Wholesale - Pricing Formulas
For Your Wholesale Jewelry  

Your ideal goal would be to set your price at 2x your total cost, though sometimes you will have to settle for a lot less mark-up. The compensating factor here is that when selling wholesale, you are selling in larger volumes than when selling retail. The larger volumes should help you reduce the costs of your parts, since you can buy those in volume. It should also result in a lot more "cash" flowing through your bank accounts. While you don't measure "cash flow" in actual dollar amounts and profits, "cash flow" definitely has a value because it enables your business to keep operating smoothly, and with less fits and starts.

The minimum return you should settle for with wholesale is the ability to price your items at 1.25x your total cost. If any less, you need to rethink your product or your marketing strategy.

A reasonable return you should aim for with wholesale is 1.4x your total cost.

Again, your ideal goal would be 2.0x your total cost.

[If you are just starting out and are in business for yourself making and selling jewelry, then use this rule of thumb: If someone is buying 10 pieces from you, then give them a wholesale price. If they are buying only one or a few pieces at at a time, then give them your retail price. Thus, if you are only wholesaling a few pieces at a time, then 2.0x might be your minimum acceptable amount.]

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Consignment Pricing Considerations

Many artists and craftpersons are dependent on consignment sales, since many of the retail outlets for these types of products must share the "risk" of sales with the artist. That is, the retail outlet cannot afford to buy the pieces outright. They can only afford to create a retail environment conducive for the sale of crafts and artwork.

Thus, the retailer in consignment basically agrees to accept a little less of a profit from the sale of any item. The artist/craftsperson also agrees to accept a little less money.

Typically, the retailer and artist/craftsperson might negotiate an item's "price" based on what they think someone will pay for it. Then they will agree how to split the money. A very common split is 60% of the sales price goes to the retailer, and 40% goes to the artist/craftsperson. Also common is 70% retailer/30% artist craftsperson. Less common is 50/50, 40/60 or 80/20.

Now the artist/craftsperson has to determine if the return is sufficient to result in a profit. If the decided-upon price for an item was $10.00, and the negotiated split was 60/40, the artist would expect $4.00 from its sale. This $4.00 would have to cover the cost of the parts, the general overhead costs, and hopefully some or all of the artist's labor, as well as some extra money to reinvest in the business.

Suppose the item was a pair of earrings, the cost of the parts was $1.00, the cost of labor $2.50, and overhead .88. The cost to the artist would be $4.38 -- .38 more in cost then in return. The artist could decide to take less for his or her labor. Or, the artist could renegotiate with the retailer to set a higher price for the item. The retailer would evaluate whether the item could sell at a higher price, or would sit around gathering dust, thus costing the retailing overhead costs, that could otherwise be offset with a better, faster selling item.

[Retailers need to "turn" merchandise around at least 2x, and ideally 3x each year. That is, each square foot of selling space must generate a certain number of dollars each year to enable the retailer to pay the rent and other overhead costs generated by that square foot of selling space.] If the retailer is resistant to raising the price, and the return is insufficient to cover the artist's costs, then the artist needs to re-evaluate the product or the location for selling that product.

In consignment, the retail is always assuming the greater risk. Hence the 60/40 split in favor of the retailer is a fair bargain. If you are offered a consignment deal, say of 30/70 in your favor, this should raise a yellow flag. It suggests the retailer doesn't understand his/her business fundamentals. This might mean that the retailer may not push your merchandise, keep it clean, display it well, or if sold, pay you in a timely manner.