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Starting a jewelry business: How to price handmade jewelry

You want to sell your jewelry, but you do't know how to price your jewelry to sell. Pricing handmade jewelry is a balancing act between calculation and cleverness. Learn how to make your work add up to a profitable venture.

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It’s the million-dollar question: How much should you charge for your jewelry? The formula is simple, but before we get to the math, let’s talk about the most basic of best practices.

 

Rule #1

Open a separate bank account for your business. It makes it real, and keeps it clean and separate from your personal accounts.


Rule #2 

Keep accurate records of all expenses and income related to your business. Precise records will tell you if you are making a profit and will also be your saving grace at tax time. 

 

Another reason to track your expenses is to record your sources. Whether you handwrite in a ledger book, use a digital spreadsheet, or a specialized software program, choose a method that is right for you. I record the date, location, and vendor information, plus what I paid for, how many beads, stones, or elements, and I even draw sketches of accent and focal beads. 

 

You can also opt for one of the many software programs designed for jewelry makers. (See “Pick a program, any program,” below.) Using software requires time to enter all the details of the materials you buy, plus the materials already in your inventory. But later, the software can do the math when you need to know how much it costs to make a finished piece of jewelry. 

 

Pick a Bead Manager Software

Three popular software programs for jewelry artists include Jewelry Designer Manager, Bead Manager Pro (available at Appstore), CraftyBase, and QuickBooks. They all have features to track components, finished jewelry, and inventory, plus they generate invoices and report income and expenses. You just have to keep up with accurate data entry. QuickBooks has the added advantage of being familiar to most accountants. Often they will simply need a backup copy of your QuickBooks data file at tax time in lieu of you preparing separate reports of income and expenses. Big time-saver! 

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The Freckled Pear's booth in Tucson, Arizona.

The formula

Once you have things recorded, you will have what is needed to figure out how to price your jewelry to sell. Here’s the rule-of-thumb formula for pricing: Labor + Costs + Profit = Minimum Price. Note that this calculates the “minimum” price. That’s because eventually you should figure in other costs — show fees, travel expenses, postage, packaging, overhead, advertising — which will add to your price. But for now, let’s keep it simple.


Labor

You must know the cost and extent of your labor if you’re going to make a profit. Keep a log of your hours as you create each project, especially if you can only work now and then. 

 

Next, assign yourself an hourly rate. This is subjective, but base it on what you think you are worth. A new beader should not be asking the same rate as a master. Still, beading takes years to learn and is unique from other jobs, so even a novice’s time is worth something.  

 

Costs

We’ve already touched on this with tracking your expenses. 

 

Profit

As with your hourly rate, profit is subjective. It’s based on what you want to make on the jewelry, above and beyond the labor and costs. Again, keep your skill level in mind. Don’t undervalue your work, but be realistic about its worth. Your originality, skill, and eventual tenure in the field will earn you the right to expect a certain profit.

 

One more thing: Don’t mistake your labor as profit. You may be tempted to charge nothing for your labor and then think, “I’m making $10 an hour in profit!” But actually that $10 an hour is an expense, not a profit. You need to make a true profit that can go back into your business, allowing you to grow it. 

 

The formula, revisited

It’s time to see this formula at work. Let’s say you make beaded beads, and then from those beads, you make pendants. It takes you five hours to make one pendant, and you’d like to make $10 an hour. Each pendant costs you $3 for the beads and findings, and for profit you want to make $20 per pendant. 

 

So your formula looks like this: 
$50 labor (5 hours x $10) + $3 costs + $20 profit = $73 for the minimum price of each pendant. And that’s the wholesale price, what you’d charge a shop to sell your work. However, that shop will double or triple your minimum price to make their profit. That brings your pendant to at least $146. You might only be interested in selling directly to the public, but if a shop can charge $146, then so can you. But would your pendant sell for $146? If not, why not?

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See more from Freckled pear here.

Perceived value

There’s a variable that can affect the formula: perceived value, or what people think your jewelry is worth. Different materials and styles are considered more valuable or in greater demand, especially if they represent fads in home décor and fashion. Pay attention to trends, and you may be able to hitch a profitable ride.

 

To get an idea of the perceived value of your work, go to local craft fairs or galleries, and find pieces similar to yours. What do they cost, and are they selling? Do people put down an item as soon as they learn the price? 

 

Consider these ways to increase the perceived value of your work:

  • Make one-of-a-kind items; uniqueness adds value
  • Cash in on a niche market
  • Use a material with a higher perceived value. But be careful — this will add to your cost, if not your labor. Yes, using sterling silver findings takes the same amount of time as using base metal findings, and you’ll be able to charge more, but they will hike your costs. Does sterling silver truly add value to your design? 

 

Troubleshooting

If you’ve gone through the formula but don’t think the minimum price is realistic for your audience, consider these cost-cutting tips to arrive at a more suitable price:

  • Find technical shortcuts to be faster
  • Don’t pay yourself for labor up front. Instead, when the business is in a profitable place, take a payout as a lump sum. Talk to your accountant about this.
  • Find a cheaper source for materials by locating wholesalers and buying in bulk
  • Set up an assembly line to increase your efficiency
  • Invest in better equipment to save time or ease production

In the end, your creative skills and sense of the market determine how to price your jewelry to sell, but with careful management of labor and costs, you can control the price of your work and therefore the profitability of your business. 

 

Watch for the next blog on finding the perfect venue for selling! 

 

Have a question or comment? Please contact us at editor@FacetJewelry.com.

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