Am I getting my pricing all wrong?

Jewelry Discussion
1

Hi there,

Here’s how I do my pricing, my work is very “very” detailed
beadwork, I use the very best materials. Pearl, Swarovski, Gemstones
etc I charge my hourly rate, and then just add the wholesale
materials price, from some of the mails I have read, I feel I should
be charging more for materials.

What percentage should I put on top?? 100% or more??? The reason I
hesitate on charging more for materials is…well the finished
pieces work out expensive, although that shouldn’t be a worry, they
cost what they cost right?

I would really appreciate some advice.

Thanks soooooo much!
Tina
Dublin, Ireland

2

Hi, Tina, I used to do as you describe-- my hourly rate, plus
materials. After reading SO many posts here about charging anywhere
from double to 6x costs, plus hourly rate, plus double or more to
cover overhead, I finally gritted my teeth and raised my prices this
year. (It helped that a few relatively expensive pieces got sold in
the meanwhile.)

No way to tell how much is luck, how much is the economy, or sun
spots, but at my one show this year so far, I sold better than
before. And with prices mostly in the hundreds instead of $300 and
down to $40, it seemed as though people regarded my more moderate
priced pieces (like $50 or under) with distaste and suspicion! “Are
they sterling?” So I raised them to $65 and sold them. This for
pieces with about $7-$10 in materials and 10 minutes to make.

That was only one show, so it’s too soon to call it a pattern! But
I’ve been working up to it for a while. My most expensive sale so
far was $8,000, and that raises one’s confidence.

Someone once told me that if her toes didn’t curl when she quoted a
price, she knew she wasn’t charging enough.

Good luck!
Noel

3

Hi Tina,

Just a comment on your rhetorical question:

they (the beads) cost what they cost right?

What you are referring to is what is known as the “direct cost” of
your materials. What you may also wish to consider are all of the
“indirect costs” associated with the piece. For example, do you
charge for the time you took to buy the beads, etc etc? That time is
a cost because you are foregoing time to make your piece and thus
earn income. Some of the indirect costs could be trivial but others
could be substantial. If you do not account for them, you could be
losing out.

Just a thought.
David

4

Dear Tina:
Oh sweet Ireland,

See my comments on commission sales where you see material and labor
cost then double it for wholesale.

You cannot be buying those beads and composing the beautiful bead
work and not getting your money back plus a return for your
investment and creations.

How much are those beads anyhow?

They are not like high value precious stones where you can make
thousands of dollars with a 5 percent mark up.

Allan Creates
P.O. Box 51 Cote St-Luc
Montreal Quebec
Canada
Tel: 514-488-7553
Fax: 514-489-7299
Superringfit.com
Perfectly Fabulous Fit Arthritic Shanks

5

“Thank you for your swift and very helpful reply”!

I will take your advice, and grit my teeth and just go for it!

Do you add the costs of ordering into the loop?? that’s one that I
have never thought of, but it has just been suggested to me that I
should look at the hidden costs as well as the direct costs.

Very good suggestions from everyone!!

Thank you for your support Noel, you’ll be the making of me yet!
Wishing you success in all that you do

Tina

6

This is my first post to the forum, so I hope I’m doing it
right…guess I’ll find out in the digest tomorrow! (I find it
weird that there’s apparently no way to access the ongoing forum
from the web, just through e-mail, or am I being a hapless newbie?)

Anyway, about pricing - I usually stick with the materials +
time=wholesale x 2 = retail price formula, and I’ve had many friends
and even customers tell me my prices are too low. I just can’t
bring myself to charge $35 for a cast piece that cost $2 and takes
10 minutes to finish. I started my business last September, and I
still feel like I’m being cocky if I charge a fair price for my
work!

I have noticed that customers really do equate higher prices (to a
point) with higher quality; this seems especially true of fabricated
pieces (as opposed to cast). I thought I would have a great deal
of difficulty explaining why a constructed piece the same size as a
cast one costs twice as much, but most folks seem to understand that
there’s more work involved.

Picking up on the thread on price tags , I too hate the look of
them, but I’m shy about asking when I’m shopping, so I try to spare
customers that hassle by making them visible. It is amazing how
many people will ask “How much is this?” when the price tag is stuck
right on or next to the thing they’re looking at, however!

Jessee Smith
www.silverspotstudio.com

7

You clearly did your posting exactly right!

I went to your website - what beautiful work! I’m amazed at the
precision of the bezels around the beaded patches. Hope we hear a
lot more from you.

I have one little comment (wouldn’t you know - ) about the website.
People don’t mind scrolling down, but research shows they HATE to
have to scroll sideways. It’s perhaps not significant enough to
make people abandon your site, but it’s entirely possible they will
miss items on the far right. Other than that, Love the site!
Especially the apparently authentic recreation of real biological
patterns. Mother Nature was the first artist, and is still the
best. We’re all Her humble students.

Tas
www.earthlywealth.com

8

I would suggest you get your head straight now. You’re lucky that
customers have said your prices are low and they understand
fabrication is more. Think about who’s smarter. They say you’re low
and you can’t bring yourself to raise them.

Anyway, about pricing - I usually stick with the materials +
time=wholesale x 2 = retail price formula, and I've had many
friends and even customers tell me my prices are too low.   I just
can't bring myself to charge $35 for a cast piece that cost $2 and
takes 10 minutes to finish.

Firstly, I have quietly come to your shop window and watched you
work (nicely clean bench :slight_smile: ) You’ve never taken only 10
minutes to do anything, shoot-you’ve spent that much time in the
“john” reading Lapidary Journal.

You have to consider that if you arrive at 9, leave at 6, take an
hour for lunch, that you have AVAILABLE 8 hours of which to produce.
You don’t. You’re lucky to get in 5-5.5 hours. Why?

Remember the bathroom break? You have to ADD in breaks and down time
to the “10 minutes” to do something.

Your cost times two isn’t a bad place to start but you said “labor x
2”. My question is where did you get your labor quote from?

$35 per hour is completely unimportant. It’s how many minutes to
multiply it by.

At $35 per hour YOUR way, might be 15 minutes, or $8.75. But if you
did a REAL time study, you’d find it might be 30 minutes or $17.50

Double $8.50 and you get $17.

Double $17.50 and you get $35.

Figure you’re OFF by 40% and by years end you could have collected
$14,976 MORE money. Just on this one mis calculation.

Many wholesalers double there costs. If you’re doubling for RETAIL,
you’re missing out.

You should at least triple your labor rate and 2-2.5 to 3 times your
materials. Easily 3-5 if you’re making directly for retail.

Jewelry stores who BUY silver jewelry usually get 3-5 time markup.

I started my business last September, and I still feel like I'm
being 	cocky if I charge a fair price for my work!

You’re not cocky, you’re scared and price by quilt. I bet you’re
young (in your 20’s, early 30’s?). Start having mortgages, kids,
wants and desires and you’ll get over this guilt pricing. It’s not
easy, took me 12 years to get over it. It was real easy. The Internal
Revenue Service helped me a lot! (They don’t take no for an answer)

I have noticed that customers really do equate higher prices (to a
point) with higher quality; this seems especially true of
fabricated pieces (as opposed to cast).   I thought I would have a
great deal of difficulty explaining why a constructed piece the
same size as a cast one costs twice as much, but most folks seem to
understand that there's more work involved.

My suggestion now that the light has shown upon your head to DOUBLE
ALL TIMING starting from today, then multiply it by your itty biddy
hourly rate.

Picking up on the thread on price tags  , I too hate the look of
them, but I'm shy about asking when I'm shopping, so I try to
spare customers that hassle by making them visible.   It is amazing
how many people will ask "How much is this?" when the price tag is
stuck right on or next to the thing they're looking at, however!

Think about this folks. We are the ONLY BUSINESS where the customer
is REQUIRED to ASK PERMISSION TO EVEN VIEW OR TOUCH an item. Think
about it. You can sit in a $80,000 Jaguar without permission in a
showroom, ladies can try on at least one show of a $300 pair at any
show store. You can try on a $500 suit, touch a $10,000 painting but
you have to ASK PERMISSION TO SEE A STUPID $25 silver chain!

Yes! Everything is under lock and key. So make it easy. If their
eyes LOOK at a piece, don’t ASK them if they’d like to see it, PULL
IT OUT and place it in their hands.

You could be signs in the cases “Under $50”; “Under $200” and help
them.

I visited one classy store who had no tags. They took a picture of
every item and put in on a paper with description and price. That sat
under the counter. One sheet per showcase. All they had to do was
look for the picture on the sheet to say a price. It was a very clean
looking case.

If you raised your prices (your customers have already given you
their blessings) by 25%, and you NOW sell 100 units you’d only have
to sell 80 units to take in the same amount of money.

You’ll find the closing ratio won’t change that much. If you sell an
item for $100 and 7 out of 10 BUY; and you raise the price to $125,
IF you still sell 7 out of 10, you’ll receive 25% more money.

But if 6 out of 10 now buy, you’ll STILL get $750 and have lowered
your cost and time and number of people you have to deal with. You’ll
probably find when you raise your prices, because of your product,
hardly anybody will squawk.

I recently came out with a new, improved pricing book, with more
bells and whistles. For the past 3 years it was $175. This newer one
is $299. My closing ration came down 1 point but my sales have
greatly increased. People who can see the value (you have to know how
to sell-not a dirty word) will appreciate what you do and pay a
“fair” price. Your pricing is WAY “under-fair”.

David Geller
www.JewelerProfit.com

9 
Do you add the costs of ordering into the loop?

Hi Tina,

I am a retailer and bench jeweler. I have fought with myself long
and hard about what is truly fair pricing–fair for the seller and
for the buyer.

First, to answer your direct question about the cost of ordering
materials: According to the IRS, “Cost of Goods Sold,” or “COGS”
includes the price you paid for the item and/or materials AND
“freight in.”

Now the touchy part. I know there will be many who believe I don’t
charge enough–and maybe a few who feel I charge too much, but this
is the formula I use: I double (keystone) the COGS and then add what
I feel my labor is worth. In some cases when I find it difficult to
estimate the value of my labor I simply triple-key (3X) the COGS.

Having said all that, as an artist you should be pricing your
creative works based upon their artistic value, with the above being
a guideline only for those jobs that you feel are routine. I know
that Salvador Dali and Pablo Picasso didn’t price their works
according to materials and time, and they were two of the most
commercialy successful artists of the 20th century.

Del Pearson in beautiful South Texas, where we really appreciate air
conditioning.

10

I used to have the same problem. Customers telling me I was working
too cheap. Several years ago one of my friends was doing his sons
income tax return when I arrived at his house. My friend showed me
the return form. His son, working forty hours per week plus every
second saturday was making over $50,000 as a mechanic for Canadian
Tire Corp. The son later told me that their “flat rate” was based
on an hourly billing rate of $60 per hour.

From that day on I have looked at business differently. I had been
regularly doing small jobs for free. For example, putting a spring
ring back on a necklace after it had been pulled off. Now I have a
minimum charge of $5 for the smallest job. I kept a paper on my desk
for several months and kept score. I averaged $123 per week charging
for these “silly” little jobs. This pays half the rent.

For my custom goldsmithing work I now charge as much as I can get .
If I see my business going down I’ll adjust.

I’ve learned that if you don’t respect your time, neither will your
customers.

R.H.

11

Thanks for you mail,

What in the hell was I thinking?? I haven’t been figuring in the
costs of freight and delivery??? “twit”, well that’s going to change
from here on in. What I asked you about originally was, if you add in
the costs of time you spend ordering in your materials?? I had one
mail from the forum subjecting I do so.

I know that Salvador Dali and Pablo Picasso didn’t price their works
according to materials and time, and they were two of the most
commercially successful artists of the 20th century. What if they
got their pricings wrong?? by just coming up with a price off the top
of their heads? Cant imagine how they’d get even close to what the
work was worth using this kind of format. I always time myself when
working, if I take a cigarette break, or any other kind of break, I
write the time I stopped and resumed work. You cant really go wrong,
unless your hourly rate is too low, Id be interested to know what
most jewellers charge per hour.

In some cases when I find it difficult to estimate the value of my
labour I simply triple-key (3X) the COGS. I cant understand why you
cant figure out the estimated value of labour?? is it that the work
is of a specialist nature? and that you feel that its worth more than
usual?? How could tripling the cost of COGS cover you?? pray tell??

Sorry if I misunderstood.
Best to you
Tina

12

Pricing is a wonderfull subject, a make it or break it subject. I
think there are two major considerations to pricing first the
science of pricing, anything measurable, then there is the art of
pricing, what will the market bear? The science involves allot of
record keeping and keeping record keeping current, keeping records
by client for custom work and inventory control for accounts. Parts
need counting and pricing by date since the metals market changes
pricing, you need to know how much you paid for an item and what it
costs to replace that item. The price difference between purchase
date and current market can be taken up in your profit margin and
changed when the market increases or decreases to a level you
decide. Over head is part of the science as well as the art. Your
salary for instance is completely market dependent. I have been in
the market a long damn time and I charge x amount per hour and have
been turned down for too high pricing. More often than not though I
am employed by clients and accounts, that is how I judge my hourly
wage. I try not to fight the market or be too proud and subcontract
when quallity is at my required level and the pricing of the
subcontractor is less than or equal to mine. I don’t play the
quantity game against the market, that is when I either subcontract
or discontinue the item. Physical overhead is all science, eletrical
bill, water, gas, tape, packaging and marketing all need to be
accounted for. Goals for marketing help you decide if it was worth
it or not, you will never know in advance. I am currently working
with Jewelry Design Manager to help in the record keeping. I LOVE IT
and it’s cost was easy to gamble on. Pure art work is another story
and in my opinion completely market dependent. Pure art work is damn
near all marketing, Picasso and Dali KNEW HOW TO SELL THEMSELVES and
I am SO jealous!!! I have been away for many months, I have been
monitoring Orchid and love it more than ever, I’m back and doing
very well for myself after gut wrenching changes.

Sam Patania, Tucson

13 
     What if they got their pricings wrong?? by just coming up
with a price off the top of their heads? Cant imagine how they'd
get even close to what thework was worth using this  kind of
format.

Tina,

I am a bench jeweler. I do not create pieces unless I am asked to
do so. When that is the case, I still do not feel that I am truly an
artist or creator because I am simply fulfilling the wishes of the
client. As a technician, rather than an artist, I find the 2XCOGS
plus my time makes sense.

An artist is not merely a technician but rather is a person who
comes up with his or her own ideas and then creates an original,
unique piece of work. I can see no way to objectively place a price
upon a person’s creativity and execution of design. Certainly you
must recoup your time and materials costs, but the real value of a
piece is probably best measured by what the buyers are willing to
pay. This may take some time to figure out, but materials and time
alone simply cannot dictate the price of creativity. Also, as your
work becomes better known and as it becomes more in demand I feel you
must increase your prices (within limits) to reflect the value the
customers are placing upon it. I sincerely doubt that Picaso and
Dali sold their latter works at the same price as their earlier
works. Their successes added value to every piece they created.

As to the “3 times COGS formula,” I should have said 4 x COGS. In
the construction trades a rule of thumb is that a project will cost
twice what the materials cost–ergo “bottom line” = COGS x 2. Even
though contractors use hourly labor costs in their estimates, a job
will almost always come out to being twice the cost of the materials.
As applied to jewelers, this translates to four times the wholesale
cost of materials, since we normally retail for at least twice
wholesale. So the formula becomes COGS x 2 X 2. This has nothing to
do with creative work. Also it does not apply to most jobs. I use
it when the time spent is minimal–maybe only one minute–and I feel
the work performed is worth more than 75=A2 (assuming a $45 per hour
rate). Of course, a viable alternative to this is to have a
“minimum bench charge.”

Hope this clarifies, rather than muddies, what I was trying to say.

Del Pearson in Beautiful South Texas where people still do business
on a handshake.

14 
    Having said all that, as an artist you should be pricing your
creative works based upon their artistic value, with the above
being a guideline only for those jobs that you feel are routine.  I
know that Salvador Dali and Pablo Picasso didn't price their works
according to materials and time, and they were two of the most
commercialy successful artists of the 20th century.

Hi Del: I totally agree with you. No painters (that I know of) set
their prices based on materials or time. The prices are usually
pretty arbitrary and are related to their notoriety, collectability,
stature in the artist’s community, publicity, etc…

Materials are generally minimal, though paints have gotten terribly
expensive as have canvas and brushes. But generally, the artists I
have known first sold their paintings fairly inexpensive until they
had established a following and then began increasing their prices.
I sometimes think that the same thing here applies that applies to
real estate - and that is “what the market will bear”. I’m sure you
have noticed that when someone wants something badly enough they will
generally “pay the price”. Few people have the will power to simply
walk away.

One of the watercolorists I studied with years ago made mention of
the fact that he (he was oriental) had a commission to paint a
goldfish on a panel. He did so and charged the client (at that time)
$600. She gladly paid the $600, then asked him “how long did it take
you to do this”. He said “15 minutes” and she, incensed, said “that’e
ridiculuous, how can you charge $600 for one goldfish that took you
15 minutes to paint”. Ah, he said, “I don’t charge you for the 15
minutes it took me to paint the gold fish, I charge you for the 20
years it took me to learn to do it in 15 minutes”.

So, that bears consideration in what we do and how we price, bearing
in mind of course that we do want to recuperate our material costs
(which are fairly easily calculated most of the time.

Enough said.
Kay

15

I have considered what my labor pricing should be worth by comparing
my labor with that of a comparable Auto mechanic’s wages. As Mr. David
Gheller has promoted flat rate pricing, the truth should be somewhere
between the two.

ROBB

16

With respect to pricing, I have a mixed strategy. I sell my very
small volume of my work on consignment. And I have an excellent
relationship with the store owners and managers. So I seek advice
from them as to what they think “we” should charge. Next, because I
produce so few pieces, I plot the selling price against the time it
took to sell. This plot tells me very very quickly what works and
what does not work for me.

For example if I make enameled over engraved copper earrings that
take ages to sell. Yet if I make enameled silver earrings with a
ornamentation they sell twice as fast at twice the price.
Consequently I started out with some quite elaborate pieces (at least
for me, pretty rough stuff for the professionals) with copper and
have gradually switched over to silver. And I had to learn a whole
bunch stuff all over again.

So it is possible to mix “art” and “science”.

David

17

Thanks to all the helpful suggestions I have improved my pricing
techniques, “thanks” Sam for your input.

When it comes to using up to date pricings for findings and
components, I just label the packages and when they are used up, I
buy more and reliable them, it works well for me.

I make one off pieces mostly, and I don’t worry about how much they
retail at anymore, “they cost what they cost”. They are unique after
all.

Wishing you continued success!
Tina Ashmore
Dublin,
Ireland

18

I’ve been in this business for some time…and yesterday my faced
was rubbed in the , let’s say dirt, BIG TIME because of pricing. I
make a line of chains which are made of cast components and linked
together with jumprings and a lobster claw at the end. These are all
in sterling. I have sold these chains for years, they are in some
cases my grandfather’s design and my dad made and sold them all his
life. Well, smart me picks a few designs and instead of having them
all fabricated, I develope the links to be cast, saves time in
production, time=money. Well, I’m plugging all these cost into
Jewelry Design Manager and the retail is astronomical (at least in
my eyes from looking at the historic pricing). WOW, how could I have
been so off all these years? I used to figure the prices at an inch
and then multiply that by 18, 20 or 22 inches and put them out ands
sell them rather well. I was dumbstruck yesterday when these prices
came up, I tore into how I had been pricing and JDM is right, it’s
so simple it makes me sick. This may be an item I discontinue but, I
will see how the sales go. I have the marketing angle on this but,
I’ll have to see how the market reacts. Stay tuned.

Sam Patania, Tucson