Friday, January 25, 2013
Forgotten Factors in Pricing Jewelry
People often wonder what goes into the pricing formula for handmade jewelry. Crafters and artisans figure out this riddle on an individual basis, some even use software designed for costing and pricing jewelry. As I see it, there are 3 basic elements in pricing: cost of materials, labor, and cost of selling.
Cost of materials would seem to be self explanatory. But one element that beginners are likely to miss is inventory cost. For example, you purchase a string of beads for $35 and use half of the beads in a jewelry piece, saving the remaining beads for something in the future. That leaves $17.50 that came out of your pocket and cannot be charged out until you use the beads unless you have an inventory cost factored into your pricing. A small percentage will do, but it helps to keep your cost of maintaining a large inventory of materials bearable. Also the cost of education (classes, magazines, tutorials) should be considered.
Labor is not as easy as setting a timer to keep track of the actual minutes/hours you spend constructing a piece of jewelry. How much time do you spend sourcing materials? How much time do you spend gathering the right components before beginning to construct a piece? Again adding in a small percentage to cover this time works well because your bead shopping and gathering is usually spread out over several pieces rather than just one piece.
Cost of selling is potentially the area with the most forgotten factors. There are the up front fees for shows, listing and subscription fees for online sales. What about the cost of tents, tables, displays, travel, meals etc. if you do mostly shows? If you do online sales, then you have photography (which also requires displays, lighting, camera), packaging, shipping, fees on the sale (Etsy, PayPal, credit card). Either method of selling requires promotion in the form of business cards, mailings, blogging and other social networking. If you have a full time jewelry business and have to report your income to the IRS, that is another cost factor that should be included in pricing.
We love what we do but we should be sensible about it so we can stay in business and maybe make a profit!!
To see more of Gloria Ewings jewelry click here or here.