How to Price Your Handcrafted Jewelry

continued from page 1

• Profit — Profit is the return you get for the whole jewelry project — for the creativity that went into it, the skills required to carry it out, and the risks undertaken. In short, for being an entrepreneur instead of just a laborer.
  
  If you do not add a profit to your price, you will just break even — assuming you have figured out your costs correctly and what you pay out in expenses isn't more than what you bring in, in sales. If your business isn't making a profit, your business isn't succeeding.
  
  After you have figured out your materials, labor and overhead, all you need to do is add a percentage of the total of these three costs and you are ready to set your wholesale price in your pricing formula.

  Example:

  Materials: $5.25
  Labour (1 hr x $15): $15.00
  Overhead (20% of M+L): $4.05
  Total Production Costs: $24.30
  Profit (15% of total Costs): $3.65
  Wholesale Price: $27.95

Setting Retail Prices

The second stage must absorb the cost of selling the product, regardless of the means of selling you use. Even though you may decide to start out selling your work strictly retail through craft shows, you should still figure your wholesale price, as your selling costs will be added to this price to arrive at a retail price for your products. Normally your retail price is double your whole sale price.

Many jewelry designers say they can't afford to wholesale their jewelry — that is, they can't give a discount off their retail price to a shop or gallery that wants to purchase in quantity for resale. This is because these jewelry designers are selling their products retail at the first pricing stage, the wholesale level, and therefore have not adequately considered the second set of selling costs.

Selling Costs

Selling costs are what it actually costs you to make a sale. Your selling costs are any money that you must pay in order to get your product to the final customer.

Following are some of the easily identifiable costs of selling that contribute to your selling costs:

• Exhibition Expenses. Booth fees for craft shows, cost of materials for your booth, signs, and display items.

• Travel Expenses. If you attend out-of-town shows you should include your food and accommodations.

• Advertising and Promotion. Included in your selling costs are any expense involved in making your customers aware of your products. Printing of brochures, flyers or catalogues, and any advertising in magazines or newsletters. Also the cost of setting up a website.

• Packaging Materials. When selling your products directly to the customer you need some sort of packaging material for them to carry their purchases home. This would include gift boxes, bags, tissue, hand tags, and gift cards.

• Rent. If you were to rent a shop or studio the cost to rent, utilities, and cleaning supplies.

• Your Selling Time. In your selling costs you must also consider not only the time you actually spend at the show sitting behind your booth, but the time spent packing up the jewelry the day before, loading the car, traveling time, unloading and unpacking when you get back — after all, you are losing these hours from production.

• Sales Help. You may need to hire help for setting up and dismantling your booth, as well as help in selling.

• Mail Order. If you sell your products through the internet or mail order then you must also consider your mailing costs such as postage, shipping, and extra packaging materials.

Depending on how you decide to sell your work, you might find that you are spending as much time or more on selling your jewelry as you are in making them. Actually this is quite normal and to be expected, especially at first. You should soon become more knowledgeable about selling and get your selling costs in line with what your retail price allows.

Even if you are only a part-time jewelry designer, you must bear in mind that the prices you charge must reflect an income from which you could earn a living.

Right now you may be selling handmade jewelry either for the fun of it or for only a bit of extra income. However, in the future if you do decide to make jewelry as a full time business you will realize that you are not making sufficient profit from the low prices you have been charging and then it will be too difficult to suddenly raise your prices high enough to make a living from your jewelry designs. Therefore, fixing a reasonable and fair price early in your home jewelry business is of extreme importance, especially if you are to make your business successful. •

© 2008 by Gloria-Jean Browne. All rights reserved.

Gloria-Jean Browne's Beading Design Jewelry offers hundreds of ideas and tips to inspire you to design and create unique bead jewelry designs that will give you an edge in the market place. More »

7/10/08