Adding Up Your Real Costs, Gas Included
Module: What to Actually Charge
Last time we talked about charging for your time. Today we're doing the boring part that makes that number honest: adding up what a job actually costs you.
I want to be straight with you. This is the least fun lesson in the whole class. It's a spreadsheet lesson. But it's the one that keeps you from finding out, three months in, that you've been paying people to let you work for them.
The costs people remember
Most beginners get the obvious stuff. If you're baking, you count the flour and the butter and the cake boxes. If you're doing crafts, you count the yarn or the wood or the paint. That part people do fine, mostly because it's the part you're holding in your hands at Macey's when you're buying it.
The costs people forget
Here's where it goes sideways. The costs that don't come with a receipt in your hand are the ones that get skipped, and they're usually bigger than people think.
- Your driving. I priced a job once by gut feel and completely forgot to count the drive up to a party in Draper. Two hours round trip, gone, unpaid, because I didn't write it down anywhere. Now I count every mile. Always. The IRS publishes a per-mile rate every year — you don't need to get fancy, just multiply your round-trip miles by that number and add it to your cost. If you're up the canyon or across the valley for a job, that adds up fast, especially with gas prices doing what they do.
- Your own hours, including the invisible ones. Not just the hours you're standing there doing the thing. The planning. The shopping trip. The prep the night before. The cleanup after. If you spent an hour at Costco loading up on supplies for Saturday's job, that hour belongs to the job.
- The stuff that wears out. Your mixer, your tools, your good knives, your car. None of that lasts forever and none of it was free. You don't have to get precise about this at the beginning, but at least acknowledge it exists. Set aside a little bit per job toward replacing things.
- Fees you didn't think about. A card reader takes a cut. A permit might cost something. A booth at a craft fair has a fee before you sell a single thing.
A simple way to do this at home
Grab one job you've actually done, or one you're about to do, and write down every single cost in four columns:
- Materials — the stuff you bought for this specific job
- Mileage — round trip miles times the per-mile rate
- Your hours — every hour touched by the job, times whatever hourly number you landed on in the last lesson
- Wear and overhead — a rough guess, even 5-10% of materials is a fine starting point
Add it up. That's your real cost. Not your gut-feel cost. Your real one.
Where this gets personal, not just mathematical
Now here's the part where the math runs into real life, because it always does.
A while back a family in my ward was having a graduation open house, and I knew money was tight for them. I quoted low. Really low. I lost about sixty bucks on that job once I actually did this same math I just walked you through.
I don't regret it. That was a decision I made with my eyes open, for a specific family, on a specific night. But I made it knowing what it cost me. That's the difference. If I'd never done the math, I wouldn't have been choosing anything — I'd just have been quietly losing money and calling it generosity by accident.
That's my opinion and I'll say it plainly: track your real costs, including gas and your own hours, or your profit is fiction. You can still choose to charge less for somebody. That's allowed. But choose it. Don't let a missing spreadsheet decide it for you.
A word about being honest with yourself
Nobody's checking your math but you. It would be easy to lowball the mileage or round your hours down because the final number feels more comfortable that way. I get the temptation. But the whole point of this exercise is to see the truth, not to make yourself feel better about a price you already picked. If the real number is uncomfortable, that's useful information, not a reason to fudge it.
Before next time
Pick one job, real or hypothetical, and fill out those four columns on paper before we meet again. Bring the number. We're going to compare it to what you were planning to charge, and I want you to be a little surprised by it.