Let's start by addressing the myth that low prices make merchandise sell more quickly. This isn’t always true, especially when it comes to hand-crafted items. As a result, many hobby and craft business owners cheat themselves out of making a reasonable profit. This is easy to do because you want that money to start coming in as quickly as possible. It's tempting to believe that the lower the price, the quicker it will sell.
Sometimes super low prices may make customers suspicious. Why so low? Also, if someone really wants an item (as long as the price isn't outrageous), they will pay what you ask.
When pricing, consider your overhead. This is any cost that isn’t directly related to your merchandise. With jewelry, for example, beads would not be an overhead expense because they are part of the item you are selling. Some examples of overhead costs include:
- Travel (such as going to shows to buy supplies).
- Your office supplies (business cards, paper, pens, etc.).
- Your tools (pliers, wire cutters, etc.).
These are critical to consider because they do cost you money, and if you don’t include this in the cost of your jewelry, then you are losing money. Calculate your overhead and come up with an approximate overhead cost that you can apply to each piece of jewelry you sell.
Be realistic about how much you need to make per hour. Once you have an hourly rate figured out, the next step is to figure out approximately how much time it takes for you to make your jewelry. You don’t have to time yourself on every single piece from now until eternity, but you need to have an idea of how much time most jewelry items take to construct. This will help you later on when you are trying to determine the final price of your jewelry pieces.
Wholesale vs. Retail
If you want to make quantity sales, then this is a subject you must deal with. Many crafters feel they are being taken advantage of by wholesalers, but the rules for wholesale have already been established. So, you must play by their rules. You may sell your jewelry at a show, but you will have to spend 1 to 2 days at the show, plus spend money on food, drinks, gas, etc., while a shop could take it off your hands for only a few hours spent on the sale.
There are a few different formulas you can use when pricing your jewelry. Make sure you come up with a wholesale and retail price early on in your business development because later it can be too difficult to backtrack and do this. You want wholesale prices in case you one day decide to sell to a shop and you want retail prices in case you decide to sell at art shows. If you do both, you don’t want shop owners to get made that you are undercutting their prices, so your retail needs to be in line with shops that you sell to.
A simple formula when pricing for wholesale is to add up your costs (this includes labor, overhead, and supplies) and multiply by 2:
2 x (supplies + labor + overhead) = total cost to you
For retail, do the same, but multiply by 2.5 to 3 (often referred to as keystone pricing).
Factors like where you sell your jewelry can affect the price you should ask. While you need to be consistent, in fact, it can just be too difficult to manage if your pricing is all over the road, you need to be aware of your audience. Selling your jewelry at a small town farmers’ market is not going to be the same as selling it at a high-end gallery.
Final Pricing Words
Most jewelry makers do not ask enough for their jewelry. We feel intimidated by large stores that import jewelry, but if you really stop and think about it, nine times out of ten, your work is going to be far superior in quality. If you want to make your jewelry business into a serious, viable occupation rather than just a hobby, you need to be a serious business person and that means pricing your jewelry seriously, paying yourself a reasonable wage, covering all of your expenses, and eventually, making a profit.