Tuesday, July 1, 2008

6 Traps to Avoid When Pricing Jewelry

By on Tuesday, July 01, 2008 14 Comments

Designing is not usually a problem for fledgling artisans who are starting to market their jewelry. However, arguably the single most important question that pops up is "What should I charge?" The process of finding the right pricing range is perhaps a trial and error process but here are some tips to avoid from the outset.

1. Underpricing

Asking for the right price is important for the designer wishes to be compensated for the materials, the time and the skill required to produce the piece. Yet, he or she shouldn't be giving it away either. Bear in mind that if you start too low, it is harder to raise prices after that than to lower high ones. People do not appreciate rising costs as much as they like what is perceived as a discount.

Some sellers are afraid to price higher because they are fearful the items won't sell. This hurts all artisans as the buying public becomes habituated to low prices. Many people are still of the mindset that handmade equates to homemade. They regard homemade as the stuff you make when you can't afford to buy store items. There is clearly a need to educate many to custom jewelry making. If they can appreciate haute couture clothing then surely they appreciate one of a kind jewelry but not if items are under priced.

This website lists a number of different pricing formulae. The most commonly used method involves tripling the material costs and adding the hourly labour costs. It is a useful yardstick but remember other factors come into play like particular local market preferences, your experience and so on.

2. Underestimating time

Eyeballing prices isn't usually recommended because of the risk of underestimating time. Some artisans keep spreadsheets or some sort of record keeping method to keep track of what is involved in the creation of a piece. Need some help? Chris Parry who is an Etsian, has a spreadsheet to download (no longer free)There are also professional software packages available if your budget allows.

3. Not allowing for wholesale or discounts

When first starting out, most artisans are just focused on landing that first few sales. They rarely think ahead. What if you become successful enough that you now have loyal customers who buy many pieces and you wish to keep them coming back for more? Although it is not for everyone, doing wholesale is also another situation where discounts come in. Wholesale could be quite lucrative for moving large amounts of your inventory.

In either case, that discount level should be built into your original price in the first place. If you are going with the exact pricing structure you first developed without this breathing room, you will thus lose money when you do have to give discounts. One suggested formula is to drop the 3x materials cost down to 2x for wholesale. Wire-sculpture.com's pithy comments on dealing with wholesalers and shop owners is worth a read.

4. Agreeing to consignment

After pricing, the next big question for artisans is "Where the heck do I sell my jewelry?". Doing consignment is not wrong. Many artisans do make a go of it and successfully. However, there are a myriad different things to be aware of like having to track your jewelry and keeping it looking shiny with that "Buy me " sparkle when you're not there to take care of it. How much better it would be if the shop owner just bought your jewelry outright? It's sold then and there. End of story.

If you still want to go the consignment route, a good place to do some research is Rena Klingenberg's website page on Selling Jewelry Wholesale and on Consignment.

5. Forgetting overheads

This one is often missed. It is not just time making your jewelry but many things. The time you spend selling, making and printing out cards, cost of the cards, the shipping charge levied on your materials, storage containers, gas for the car when you are out delivering jewelry or buying supplies and so on all add up. So factor in a small but appropriate % rate per item to cover this expense. A pricing formula which takes this into account is found here.

6. Neglecting market research

Some basic market research is required. Check out what your local competitors are charging. Check out what online handcrafted jewelry is going for. Check many places and many sources and come to your own conclusion what is right for you and the market you are targeting.

References
Tips for pricing your jewelry
How do I price my handmade jewelry?
How to price your wire jewelry for wholesale or retail business
How to effectively price your jewelry designs
How to price handcrafted jewelry
http://jewelrymaking.allinfoabout.com/features/pricing.html
___________________
The Beading Gem's Journal

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14 comments:

  1. thank you for sharing this.
    Check out my blog - http://wireblissmei.blogspot.com/2008/06/arte-y-pico-award.html
    I hv bestowed you an award.

    ReplyDelete
  2. I deleted the page you are referencing on my site a few weeks back. Whooops. Sorry hun!

    Great article by the way!

    Szarka

    ReplyDelete
  3. Fantastic article! Pricing for the market can be really tricky. I started out in a very poor area where $15 for a pair of earrings was really expensive, then moved to an area with a better economy where $15 for a pair of earrings was very cheap.

    ReplyDelete
  4. Mei- Thanks for the award! You are so sweet. Will have a look asap!

    Szarka- My secret is out! I write my blog days, and sometimes weeks ahead. But I appreciate you telling me. Will delete the link.

    Lindley - Yes, I too have found pricing varies with areas. Perhaps one can adapt with different markets with the materials used.

    ReplyDelete
  5. Your link to "pithy comments...........Shop owners" is broken. Cannot access it.
    Gail

    ReplyDelete
  6. Thanks for letting me know. I have updated the link in the blog post. Here is the link :
    http://wire-sculpture.com/store/index.php?p=page&page_id=Pricing_Your_Jewelry

    ReplyDelete
  7. You are always so informative. Thanks for this article. This is my achilles heel. There's different formulas out there. One that I saved from about 3 years ago that I try to follow (the operative word being "try") that states to double cost of materials if purchased retail, quadruple if purchased wholesale, then add your hourly and other costs. By the end of the tally, my eyes get big and there's just no way I can charge that. So what do I do? Hand it over to my husband who's the finance whiz in our house. I know. Bad. It just gets harder and harder with the economy and prices of silver the way it is. I'll read the other links you posted. I could use it! :o) Thanks again.

    ReplyDelete
  8. Thanks again for such great info and advice!

    Becky

    http://www.kenleindesign.com
    http://kenleindesign.artfire.com

    ReplyDelete
  9. I especially appreciate #6. This may be the most important tip. If your piece takes a long time to create and, therefore, you want to price it high, you have to consider the price other people are asking for a similar item. Let's say I have a byzantine chain in sterling silver. I think it's beautiful, and I took a long time to make it, so I want to sell it for $200. Then I look around and see that other people are selling more-or-less the same chain for $130. Why would someone buy mine for $70 more? My price needs to be in the same range (or maybe just a very little more) so people will buy it. If I decide that I don't want to sell it in that price range, then I need to either (1) find a way to bring down my costs and time or (2) sell something else.

    ReplyDelete
  10. Hi! I am an absolute baby in the jewelry making business. I just made my first two chainmaille bracelets and must learn to make much more before I even think of selling. However, your topic of pricing, as well as all the comments, are timely as now is a good time to start 'practice pricing' on the pieces I make as well as watching the local stores. Thank you so much. I can see I have a lot to learn from this website!

    Paulette

    ReplyDelete
  11. Paulette - we all never stop learning! There is still a lot for me to learn and I will continue to share my findings here.

    ReplyDelete
  12. just FYI--Chris Parry now charges for his spreadsheet.

    ReplyDelete

 

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