Do you have a structured way to calculate how much you should sell for your handmade jewelry? Pricing your work is probably one of the most difficult decisions to make in running your business. Price your work too high and you limit sales, possibly pricing yourself right out of business. Price your work too low and you’ll give your labor away, as well as your profit.
If you’re a beginner artist and jewelry designer you’ll probably price your work too low, hoping that you can sell off your creations easier and faster. Well, that is not a wrong approach if you intend to build up your reputation at selling marketplaces. Also, there will be an inevitable learning curve for you where you will take time in perfecting your techniques. Due to this learning curve, even if the design is the same, the quality of early pieces will be dramatically different from those of later pieces. We’re all constantly improving and perfecting our techniques. Just think of yourself as a jewelry making apprentice. As your skill improves so should your hourly rate. This allows for small price increases over time that can easily be explained as inflationary; however, if you start out giving your work away you will not only give the illusion that your work isn’t worthy of a decent price but any customer base you build will suddenly turn up their noses when you see the light and raise your prices to fit what they are truly worth. Does that mean you should start charging premium prices right out of the gate?
The key is to be sure that any jewelry pricing formula you use compensates you for:
– Cost of Goods
– Your overhead expenses
– Your time/ Labor Cost
COST OF GOODS – are direct expenses incurred in producing your jewelry or other craft creations. The main component for this usually comes from raw materials or supplies used to make your creations. There are also other expenses such as packaging cost such as stamps, label, envelope, courier charges to deliver your package to your customers. To be competitive with others, your cost of goods should be as low as possible so it’s important to purchase your supplies at the lowest possible price – at wholesale or at bulk.
OVERHEAD EXPENSES – Operational Cost are all cost incurred just to maintain existence. The operational cost would include, rent on office space, electricity, insurance, tools, advertising, and wages of persons not directly attributed to the production of the product. Once you have your annual operational cost you can distribute this cost to an individual product. There are a few ways where you can distribute your operational cost. The easiest way is you can estimate the number of creation you can make in a year and use total operational cost to divide with the total number of products you can create.
LABOR COST – Don’t forget your own labor. Just because you’re the owner doesn’t mean that your labor is any less a cost of goods than the crafters you hire to help. Many craft business owners either have the tendency to undervalue the worth of their own time or haven’t adequately figured out how much time it takes them to get their craft item to market. Don’t fall into this trap – your time is important! Estimate how long it takes to make one item. Decide how much money you wish to earn per hour of creating crafts.
YOUR PROFIT – A standard markup is cost x 2. However, jewelry is usually priced higher than most goods so cost times 3, 4, 5, 6 even 10 is not unreasonable. You can decide this markup rate based on the customer base, quality of materials, market venue, and your competition. Generally, you can price your items higher if you are selling directly to your customers. We call this price as retail price. Usually, most jewelry makers would apply a retail mark-up of 400% (4x) from your total cost. If you sell your pieces at wholesale or on consignment to a shop, you would generally sell it at a lower markup rate. Wholesale and consignment prices are typically 50% to 60% of your retail price.
SELLING PRICE – To sum it up, the formula to compute the selling pricing would be Cost of Goods + Overhead Expenses + Labor x Markup %
All this may sound and look difficult to calculate, but with the help of DIY Jewelry Making’s Pricing Calculator, you can do these all in a breeze.
With Jewelry & Craft Pricing Calculator Materials Inventory and Product Management Excel/Desktop Application you can:
- Calculate pricing for your creations
- Keep track of the materials used and purchased for your business
- Keep track of your materials inventory
- Create your product listing in a central database
With the pricing calculator, you can effectively run your jewelry making or any kind of crafting business. With this simple tool, wherein you just have to input quantity, cost of materials, number of materials used to create a piece, add in your labor cost and markup percent and voila! It will do all the calculation for you. Now, you can focus more on creating and this weekend, you can receive the Pricing Calculator as a gift with this SPECIAL OFFER!
receive the Pricing Calculator as a gift with this SPECIAL OFFER!
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