It can often be difficult to decide on the selling price for your jewellery. The tendency at the beginning is to price too low, because you can’t imagine that any one would pay the price that you need to ask.
However, you should never compare the price of your jewellery with the price of cheap imports sold in supermarkets and clothes stores. Your jewellery is unique and has been hand crafted from specially chosen components into a piece of wearable art. Remember people tend to select jewellery on how they imagine they will feel wearing it rather than how much it costs.
You need to work out two prices for your jewellery, the wholesale price and the retail price.
The wholesale price is the lowest amount you would ever sell your jewellery for and is the price you would quote to galleries, boutiques or department stores that buy in large quantities to sell on.
The retail price is the price you would sell your jewellery for when selling direct to your own customers at a craft fair, jewellery party or on your website.
Working out your Wholesale Price
The wholesale price is calculated from three values. The cost of your materials, the cost of your labour and your overhead costs.
Following the 4 steps below will help you to work out your wholesale price.
Step 1 – Calculate the Cost of your Materials
It is essential that your keep track of the cost of all your beads and components. The easiest way to do this is to immediately label all components and beads you buy with the cost price. Stick a sticky label on the bag and record the cost per bead or finding. If you are recording beading string, or wire, record the cost per centimetre or inch. Also record the supplier code and the name of the supplier on the label as it will make it easier to reorder.
Once you have a record of your cost prices, it is an easy process to count how many of each component you have used and multiply by the cost price to give you the cost of an individual piece of jewellery.
Step 2 - Calculate the Cost of your Labour
When you calculate the cost of your labour you also need to take into account time spent on your business when you are not making jewellery. This includes activities such as marketing, sales, book keeping, hosting jewellery parties, shopping for materials, photography and emailing suppliers and clients.
If you can, it is a good idea to spend a few months recording how many hours a month you are actually spending on these activities. This will give you an idea of how much time you spend making jewellery compared to how much time you spend on other business tasks.
For example if you spend, on average, 30 hours a week making jewellery and 10 hours a week on other business activities. It gives you a ratio of 30 to 10, or 3 to 1. This means that for every 3 hours you spend making jewellery you spend 1 hour on other business activities.
To work this into your labour costs, divide the amount of time spent making a piece of jewellery by the ratio, in this case 3, and add the result to the time spent making the jewellery.
Example
A necklace takes 30 minutes to make. Divide 30 minutes by 3 to give 10 minutes Add the 10 minutes to the 30 minutes to give a total time for making the necklace of 40 minutes.
Now you have this figure you can multiply it by the amount you want to earn each minute to give a labour cost.
For example if your aim is to earn £18 an hour then you want to earn 30p a minute.
In the example above, the necklace took 40 minutes to make, so the labour cost is 40 x 30p, or £12.00
Step 3 - Calculate your Overheads
Overheads are the fixed expenses of your business and can include, rent, insurance, heating, lighting, telephone bills, show fees and travel expenses.
The best way to get a figure for these is to track them over several months.
For example if you have spent £900 over 3 months you will have spent an average of £300 a month. If you have produced 100 pieces in a month you divide £300 by 100 which gives £3 overhead for each piece.
Step 4 – Work out your Wholesale Price
To get the total cost of making a piece of jewellery add together the cost of the components, the labour costs and the overhead costs.
In the necklace example above
Components = £5.00
Labour = £12
Overheads = £3
Wholesale price = £20
This is the absolute minimum you would expect to get for that necklace and is your wholesale price. If you are selling wholesale you would expect your customers to spend over a minimum amount , such as £250, to make it worthwhile.
Working out your Retail Price
Generally the retail price is just double the wholesale price. For example if your wholesale price is £20 then your retail price will be £40.
If you do these calculations and your prices come out too high, or higher than you think the market can support, then there are a couple of things you can do.
The first is to remember that as you keep making jewellery you will get faster, faster at making jewellery, faster at ordering, faster at making promotional material, so the labour cost will drop.
The second is to buy in bulk so that you can get your materials cheaper.
You can also alter your pricing structure so that you charge more for labour on earrings, that are relatively quick to make, and reduce the price slightly on more complicated items. This should allow you to average out at an acceptable profit.
