I've had some feedback about the Pots By the Pound equation, and it illustrates the value of listening to people who know what they are talking about! (Listening is a skill I had to cultivate. I used to get defensive about my ideas and push back on perceived criticism; it's hard to learn anything, that way.) Some input I will put in place, because it is a genuine omission which would ultimately have caused the approach to fail. Others were just things that I needed to think about: if they needed to be in there, and if not, why not?
To review, the pricing equation looks like this:
2 x BM(Bare minimum of household expense) + UFE (15% of BM, for unforeseen expenses) + S (20% of BM for savings) + BE (Business Expenses) divided by PC (pounds of clay I purchase annually) = wholesale price per pound for pots.
Firstly, someone pointed out that I have not accounted for failed pots. My numbers assume that 100% of the clay that I buy will result in a finished, salable piece. That is so not true! I lose at least 10% of my ware, though most of those become seconds rather than shards, due to normal parts of the clay process, like cracking and warping, accidental chipping of greenware or bisqueware, and glaze flaws; and a few more which are specific to vapor glazing: big crusty blobs of soda in the middle of a plate, for example, or a pot that received so little soda glass that the surface is dry and unappealing. There are also some pots that fail because I try something new and it doesn't go well. I don't know if 10% is high or low, but I know all potters have some percentage of kiln-god sacrifice. So the PC part of the equation will now be amended to PC = pounds of clay purchased annually minus 10%. This pays for the inevitable expense of making pots that then fail.
Another important point mentioned was that I should build into the equation expenses that are not unforeseen but not annual, either. Someday I will have to replace my kiln. Someday I will have to rebuild the kiln, whole or in part. That will have to be part of BE; I am thinking ten percent every year of the initial cost of those items, and any other big purchases I can think of that come around rarely but predictably.
A point that required more reflection: a friend pointed out, correctly, that this model contains no profit for Fine Mess Pottery itself. There's compensation for me, and (now) money that will be saved for future predictable expenses, but Fine Mess (in theory if not in practice) will have zero dollars on the books at the end of each year. It will generate enough to keep me happy and afloat, but no extra to expand. No future larger facilities, no apprentices, no second kiln. Apparently businesses are supposed to do this, plan money to grow.
Seems obvious, so why did I leave it out? I realized: I don't want to grow. I'll need to expand my market to reach the numbers this equation generates (will eventually generate, when I stop talking about it and put some actual numbers instead of letters into it) and presumably my expenses will go up a little each year, and I may discover some needs I didn't know I had, but I don't want or need my business to grow beyond how many pots I can comfortably make, with enough time to make them well. In a sense, if you think of my compensation as a salary, an expense which Fine Mess Pottery incurs (if we can for a moment separate the potter from the Pottery), Fine Mess is sort of...non-profit. Not in the legal sense, of course, but I have no interest in building an empire, however small.I have no shareholders to satisfy. I just want to make good pots and have a life free of oil-bill and car repair panic attacks.