Hi there,
I am just wondering if it is standard practice to double labor costs
when calculating a wholesale price.
Some jewelers have advised me to but, it could be pricing my work
out of the market.
Thanks for any replies
K
Karen- It depends. How much per hour do you charge now for your
labor? What city are you in? Are you doing repair, custom, or making
a line of jewelry? Where is your jewelry sold? Who is your target
audience? How fast does your work sell? Where does your work sell
best? All of this is important in deciding what your market will
bear.
Feel free to PM me if you like.
Have fun and make lots of jewelry.
Jo Haemer
timothywgreen.com
Karen,
That has been a common practice in the past. The Orchid Archive has
much info on just this topic.
Don Meixner
Generally wholesale is half of retail. So I’m thinking maybe you are
going at this backwards?
You begin by figuring your wholesale price, which is generally cost
of supplies, labor, overhead, etc., plus whatever profit you
consider acceptable at that level. There are various formulas for
this - pick whatever works for you. The key is the wholesale price
MUST cover all costs related to the piece plus give you some sort of
profit. Not worth selling otherwise.
Having calculated your wholesale price you now use that to figure
your retail price. Most people go somewhere between double and
triple for retail - again, this is up to you.
This is the point at which you may well decide that what you must
sell something for to actually sell it is lower than the price needs
to be based on these formulas. This probably means you can’t
wholesale that piece, but only retail it.
Remember - the person who purchases it from you at wholesale now
must take what they paid you, add their overhead, their profit - and
still be able to sell it. If they can’t do this they won’t buy it
from you.
Next big point - never, ever, ever, ever undersell your retailers!
Ever! If you have a piece you sell at wholesale to retailers, and
offer directly, your direct price MUST be at least double your
wholesale price. If the retailer wants to increase it more than that
they have that option, but if you sell for less than that you are
undercutting them, and when they find out they will drop you like a
hot potato!
Hope that helped. if you do a Google search there has been a lot
written about pricing formulas to determine costs, wholesale, etc.
Good luck!
Beth Wicker
Karen,
You can price it they way you are going or price it to make a
living.
Sounds like you thing about it or you wouldn’t post it on Orchid.
Just don’t be remorseful with you client’s, just put the price out
there and get the money for you time, skill, art and abilities.
Richard Dennis
Hi Richard, Don and Jo,
My apologies for the late reply.
I have just moved to Connecticut and am looking to sell my work both
here and in NY. I have never sold my work here before so, IIt
remains to be seen how well received it will be. I do not make high
volume pieces and have mainly sold my work in Galleries and small
but, exclusive stores. I make limited edition and one off pieces.
I have never doubled my labor costs before and I just wondered how
common it is in the trade. My pieces can take anything from 1 1/2hrs
- 50hrs to make. I am not selling directly to clients so, my price
will at the very least be doubled to achieve the retail stores
price. I charge $35 per hour.
Thanks so much for your replies. I really value your feedback.
All the best
Karen
Karen- You should receive at the very least $50.00 per hour for your
labor.
Tim and I charge $75.00-$100.00 per hour for our labor at wholesale
cost.
We double our materials costs.
Have fun and make lots of jewelry.
Jo Haemer
timothywgreen.com
Thank you all for your valuable feedback.
Beth, I was confused about why a jeweler might double their labor
costs when calculating their wholesale price too. That’s why I
posted my enquiry. I had never heard of the idea until recently when
two jewelers I know told me that they did it. I am from Europe and
wanted to know if it was common practice here. I agree with your
point about matching the retail price of the Gallery your are
selling to when you also sell the same work.
Gerald, Thank you for your contribution You are right, this is not a
hobby but. do you really think I could charge $50 per hour when I
mainly work with Silver and custom cut semi-precious beads and
freshwater Pearls? I make highly detailed clasps and ear-settings
and I use some Gold but, I am limited at the moment because of the
costs.
Jo, I love your point about scarcity. It is soo true but, I do not
know if the Gallery owner I am hoping to sell to will see it like
that when I am new to the area and unknown. If I had my own shop
that would be a different story. I think I will follow Beths advice
and stick with a flat labor cost, doubling my material costs to
achieve my wholesale price. It gives me a fighting chance of selling
my work.
What is the standard charge per hour for a jeweler? I know a master
jeweler and he charges $50. I am not a master jeweler.
Looking forward to your replies
Thank you!
All the best
Karen
I will admit that I have not been following this entire conversation
but I am now curious to hear what people say about the standard
charge per hour as a jeweler. I too am not a master jeweler. My work
is predominantly with sterling silver and semi-precious stones &
keshi pearls. I would love to work with gold but until I have more
sales, that is not an option. I am sure this is the plight of many!
My hourly rate is usually $20 per hour. If I were to charge more, my
prices would go through the roof and I know people would not pay for
my pieces. I wonder whether I am (still) working too slowly but
sometimes setting a stone etc. just takes as long as it takes and I
am not prepared to do a rush job and present a piece that I am not
happy with.
I have been presented with various “formulas” to work with (by
renowned jewelers).
a) materials + labour x 2 = wholesale x 2 = retail
b) materials x 2 + labour = wholesale x 2 = retail
c) WS = COGS (materials + labour) =C3- (1 - %Profit - %Fees -
%Overhead). This formula is based on a 25% profit (if I understand
it correctly)
Whilst I like both formulas a & c, they raise my prices to the
extent that I don’t believe pieces would sell. So I usually play
around with all 3 and the adjust the price accordingly up or down,
depending on what I think people will pay. I realise this is very
time-consuming so I have to choose one and stick to it!
I am still afraid that my prices are too high but don’t know how to
bring them down without compromising my own costs. Oh and not paying
myself either! Am I doing something wrong? I don’t calculate for the
time where a mishap causes me to correct a piece before I can
continue. I have also stopped the clock, when I have a tea break!
Yet if we were working on a contract in industry, these breaks would
be paid! Some may say, I should not be doing this but ending up with
a price that seems too high and then having to adjust down simply
hurts and is frustrating!
I apologise if all of this has already been posted.
Emma
Jo,
Did I understand correctly that you double your materials cost for
WHOLESALE?
How do you figure your prices for retail?
Thanks,
Janet in Jerusalem
I am by far from a master jeweler. And when talking to a client, I
charge labor at $120 per hour. Plus materials.
Gerald A. Livings
Livingston Jewelers
I haven’t read all the tread by I can tell you I’m not calculate the
labor I’m add it per grams, in in Europe so it is in euro I do 10
euro at gram for silver and 60 euro for 18kt gold
I am of a similar mind as Orafo. I use a fairly standard
manufacturing cost/price calculation that acknowledges all cost. It
includes the assumption that I can work 31 grams of silver in an
hour. I tested this assumption a couple weeks ago when I was making
60 standard pieces and it is still accurate. I apply a labor rate of
$45/hour. This assumption is that I would pay an employee $45/hour. I
do not as I am the only employee.
The $45 is increased by manufacturing burden, sales and
administrative cost and profit to close to $100/hour. The cost of
material is also added and increased in a fashion similar to labor.
Adding profit, I come up with a wholesale price. I double that for
retail. My current retail multiplier for silver is $7/gram. Wholesale
or commission is $3.50/gram. There is a lot of history on this topic
in the archives. In the end, short term, you sell into a market that
may or may not support your participation. You only have a few
choices. Lower or raise your prices, change what you sell, leave.
Long term you can work on creating a market for what you sell. This
is hard to do and can be very fleeting, so don’t take yourself very
seriously. In the end, you need to take away the joy of doing what
you do or it isn’t worth it. My two cents. Rob
Emma- When I was starting out and very slow I kept my prices low for
private sales but soon ramped up as I got faster. When I was in a
union shop the starting wage was about $3.00 per hour or the then
minimum wage.
My bosses still charged the stores $50.00 an hour for my work
because they had to pay overhead etc. I was polishing, sweeping
floors, making wire and sheet and fetching beer for the journeymen.
In the union shop if I performed well and got faster I got at the
very least a raise every 6 months.
So give your self a raise every 6 months as you get faster.
Oh and I charge the same rate per hour for gold or silver. More for
platinum work.
Have fun and make lots of jewelry.
Jo Haemer
timothywgreen.com
Janet- We’re wholesale only. I set our prices and then let the
retailer set theirs. In most stores I’ve worked in everything in the
store that is under $2000.00- 3000.00 is a 3X mark up. Over that to
say $5000.00 is 2.5 X.
$10,000.00 to about $20,000.00 2X. Over $20,000.00 it depends on
the store and client.
Jo
Thanks everyone for helping me think this through.
Orafo,
Yet another unusual way to price a job. It doesn’t rseem right to me
that you are not charging for your labor though…
Thanks for your contribution
Gerald,
Thanks for all your advice and comments. Maybe I will put my hourly
rate up a little and just double my material costs.
I am dreaming of the day when I can charge $120per hour. Maybe when
Im a bit more established and put some roots down 
Thank you!
Janetb
Jo was talking about wholesale pricing when you sell to a retail
store. As a maker you always have to double your materials but, the
main question was should you double your labor to get your wholesale
price too? The feedback has been no. Raising your hourly rate if it
is too low and doubling materials will do the job.
Emma,
I think you are charging too little for your hourly rate. I work
with beads (custom made)and pearls and make my own clasps in mostly
Silver and I charge $35 per hour but, the feedback from everyone
here is that I am not charging enough.
and work at the same time, otherwise I would never count break time.
It is not related to the job so it should never be counted as part
of your labor. You are doing the right thing.
Im looking forward to hearing what everyone thinks the standard
hourly rate should be for a jeweler.
All the best and thanks again everyone.
Karen
I usually start out with the 2.5 times the cost of materials for
wholesale and double that for retail. Then after a year I take my
best selling pieces and raise their prices by 10% every 6 months
until I see a drop in orders then keep that price for another year
then try the 10% raise again… My first retirement was after 20 years
in the business. I have tried to retire 5 times now and still flunk
retirement. Guess I am just not retrain abl
Vernon Wilson
Hi Karen,
Your last paragraph prompted me to now come in to this thread, where
you ask what is the standard hourly rate? etc.
There is NO standard rate for a self employed jeweller. You are
worth what you can make.
You are confusing what a hired jeweller earns per hour working for
someone or a big co. There is a broad hourly rate, that depends on
where you are working, ie 5th Ave NY or some small town out in the
farming mid west, and how good you are.
But to return to being self employed, you need to start with a
pencil and the back of an envelope and work out what you need as an
income per week just sitting at home with your feet on the table, and
how many hours a week you are able to devote to your chosen work.
Devide one into the other will give you the absolute basic hourly
rate you need to keep you from getting an employed job doing what
ever your skill set points you toward.
Then, you have to decide wether your going to design, make and
market your own products, or undertake making to contract for say a
big store, or make products to sell wholesale through galleries.
Which ever route you go down will dictate what equipment and
materials you need to deliver to your customers.
You then add to this all the over heads per week plus the material
costs per item with a percentage to cover wear and tear on all the
equipment and any interest on money you borrowed to purchase capital
equipment.
If you limit yourself to making things that people wear on the body,
as opposed to smithing ie hollow ware, or cutlery or buckles or
buttons, then your seriously constrained what products you can make.
Then theres the competition, those who are well established, with
many yrs of experience and lots of capital behind them.
No easy task, you have set yourself.
You will need 3 skill sets, design, making and marketing. How good
you are at these 3 will determine wether you succeed or fail.
Its not all gloom and doom, if its been done before then it can be
done again.
I wish you well, Ted in Dorset UK.
Karen, whilst you started this discussion, I am now following it
greedily and join you in thanking everyone for all the comments,
advice and ideas!
Goes to show what a brilliant community we have here and how
precious it is.
I am still trying to find my market. I do not want to (and don’t)
make low priced pieces of jewellery to satisfy the tourists coming
into town off the cruise ships (Portland, ME). However finding the
market I am aiming my pieces towards is clearly the more difficult
route. I will persevere! They have to be out there somewhere
Dying to get into my studio after work today. Even if the weather is
GORGEOUS (finally!)
Emma
We have discussed this several times and those discussions are in
there archives. Everyone has made excellent points as it applies to
their business plan. My brother Rob has posted his “Multiplier” for
figuring costs and it works extremely well. I use it too on
complicated projects.
I have basic pieces that I make that the 3 or 4 times material costs
method works just fine. It works to with in a few dollars of every
method I have seen.
And as my Dad said, "You have to charge something for the art "
Create a business plan. Are you building jewelry for a living? Or
are you doing craft fairs a half dozen times a year. Remember the
IRS isn’t happy if you only break even. So don’t. Do it full time or
part-time but make a profit at it and base your prices on making a
profit. If you have a bunch of Sterling earrings that haven’t sold,
melt them and make something that does.
Don Meixner