. They are all bills that have to be paid, but folks don’t always remember to figure them into the sales prices!

In my home-based micro business, overhead costs are shared art supplies, office supplies, website hosting, and licensing and membership fees.

Some of these I can estimate easily, some are a general guesstimate, but either way they are something I need to make sure I work into my profit margins. Assuming I want to have profit margins.

Fixed Costs

There are some costs I know I’ll have come 2012 since the prices are set and shouldn’t change in the next month or so. These costs are ‘fixed’ because they will not change, no matter how much (or how little) business I do.

Must-Haves

These are the items I have to have in order to run the business.

Cost Item
58.00 Post Office box (29.00 per six months)
30.00 Business license yearly
107.40 Domain Hosting every year
30.00 Domain Name Registration every year (3 @ 10.00, in 2015 will be 5 @ 10)
10.00 The Model Horse Sales Pages yearly (Quarter Horse level)
235.40 Total

Nice-To-Haves

These are the items I’m currently budgeting in, but that can be cut if need be.

Cost Item
29.85 Domain Name Privacy every year (3 @ 9.95, in 2015 will be 5 @ 9.95)
49.00 Online Writing Workshop yearly
10.00 The Model Horse Blab yearly
88.85 Total

Variable Costs

Odds and Ends

These are the costs that change depending on how much business I do. For the most part they can easily be associated with a job (body cost, editing costs, etc.) but some of them are more general.

Things that are not so easy to estimate: Paint, Paintbrushes, Pastels, Gloss Sealer, Matte Sealer, Printer Paper, Packing Tape, Packing Materials, Printer Ink, Pens, etc.

Since I have a good stockpile of art and office supplies, I’m going to guesstimate that I won’t spend more than $20 a month on them this year. So I’ll add $120 to the $324.25 for a yearly overhead total of $444.25.

Impact On Income Goals

Total $444.25 per month is $37.0208333 (or $37.03 to make things easier), So for my own personal accounting purposes, I start out every month $37.03 in the red.

This means that January’s gross profit goal of $67.20 ($42 net) is really $104.23. Arg.
But I still have two weeks left in January to rally, so I’m not throwing in the towel quite yet. I just need to get up off my duff and start finishing off some horses!

Martha Bechtel

My name is Martha Bechtel and I write fantasy and science fiction stories, paint small model horses silly colors, cast resin and plaster magnets, code random code (and Wordpress plugins)... Come on in and join in the fun!

Leave a Reply