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Determining a wholesale Price


#1

Pricing ones work seems to be such a murky matter; when
discussed with contemporaries there seems to be a variety of
practices. Silver and stones are at one, two or three times cost
(overhead included)? while the stones over, say $30 or so are
just doubled, as is gold. Bench rates start at $20 and go up
according to speed and experience. How does this sound to the
rest of you? Are there differences from coast to coast and
internationally? I am in Southern California where jewelers
tell me we have a lower markup than other places. Any and all
comments will be appreciated! Also, just a note of thanks to
all of you who have responded to my queries in the past. Susan


#2

We have a custom jewelry shop in a good location. For our settings we
charge at least six times the cost of the gold or platinum. If there
is extensive stone setting or more than one color of gold the price
goes up. Stones, not counting larger diamonds, are approximatly
doubled. If we buy well we ask for a bit more. Customers are willing
to pay for nice jewelry. I would be intrested in hearing how other
stores like mine handle their pricing.

John Winters <@johnjuan>


#3

Pricing ones work seems to be such a murky matter; when
discussed with contemporaries there seems to be a variety of
practices. Silver and stones are at one, two or three times cost
(overhead included)? while the stones over, say $30 or so are
just doubled, as is gold. Bench rates start at $20 and go up
according to speed and experience. How does this sound to the
rest of you?

Susan, most of us forget to figure in overhead costs for things like
insurance, gas, wear and tear on equipment, utilities, etc. My
business consultant helped me to figure out a formula for pricing my
silver and stones. I include all my costs, including shipping and
handling, so much percentage for other overhead costs (something like
.0572%). Oh, by the way, I have a spreadsheet set up to do most of the
computations. I just plug and chug with the numbers. I then add 50% to
the materials price. I add in my labor charges (which is $8.00/hr.)
and add it to the materials price. This is the base wholesale price,
which is available to wholesale accounts which pay cash upfront. They
have to pay more if I have to carry the account. I ask for a 50% down
payment until they’ve established a credit history with me.

This base wholesale price is 40% of what I charge retail. We make an
agreement. I don’t sell for less than the base retail price. If they
have paid for the merchandise outright, they can charge either more,
or less, than the base retail price. If they’re a consignment, then
they have to stick with the established base retail price. If a retail
customer is buying several hundred dollars or more of merchandise at a
time, I may give them a 10-20% discount, if they’re regulars. I keep
it to a minimum, because I don’t want to undercut my wholesale
accounts. But then, when I have my consignment galleries call me and
ask if I can knock off a few percentage points, I usually agree when
it’s a big sale. If it’s a commission, there’s usually no discounts,
because I can’t replicate the piece for production.

This formula seems to keep everyone happy. I don’t tell the prices I
give to the wholesale accounts, unless I’ve made sure the inquiry
comes from a bonafide retailer. My retailers buying wholesale keep
very mum about how much they pay, because they like the high profit
margin, and they are very protective of their territory. My retail
customers eagerly await my shows, because they have a chance to bring
in their pretties for me to do a personal design just for them, and
they get first dibs on whatever I’ve come out with. My consigners
aren’t putting out big bucks for the high end pieces, and they have
repeat customers coming back to buy the work I produce, or contract
with them for a commission.

I hope this makes sense. I’m really tired tonight. Hope it helps.

K.P. in Wyoming


#4

Susan I have been reading through email’s about ssetting a wholesale
price. Lots of good info from the group. I did have one concern that
I wanted to point out. Please establish your hourly wage at a
reasonable amount. Wendy Rosen has a book called Cash for your
Crafts, there is a small chapter on pricing. She recommends starting
your hourly wage at $15 an hour. Speaking from experience it is very
important not to sell yourself short. Sure you want to sell your
work, but you also would like to make a living at your craft as well.

Katrina Barnett


#5

We use approximately a 5x markup over metals cost but our metal costs
are fixed (ie we still figure them at 14k=$15/dwt, 18k=$18/dwt, 950
plat=$28/dwt. This means that in times like these we make more
money as the metal costs are down. Works the other way though if
prices go up higher than that. Stones are priced entirely
differently however and run anywhere from a 4x markup (for very
inexpensive stones or something we buy in large quantities and get
serious discounts on because we do–like purple sapphire melee) to 15%
over cost for high end diamonds (where the competition dictates what
we can charge to some extent. Of course all of this for finished
goods (except on the stones). We have minimum charges for our custom
work which can occasionally mean 10-15x markup over metal costs, but
this is usually because we have to make up a new model (or two or
three) for the customer or that we have to hand construct something
for them, so there is a lot more labor involved. Of course you can
throw all this out the window if you look at how we charge some of our
better more regular customers, as they usually get some kind of break,
depending on how regular they are and what they are buying. PLEASE
REMEMBER FOLKS I AM TALKING RETAIL HERE, NOT WHOLESALE OR CONSIGNMENT.
Daniel R. Spirer, GG Spirer Somes Jewelers 1794 Massachusetts Ave
Cambridge, MA 02140 617-491-6000


#6

Please note that we pay our house cleaner $15.00 per hour. If you
are an experienced jeweler, running your own business you should be
making a hell of a lot more money than that per hour.

Daniel R. Spirer, GG
Spirer Somes Jewelers
1794 Massachusetts Ave
Cambridge, MA 02140
617-491-6000


#7

As a full time jeweler, and owner/operator of a trade shop I feel
that the posts in reference to hourly rates are quite low. Consider
for a moment that normal markups are around 2 to 3 times cost, also
the hourly rate of pay is NOT the total cost of an employee, one (at
least in the United States) add for payroll taxes, benefits,
accounting etc. A good approximation is to add 25 to 50% to the base
rate of pay, I am going to use 35% as this is close to typical from
the reports I subscribe to. Also consider that in the JCK and the
MJSA salary reports the average top Bench jeweler earns close to
$30000 per year ($15.00 per hour). Now $15.00 times 1.35 times 2.5
is
$50.625 per hour. In a recent book on crafts pricing Unfortunately I
cannot locate the book at this moment having recently moved, its still
packed somewhere) the author stated tan average shop rate of $45 to
$50 was the norm for silversmiths and gold smiths should have a shop
rate of around $65.00. All of this seems to be consistent with my
calculations.

Another way to set a shop rate is to ask your self How many ring
sizings (or other common repair task which is commonly sold) should I
be able to do in one hour? Multiply this by the cost of having a ring
sized and you have a starting point for a completive shop rate.

One additional method is to ask your self, and other business men in
your area; What is the going rate for a skilled technician in my area?
A Skilled technician would be a mechanic, VCR repairman, appliance
repairman, etc. These rates can be determined by calling and asking
for a price quote for service.

Just some more food for thought from, WayneM


#8

Katherine, It sounds like you have made a good effort to calculate
your various costs and overhead. I just wonder how you can afford to
charge $8.00/hr. for your labor. I know that your cost of living must
be relatively low in Wyoming but that sounds very low. I have seen
many craftspeople sell themselves short over the years. It is common
to charge too little for your time because you are afraid of not
getting the business. I know that here on the east coast most auto
mechanics charge $45-65/hr. for their time. I feel that my expertise,
experience & talent are worth at least that. I would re-think your
hourly rate. Some times we lose business because we are too cheap.
That can change the perception of the quality of your work. What do
you think? Joel in Nyack, NY


#9
   I would re-think your hourly rate. Some times we lose business
because we are too cheap. That can change the perception of the
quality of your work. What do you think? Joel in Nyack, NY 

Joel, everyone has brought up such good points on this subject, I
feel it’s worthwhile for everyone to contribute what wage they make
and why they feel it’s a fair price. We have to protect our interests,
not only as a global group, but as individuals as well.

As for myself, I live in an area which has a very depressed economy.
Anyone who gets above minimum wage is considered lucky. We have
teachers, police force, store managers, etc. who only survive because
of welfare here. I guess we’re backwards in more ways than I thought.
Our needs are minimal and our “wants” are even less. Most people here
would consider $20/hr. positively decadent. There are advantages and
disadvantages.

Our advantages measure up in the more intangible areas. We have
neighbors who watch out for our kids when they’re walking to and from
school. Our kids visit the elderly in the nursing homes. It’s not
unusual to see friends hugging in the grocery store. We know our
neighbors and we check on them to make sure they’re all right. Our
communities pull together when a person or family suffers a
catastrophe to get them back on their feet.

It’s not perfect–we live our lives in the slow lane. Would I trade
it to have a fancier car, clothes that impress others or just so I
could have money to flash around? I don’t think so, because I’m happy
with this small, backwoods place. If I became “famous”, and I could
charge $65/hr. and up for my services, would I? I don’t know. Would
the tradeoff be my happiness and the serenity I find so appealing
here? I would have to ask myself, “How much is my soul worth?” I
respect Daniel Brush that he can remain a hermit and still command
substantial prices for doing what he loves.

But I don’t know if that same formula would work for me. Personally,
I get a thrill when I see someone’s face light up when they see their
special piece completed, and I realize how much it cost them in hours
they worked, to get something entirely frivolous, just because it
touches them in some way. There may not be financial independence for
me, but there is joy. If my work is a reflection of myself, I hope it
reflects beauty and joy, rather than simply a representation of an
investment of money. There are others who can fulfill that need.

Now, after all of the altruistic junk, I do try to go for retail as
much as possible. This pays me $20/hr. for my labor. But I have a very
small demographic pool from which to draw, and at this stage of the
game, a storefront is not an option I want. So, I plug along. I
wouldn’t trade it for big city living (been there, done that), but my
needs and wants are not the same as for everyone else.

This forum is invaluable in educating all of us, not only in
technical skills, but with practical business skills. So maybe I will
have to rethink my value (slightly), and check out those markets where
you guys are commanding your prices and getting them. I will grit my
teeth and get a herd of wild horses to draw me into the big cities.
Then I will come back home and thank God such a place still exists on
this earth.

Thanks to all of you on Orchid for the wonderful posts, and
especially to those who wrote to me personally telling me I need to
value my work more. This thread has been very informative and
educational.

K.P. in WY


#10

k.p. - i take my hat off to you for your evaluation/philosophy of
where you live outside & where you live inside - escaping from under
that hat is a bit of envy: i live in an area where people think
little of plunking down $150.00 for a bit of silver & some stones
fabricated in perhaps 45 - 50 minutes.


#11

hi kp in wy… i too am glad there are still some “slow” places left
in this face-paced world! i think your quality of life has it all over
the money to be made in the fast lane. thanks for all the altruistic
junk!!! mj in (or rather near) the big city


#12

I’d like to add something here. If you are an inexperienced jeweler,
you might be pricing yourself out of your market charging $60 an
hour. Keep in mind that you will improve. The quality and
efficiency of your work will improve. You will ferret out better
sources and will be able to buy in quantity. I must admit that I
started out not paying myself much. Bought all my materials from Rio
Grande (at the first column price – ouch). Didn’t make much money.
Things are far, far better now. I have grown into my price points,
which I set by comparing my finished products to what was around in
stores I wanted to target.

Dana Carlson


#13

Katherine, Just because you live in an out of the way place is no
reason that you must charge only the prices which you can make there,
It is entirely probable to have a multi range price scale, with
different markups for different reasons. But you absolutely must know
what your cost of production is and this includes all of the little
extras which make up overhead. I doubt that your cost of gold is much
different than mine, nor findings etc. however you probably pay much
less for rent, once you know all of the costs of production then you
can figure what you need to charge. By marketing in more prosperous
areas you can reach your gole of having a storefront of your own
sooner and bring more outside money into your area, which will help
the local economy.

WayneM


#14

Dana, you’re right . . . many new jeweler’s or even those who
consider themselves artistic metalsmiths, underprice themselves, and
wreak havoc throughout the artistic neighborhood. It does take a
couple (four or so) years to establish ones self.


#15

HI Katherine: I wanted to thank you for your thoughts on how you price
your work and your priorities - seeing the excitement in someone’s
eyes when they decide to spend some very hard earned money on a luxury
item. WOuld that I could maintain that philosophy here in the Bay
Area! My hat is off to you - Shael


#16

To add a comment to this, I know a local Artisan who does exquisite
and very precise work. His costs are a bit high for the area. He went
to Quartzsite and was among a few others who saw what he did, how fine
his work was and what he charged. They told him he was not charging
enough for his finished products or his lessons. They were more
"known" names than his. He believed them and came back with higher
prices and lesson costs and now struggles for money.

His work can/should get more recognition and money, but he needs to
establish a reputation first. The “advice” from Quartzsite has
interfered with his forward motion. The other artisans were creating
for volume and quick turnover, he spends far more time on his work
striving for fine quality, the buying public en masse does not realize
that, he does.

Teresa


#17

Teresa, I’ve seen this very problem destroy the careers of many custom
knifemakers (people who were creating knives as metal sculpture, not
as everyday tools.) Talented newcomers must allow their work to be a
bargain at first, so that they gain a devoted following. The positive
side I’ve seen many times as well, I am happy indeed to say. :slight_smile: With
best regards, Peter