| Pricing your handcrafted jewelry
This seems to be a problem for many artists. What do I sell my
creations for? A lot will depend on variables such as your location
and your required income. There are a few general ideas that should
help.
A very important thing to learn quickly is your merchandise should not be
priced to low, especially with hand-crafted items. Many hobby and
craft business owners cheat themselves out of making a reasonable
profit because they have priced their merchandise to low. It is
tempting to believe the if your price your items low they will sell quicker,
however, sometimes super low prices make your customers suspicious.
They will ask themselves, why is this prices so low? Is there
something wrong with it?
When pricing, you must consider your overhead. This will be costs
associated with the production of your merchandise. Travel, office
supplies, tools, to name a few. Calculate your overhead and come up
with an approximate overhead cost that you will apply to each piece of your
work.
What about labor costs? How much do you make per hour at your
current job? A past job? How much will you need to make per hour
to live in your current lifestyle? A lot of craftsman will work for
free or close to it because they priced their merchandise to low. If
you really want a full or part time job, you will need to include a cost of
living in your merchandise. You will need to figure out how much time
it took you to produce the item.
What about wholesale pricing? If you are in the market to make
quantity sales, then you will need to learn the rules of wholesaling that
are already established in your market. Something to remember is when
you sell your own merchandise it takes, time, effort, and money for you to
do so. If you wholesale your merchandise out, you won't have to spend
gas money, time, traveling, etc.
There are a few formulas that people use when they price their jewelry.
You will need to make wholesale and retail price early on in your business
development. By waiting to long to make these prices you may find that
it is to difficult to track everything that you used to create your items.
Your wholesale price will be something you can use if you should decide
to go that route, it is good to have this written down somewhere in case you
change you selling style. A very simply formula for pricing wholesale:
Add up your costs (including labor, overhead, and supplies) then multiply
by 2.
2 x (supplies + labor + overhead)= total cost to you
For retail, you will multiply by 2.5 to 3 (this is often known as
keystone pricing). Here is an example of this formula.
Lets price a pair of earrings you created. Lets say they took
you 15 minutes to create. Your supplies to create these earrings cost
you $3.00, the overhead you figured at $1.00 a pair. You want to
earn $15.00 an hour for working.
You take the supply cost of $3.00 + $1.00 (overhead) + $3.75 (hourly
rate) = $7.75
Wholesale Pricing: 2x ($3.00 + $1.00 + $3.75) = $15.50
Retail Pricing: $15.50 x 2.5= $38.75
Remember your have made some precious handmade items that warrant the
price. Don't just your prices by large retail stores, you can't not
possibly make things and compete with their prices. If you want to
have a thriving business, you will need to price your items seriously,
paying yourself a reasonable wage and covering ALL you expenses, then make a
profit.
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