Selling Handmade Goods and working out profit 5 June 2018 at 2:01PM edited 5 June 2018 at 2:04PM in Boost your income 1 reply 811 views

Wilty111

Hello, I'm a bit stuck on working out profit at the moment and would like some advice if anyone could help?

I'm planning on setting up as a sole trader making handmade goods to sell online. I'm still unsure of what pricing formula to go with so I'll stick with a pretty vague one for explanations sake.
Say I'm going with material cost + labor cost = A, then A x2 = wholesale. Wholesale x2 = retail.

So in that pricing formula say the material cost is £1 and it takes an hour to make and I'm charging £9 an hour for my time. With the formula it'd work out as:
£1 + £9 = £10 (total item cost). £10 x 2 = £20 (Wholesale price). £20 x 2 = £40 (Retail price).
In this instance as a sole trader would I be right in assuming £39 out of the £40 I received after selling the item is profit/earnings/taxable income?

And if so, is there an acceptable level of re-investing some of that profit into more supplies/stock so that it is not counted as profit/earnings/taxable income?

Thank you
Edit: Sorry I didn't realize there was a small business section forum, could someone move the post?

antrobus

Wilty111 wrote: »

...
In this instance as a sole trader would I be right in assuming £39 out of the £40 I received after selling the item is profit/earnings/taxable income?

Yes.

Wilty111 wrote: »

...
And if so, is there an acceptable level of re-investing some of that profit into more supplies/stock so that it is not counted as profit/earnings/taxable income?..

No.