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What is the best way of pricing your jewellery?
I found a formula from a website by a designer called Rena Klingenberg, which is basically taking the material costs, multiplied by 4 and add 10% (overheads)of that to this figure plus your hourly rate (pro rata).
How do others here figure their pricing out?
Helen
I double (or sometimes treble, it depends) my material costs then add my hourly rate.
Good question :)
I think I'll just stick to doubling as if I charge by the hour no one will be able to afford anything I've made (due to the fact it takes soooo long to make anything not that I charge a massively high hourly amount lol)! :D
How do you make a profit then?
price it to sell, cause if it doesnt sell, its game over anyway.
Look at how much others are charging, via local jewellers shops, online retailers, argos, other catalogs, even avon...then you will gain what is called "commercial awareness" of what is typically being charged for all manner of finnished jewellery.
Look at more induvidual websites too, from crafts people, but do bare in mind many have day jobs, and some are cabable of quickly and easily posting up jewellery at inflated prices, and IF one sells, great, its nice second income money, but its a tentative price...dont be tempted to think wow, 'they' are getting £300 quid for that silver piece, because they are probably not, in reality ever selling one.
Look at high end jewellers, and brands (on the net, and real world shops) and think of thier locations, overheads, and who buys from them, and 'why' , then look at samuals and craftfairs, and internet sites, and think who you would realistically get as customers, and how much they have to spend.
Once your commercially aware, and have an idea of 'marketing' by doing the above, you can work backwards, from what 'your' sort of customers are likely to pay for similar.
Double check this against your materials costs, and any left will be your hourly rate...then see if this is doable.
To multiply materials costs by 4 is easily and regularly done, by high end jewellers with classy premises, or by large scale cheap end traders getting keen wholesale prices directly abroad but are you either? You'd have to look at what your wanting to make, and find what similar already sells for, and unfortunatly these days, you will find that if you can charge materials at cost, and just put on a reasonable hourly rate, your doing well.
Typically retail jewellers used to take the buying price (which therefore included all making costs from people who could mass produce jewellery cheaply) and times it by two. Then it went to 2 times plus vat, then 3 times net buying price to give a vat inclusive retail price.
Depending on the retailers 'price point' you can undercut shops by a lot, or have no chance of competing against them. For example, i could massivly undercut shops on diamond jewellery, but have no chance on a pair of hollow gold creole earrings.
As for silver, it depends...i regularly see import items really cheap, and the same thing more expensive in a gallery, and both sell, at different prices to different people...what puts some off price wise, attracts others. I do regularly see finnished jewellery cheaper than you can buy sheet for in silver though.
It's a whole vipers nest, innit Ben. On the one hand, you don't want to undersell yourself (or the rest of the independent community) but on the other hand, if you overprice you don't sell anything.
I've found that for larger items, the 2 x materials plus an hourly rate works well. For small items, like earrings for instance, depending on the design, I can sell at 3 x materials plus an hourly rate. Bear in mind though, that to make a simple pair of earrings takes at most 15 minutes - hence the ability to do 3 x materials.
I feel strongly that we shouldn't even attempt to match the retail prices of cheap import stuff. It devalues quality hand made stuff, which is hard enough to sell anyway!
The price is what the customer is prepared to pay.
Bear in mind that how you present & package the item can make the customer feel that they have bought something classy and valuable, regardless of the actual scrap value of the metal/ gemstones.
The problem comes when the cost of your time to design, source, manufacture, finish and market the item doesn't match up with the market price.
Ben thanks a lot for your advice. As a newbie this is all overwhelming for me. I think I will use common sense, adjust pricing according to market and what I would be willing to pay myself. When I started in hypnotherapy I had the same issue - how to price myself and am comfortable with what I am charging as it is not overcharging customers. I think once I had my first experience at the stall I will see what goes and what doesn't.
Oh Di has just reminded me....if you do fairs or similar, one thing you can do to help profits, as she rightly points out about imports, is sell them too! If you cant beat em, join em! This way, people will see the difference between the often fuzzily detailed import castings, which appear cheap and cheerful, and your quality work, and then have a choice of price points, and it emphasises how good your hand made is. I find in silver (rather than gold) this is doable, as wholesalers give great prices on cheap silver, and though large comanies do get far better prices, they need greedy margins for their large overheads, so silver is one area you can at least keep up with the large sellers on. Considering thier customers pay by card, have a large printed reciept on an epos machine, and staff to pay, i bet each sale 'costs' them a pound in proccessing it, let alone overheads, so they need to get margin, so on circa £20 silver items, or less, you can easily compete and win, and at least keep up on price points after that. It all helps pay the stall rent! and this allows you to showcase your own stuff, and get the prices it deserves.
Di is also soooo right about how the 'fixed' margin varies, and often goes out the window, depending on exactly what it is!
Thats why i gave the advice about working back, as margin often goes out the window, as some findings are cheap, and it would be daft to make your own, other expensive, so you put in at cost..
Often, margins depend on percieved value. You shouldnt feel guilty about making high margin on one item, as it will SO often be subsidising a great piece of work, thats just really expensive to make, so has to be kept low margin to sell.
Here's an example of percieved value and margin. An imported pair of sterling silver, stone set earrings. Heavy, tactile, nice pink stones, zany design idea....(so here you see that simply buying the right things wholesale is an art!) they come bagged, so the box cost 30p. (The cube price lettering i managed to get bargain clearance). How much would you charge?
I think 9 quid id fair, cheap, and a bargain...and it helps pay a stalls rent, but offer them too cheap and no one thinks theyre silver! so this is a great example of marketing, as the 'price' is all percieved value. Going too high or low could put people off....so what would you sell at? They actually cost £2.