Pricing Jewelry - Jewelry Making for Profit




	Pricing Formulas For Your Jewelry Following is the information that you will need: 1) Cost of All Parts Use your "typical" costs. If you got a good buy on some parts, don't use the discounted cost, unless this is going to become your "typical" cost. To set a Retail Price, we usually multiply the cost of all parts by a factor of "2", in our pricing formula. To set a Wholesale Price, we usually multiply the cost of all parts by a factor of "1.4", in our pricing formula. 2) Cost of your Labor Figure out what you would expect to make per hour if someone were paying you a salary. $10.00/hour is reasonable for a beginner. Determine on average, how many hours it takes to make the piece. Figure out the hours to the nearest quarter of an hour. That is, if you took 1 hour 6 minutes to make a piece, consider that 1 1/4 hours. The number of hours times the hourly rate is your cost of labor. 3) Overhead costs (rent, electricity, consumable supplies, cost of travel to acquire your supplies, and the like). Assume your "overhead" costs equal an additional 20-25% of the total cost of parts plus the cost of labor. Now, compute your TOTAL COST: TOTAL COST = Cost of All Parts + Labor + Overhead Overhead is estimated as: .25 * (Parts + Labor) [use .20 to .25 as the multiplier, depending on whether you are working in your home, or in a store setting.] **** Now you have to translate your "cost" into a "price". When you first start out, it's often difficult to recoup your labor, that is, the amount of time you put into making a product. You can work as a "slave", but this only works in the very short term. You can't survive as slave labor. If you work as a slave or reduce your labor costs for the short term, (such as trying to get your foot in the door at a particular place), you would modify the formula. Thus, TOTAL MINIMUM PRICE = 2Cost of All Parts + Overhead + (Labor 0.0 or whatever discounted rate) TOTAL MAXIMUM PRICE = (2Cost of All Parts + Labor+Overhead) (1.5) By computing a Total Minimum Price, and a Total Maximum Price, you can get a range of fair prices. Something priced in this range, and sold, would result in you the seller going away happy, and your customer going away happy. If your parts costs $10.00 and labor cost $2.00, your overhead would cost an additional $3.00. (210.00+2.00+.25(10.00+2)) Your TOTAL MINIMUM PRICE would then be $25.00. ($22.50, if you worked as a slave labor -- just this once) Your TOTAL MAXIMUM COST (where you have charged the maximum amount for your labor) would be $37.50. 1.5(210.00+2.00+.25(10.00+2)) Too many people under price their products. Don't be afraid to adequately price your products. Jewelry is typically marked up higher than other goods. There are many reasons for this. The cost of getting and maintaining an inventory of parts is high; you can't buy just 1 bead at a time as needed. Jewelry fashions change every 3-4 months, often radically, leaving you with some unsaleable stock. In our example above, if your product cost: the range of a fair price was between $25.00 and $37.50. Sit back and evaluate your situation. If you feel your target market won't pay at least, in this example, $25.00 for the finished product, you need to rethink. Either reduce your costs or redesign the product, or find an alternative market. YOUR PROFITS: Assuming your cost was $10.00 plus $2.00 labor, plus $3.00 overhead, or $15.00, and you sold your item for $25.00, your profit would be $10.00. You would want to set aside between 25% and 50% of this profit for "reinvestment" into your business. Thus, after you paid your labor ($2.00), bought replacement parts ($10.00), and paid all your associated overhead ($3.00), you would put between $2.50 and $5.00 towards purchasing additional things for your business, and the remainder in your business bank account. Question: I have a question re: pricing jewelry. I just started selling my jewelry on consignment at a coffee shop. The owner takes a 35% cut of what I sell. What is the best way to price my stuff to make a decent profit on top of what she takes and to price it decently? Example: necklace I made that cost me $10.50 wholesale to make..........Sterling silver chain with an inch dichroic pendant? Is $40.00 too high? Thank you for your help Answer: You need to make an amount in this range: Minimum: 2cost of parts + cost of labor + .2(cost of parts and labor) Maximum: 1.5 MINIMUM If it took you 30 minutes to make your necklace, at a rate of $10.00/hour, then Minimum = 210.50 + 5.00 + .2(10.50+5.00) = 29.10 Maximum = 43.65 If the piece is priced at $40.00 in the consignment shop, and you get 65%, you would get $26.00. The minimum you need to get is $29.10. According to the formula, the maximum fair price the store could charge for a piece would be about $44.00. At that price and a 65% return to you, you would get $28.37. This would be more in line. Warren ____________ OnLine: Land of Odds - The South's Most Unusual Shop In Nashville: Be Dazzled Beads School: Center for Beadwork & Jewelry Arts 718 Thompson Lane, Ste 123 Nashville, TN 37204 615-292-0610; FAX: 615-292-0610 oddsian@landofodds.com http://www.landofodds.com