How many times have you pondered how to go about jewelry pricing?
Jewelry pricing is probably one of the most debated topics among jewelry artists. It’s not easy figuring out what the materials cost and exactly how long it took you to make it.
For some, the pricing formula may look like this:
(Cost of parts x 2) + (a dollar amount for your time)
Did that look familiar? Well, I recently got a chance to chat with the owner of Bead Manager Pro, Gary Capps. He explained to me why this formula is totally wrong.
Gary has had the privilege of working with thousands of artists helping them manage their jewelry businesses and keeping them on track.
He stated that there is a whole lot more that we need to be thinking about when we price our jewelry.
KNOW YOUR MARKET
Before we can talk about jewelry pricing, you have to have a good sense of your market or who your customers may be because handmade jewelry is a “love purchase”.
Think about it. Very few jewelry items are considered a necessity of life. Instead it’s more of an “I love this…gotta have this” purchase.
The good news is that this type of purchase gives you a lot of flexibility in jewelry pricing. Why? Because your jewelry is worth what you can get someone to pay for it.
FIGURING OUT MATERIAL COSTS
Let’s take a moment to revisit the first formula I gave you & why it’s wrong. If you just multiply the cost of your materials by 2, you are simply giving away your parts - that's not an efficient way to go about jewelry pricing.
Gary actually suggests having a few different types of markups for your materials depending on your market.
Here are a few examples:
Selling Directly To Customers - If you’re buying your supplies in bulk and getting great discounts, you can mark up your supplies up to 5 times on a finished piece of jewelry.
Selling To Retailers – For this market, you’ll need to come down a bit; maybe to about 2 times the cost of your materials so that your retailer can have some room to mark it up and make a profit, too.
Remember, to properly go about jewelry pricing, you really need to know exactly what materials and how much you used in each piece so make notes of everything.
WHAT ARE YOU WORTH?
This is where most people sell themselves short. They figure out how long it took to make the piece of jewelry, assign themselves an hourly rate, tack it onto their marked up parts amount and voila’. They're done with their jewelry pricing and have arrived at their selling price, right? WRONG.
If you want to a serious jewelry business, you need to know the value of YOUR time.
Have you ever stopped to think about what it costs to run your business? This is called overhead in the business world.
And what about all of the time you spend doing administrative tasks like: ordering supplies, updating your website and doing paperwork?
While some of this admin work can actually be fun, like shopping for beads or learning a new technique, I think you should still be paid for it. Don’t you? So let’s see what your value looks like in real dollars and cents.
First you need to answer a few questions:
#1 - How much income would you like to make per year?
#2 - How many weeks will you work a year?
How many hours will you work a week?
#4 - How many hours do you spend on admin a week?
Write down what your admin or overhead costs are every week and add them up.
Remember, even if you’re a small business or just starting out, you still have some overhead costs like: the cost of tools, electricity and phone or Internet costs that are necessary for you to make your jewelry.
All of these overhead costs directly affect your business. If you don’t take the time to think this step through, you will have no idea of the true costs involved when creating your jewelry. You’ll be running blind.
Now take a moment and plug your numbers into the formula below. This will calculate what your hourly rate SHOULD BE:
It’s not near as easy to work out the weekly cost of your tools because they’re not a weekly purchase which is where Bead Manager Pro can help. Their automated software does all of the work.
All you have to do is enter in some simple figures to work out your entire hourly rate including overheads and tools.
SO WHAT IS YOUR JEWELRY WORTH?
Well, we already gave you the definitive answer:
Your jewelry is worth what someone will pay for it.
But the real question at hand is: “What did your jewelry COST in the first place to make?”
Once you know the answer to that, you’ll have the knowledge and bargaining power you need when you’re talking to a customer. You’ll know that, if you sell a piece below a certain price, you’ll be losing money and that’s no way to run a business, especially a business that you love. So, don’t short change yourself.
Sell yourself…your story…your great work.
It’s what makes you and your jewelry unique. We hope this has given you some food for thought.
I’d love to hear your thoughts…give me some feedback below.
"If you would like any more information on Bead Manager Pro and how it can help you with pricing your jewelry and managing your inventory then please visit our website where you can see video demonstrations of all the great features as well as read testimonials and stories from hundreds of our happy customers."
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