Friday, May 07, 2010

Pricing your jewellery

Thank you Margot, Laura, and Jody for your comments yesterday. I thought it would be timely to post some links to some basic pricing formulas to help those of you who are just starting. There are also a number of excellent books on the market that cover this in much more depth.

We normally stock Catherine Winters - How to start a microbusiness book. Catherine is a friend of mine, but I would recommend it regardless. Maybe call/email the shop to find out when they will have it back in stock.  There are also a number of other books out there, that are equally as good. I haven't had enough coffee yet, and I seem to be google challenged this morning. I'll post in the comments later today with the links to the other books I'm thinking of.

Before I post the links - here is a very basic formula for pricing. The end result should be considered a variable. Is it enough? Is it way too high for your market?  You can adjust from there, but you will now know your exact costs. I'll bet many of you are not keeping accurate or consistent track of what you're spending. And yes, I've been guilty of that too.

However, I'm now being very careful to keep track of all purchases, and I put a note in with the beads/findings on the price per bead/component. There is software out there that can help you - but honestly, for me it's faster to just add it up with a calculator. I have thousands, and thousands of beads collected over the years. I suppose if I was just starting out, it would be manageable.  I'm also really trying to spend less time on the computer, not more!   That said, if you are operating as a business, you do need to keep track of accurate inventory levels, and expenses - but that's going further than the scope of this post.

Basic Formula
(cost of materials) + (hourly rate) + (overhead) = (true cost)

Yes, you need to pay yourself an hourly rate, and yes, you do have overhead. I don't care if you're working in your basement, or on your kitchen table. You have overhead (office supplies - you do print out stuff, and you don't work in the dark - to name but a couple)

(true cost) x (2 - 2.5) = wholesale
(wholesale) x (2) = retail

Do not sell your jewelry at wholesale to anyone except your mother. You might be tempted, and you may think that you'll never want to sell wholesale. However, that day may come. A gallery will see your fabulous earrings that cost you $9 (just cost of materials), you've got them posted on etsy for $20. The gallery wants them wholesale (that's 50% off!) You agree to sell ten of them. You forgot that they take about 40 minutes each to make.

So now, you've sold 10 pairs of earrings for $100. Take off your cost of $90, and it took you well over 6 hours to make......whohoo, all for a whopping 10 bucks. Which in just about any part of the world is far less than minimum wage.

I know I may sound slightly harsh with all of this but really, even the best of need the occasional slap upside the head ;-)

Here are some links to get you started.

Pricing your jewelry - by Tammy Powley

Tips for pricing your jewelry - by Rena Klingenberg

There are also a ton of tips on the Modish Biz blog!

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