I’ve hesitated to write too much about how to price hand-crafted jewelry before because there seem to be as many ways to do this as there are ways to cook a chicken, and I can’t say one is more accurate or correct than another. A lot of pricing depends on variables such as location and required income. However, I thought I’d at least share with you how I tackled this myself when I was regularly selling my jewelry at art shows and to boutiques and galleries.
Busting a Selling Myth
First, I’d like to address 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. However, sometimes super low prices may make customers suspicious. Why so low? Is there something wrong with it? 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.)
I’m sure if you stopped and thought about all the little extras other than supplies that you need to operate a jewelry business, you’ll come up with a long list of overhead costs.
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.
How much do you make per hour at your current job? How much money do you need to make per hour to live the lifestyle you are currently living? These are really important questions. I’ve seen too many jewelry makers make the mistake of working for free or below minimum wage. But, how realistic is that if you really want to make your jewelry business a full-time occupation or even a part-time job?
Even if it’s something you love to do, you have to eat. Therefore, 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
This leads us to 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. Sure, you may be able to make twice as much selling your merchandise retail, but how much effort will it take for you to sell each one? 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.
Jewelry Pricing Formulas
There are a few different formulas you can use when pricing your jewelry. One piece of advice to think about before you start this process, however, is to 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. Obviously, 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).
Below is an example of how this formula works, and of course, this can vary depending on the cost of your supplies, your hourly wage, and your overhead cost, but it will give you an example of how to apply the formula:
You make a pair of earrings and the cost of the supplies is $2; they took you 10 minutes to make and your hourly wage is $18, so that would be a labor cost of $3; overhead costs you’ve estimated to be $1:
Wholesale earring price: 2 x ($2 + $3 + $1) = $12
Retail earring price: 2.5 x $12 = $30
I briefly mentioned in my introduction that variables such as where you live can affect the total cost of your jewelry pieces. This comes under the “how much can I realistically get for my jewelry?” category. 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. You may want to think about this before you come up with your final prices.
Final Pricing Words
In general, I think most jewelry makers do not ask enough for their jewelry, and I think some of this is connected to self-esteem. 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.
Plus, 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.