You can earn quite a decent profit from making and selling jewelry. But it can be quite a challenge to set the ‘right’ price for your creations. You can’t price it so high that people won’t buy, but it would be unfair to you—considering the time you put in your work—to sell it too low, too.
Here is a simple guide to pricing your jewelry. It takes into account the cost of your materials, and something that many crafters don’t factor in when they sell their handmade pieces: the difference between price, and value.
Price versus value
Price is the amount of money used to buy a product or service (ex: ten dollars). But value is what makes a person fork over that money. It boils down to the question: ‘What’s in it for me? And why would I get this instead of a) another product or b) making it myself?’
Value considers the emotional value that the buyer puts both on the product and the money he spends. ‘How much time would I have to work to earn this money? What else can I buy with this money, and is that item worth giving up another potential purchase? What ‘rewards’ do I get from this item?’
So the thought process in your buyer would be: ‘With the price of that necklace, I could get a spa treatment. But that necklace will look really good with the dress I just bought. I have something to wear to my high school reunion.’ Other thoughts would be, ‘I could make that myself, but it would take me hours. I’d rather buy it than make it.’ Or, ‘I can’t find that piece anywhere else! All the things in the mall are mass-produced, this is special, and I’ll feel special when I wear it.’
When you price your item, consider its value to the user—and address those values when you market it. Do you want to emphasize practicality (‘you can wear this everyday!’) or uniqueness (‘this is a rare stone’)? Whatever price you set, the buyer must feel that the perceived value should be worth it.
Cost of production
Obviously your price should cover the cost of production: materials, transportation/shipping costs (both for buying the materials and sending it to the buyer), overhead expenses.
But that’s not all. Consider the cost and value of your skill and creativity (did you take classes? Buy jewelry design books?) and your time. After all, you could’ve used the hours you spent on making jewelry doing something else. You may also need to factor the laborers you hire, or employees who work on the project (like the person who set up and maintains your jewelry selling website).
One possible formula you can use is cost of materials + cost of packaging + pro-rated hourly rate + 10% of your overhead costs (or simplicity’sake, include cost of taking classes or finetuning your skill here).
Keep track of your materials
As a jewelry designer you will be buying a lot of different kinds of beads, which you will mix and match to make your different creations. You won’t finish one box of chains or silver beads in one project, right? So you need to keep track of the type of materials, the cost, and also the source (in case you need to reorder).
One way to do this is to sort your items into craft boxes. On the lid, paste an index card with the beads/materials inside (draw shape and indicate color, or label the compartments ‘A, B, C, etc.’ and apply code in your list). Write the price per piece, and the source. This will let you instantly calculate the cost of a piece. ‘Six of Beads A, 4 of Beads B…’
Include a margin
Give enough margin in your prices so you can do promo offers like discounted prices for wholesale orders, or special sales.
As you can see from this article, guarding profits can be quite tricky. To gauge if the profit is worth all the effort, read our article on the pros and cons of starting a business.
Photo from roirevolution.com