During the Professional Development Seminar program titled, Not Just Another Pricing Lecture: A Dialog About Pricing Your Work, the subject of overhead came up, over and over when discussing how to price your work.
During the discussion with the audience, there seemed to be some confusion about what is included as an expense under the term "overhead". Since most pricing calculations need to include "overhead" along with labor and materials to figure out the wholesale price, this is a significant factor.
Most artists and makers understand that their wholesale price needs to include overhead but seem to "forget" all the overhead costs that are less obvious. This is especially true if they are still working in their kitchen, extra bedroom, garage or basement. Yes, in that case, their overhead is less than if they rented a studio or storefront, but they should still include something in their pricing structure for future rent, utilities, etc. to create a realistic pricing structure. If you don't do this, your prices will be artificially low and you will never be able to put money aside so someday they can move out of the kitchen into a more business-like setting.
Here is a suggested list of expense items that are often overlooked but should be included in Overhead. It is not meant to be comprehensive, but to help artists and makers realize that "yes", they do have overhead expenses.
Rent for your studio (if you don't have a studio, save money for your future studio.)
Office expenses: printer, printer cartridge, paper, computer, software, pens, magic markers, tape, boxes, stamps, mailing envelopes, CD, CD mailing envelopes, stationary.
Utilities: electricity, water, heat, telephone (business line,) internet access, trash, recycling.
Depreciation on equipment either for your studio, shop, or office. (This may include your camera, photography equipment, or computer.)
Shop/studio supplies - Generally these are items that you need to fabricate your work such as brushes, drill bits, or gloves that do not go directly into a finished piece of art or craft, but are necessary expenses to keep your shop/studio running to produce new work.
Advertising: Photography, postcards, business cards, advertising, fees for online social networking sites.
Exhibition and Shows: Application fees, booth fees, salary for an assistant, lights, shipping (work to shows.)
Professional Expenses: Dues, Membership, classes, magazines, books, accountant, lawyer.
Taxes: Social Security and Medicare for your employees, Sales taxes, etc.
Share some of your overhead expenses with others and list them as comments.
"....there is a difference.