I have a question for the group. I was wandering how to price a
piece of jewelry I just made. If it cost me $10,000.00 to make, and
it is made of 18k and a very nice two carat diamond, is $15,000.00 to
much to ask retail? I am going to research the finer jewelry stores in
the area tomorrow. I suppose that will give me a better idea. I just
wanted to hear from orchidians. I value your input very much. Thank
you for your input.
Chris Slater
I was wandering how to price a piece of jewelry I just made. If it cost me $10,000.00 to make, and it is made of 18k and a very nice two carat diamond, is $15,000.00 to much to ask retail?
Designers such as myself who do mostly wholesale work will generally
tell you that you don’t make a lot of money on stones when selling to
retailers. I usually ask for stores to provide their own diamonds
when doing custom work because I can’t make as much money on stones
and would rather invest my meager capital in more profitable areas.
When you say that it cost you 10k to make I’m sure you are including
everything together: stone, labor, metal, overhead, etc. You should
probably break down the prices for the individual
procedures/materials and charge a markup for each. For example, I
charge $50 to $75/hour for labor, 1.5 to 2 X markup for metal then a
certain amount of markup for the stone(s). After all that you will
want to add some for overhead, waste, insurance, rent, utilities etc.
How high your overhead is will determine your markups. Still this
will only give you a wholesale price.
If you want to know a retail price you will then have to ask yourself
how much a retail store would mark the piece up. If it is a really
unique piece you will probably be able to ask more for it than if it
is a traditional 4 prong pendant or Tiffany solitaire. Jewelry
stores don’t usually mark up items over $10,000 as high as they would
a $1,000 item. If you have a store in a high traffic area with high
rent then your overhead is a lot more than if you are selling out of
a studio, therefore you need a higher retail markup. You could say
that “Xyz” jeweler down the street would sell this for 15,000 or
maybe 25,000 but will a customer coming into your shop/studio pay
that for it. It is as much a question of what the market will bear
as it is how much it cost you to make it.
Clear as mud?.. Larry Seiger
I was wandering how to price a piece of jewelry I just made. If it cost me $10,000.00 to make, and it is made of 18k and a very nice two carat diamond, is $15,000.00 to much to ask retail...
Chris–
I sold high end (mostly antique) jewellery for years. I am now
fabricating my own pieces, and it’s amazing how difficult I find it to
apply those years of experience when it comes to pricing my own
pieces. I cannot really help you in establishing your price, but I do
encourage you to bear in mind that often too ‘reasonable’ a price tag
can somehow undermine the magic/aura of your piece. It’s human nature
to want what’s a bit unobtainble; what we have to stretch or sacrifice
a little for; what only we were insane/smitten/special enough to
acquire. There’s also the point of name; if you’re looking to build a
name for yourself then underpricing will not serve you. Many
jewellery buyers feel a bit insecure around their purchase, because
they feel they don’t know enough about the field to judge value for
themselves–a ‘high end’ price tag acts as (or acts in conjunction
with) a ‘high end’ name. It’s reassuring; that’s what namebrands are
all about. All that I’ve just written makes me cringe; it looks crass
and cynical. And of course, I’m not at all in favour of overpricing.
I guess I’m writing this b/c of my own struggles to value my own work,
even after having watched hundreds of women [yes, usually
women–myself included!!!] fall more deeply in love with a piece after
learning it was priced just a little out of reach. Please keep us
posted on your thoughts/resolution with this issue; I know I would
find it helpful.
Regards,
Andy
(PS: I suspect that if you were able to post a picture of your piece, or
give a more detailed description of the sort of intricacy/labour involved,
some of the more experienced jewellers in the forum will find it easier to
help guide you. If your $10,000 covers materials only, then it could be
that $15,000 is too low.)
In the real world I am a comptroller - I have worked in many fields,
real estate, manufacturing, retail.
Rule of thumb across all of these fields is that after you consider
all of your Cost of Sales (all of those direct expenses involved in
the manufacture/sale of a piece) and all of your Indirect Expenses
(Office Supplies, Advertising, what you typically think of as
Overhead, plus those unexpected expenses everyone gets hit with) you
should end up with a MINIMUM of 42% profit.
How to compute this:
([Cost of Sales]+[Indirect Expense])X 1.42 So that if my materials
and labor cost $50 and my indirect expenses are $25, I need to sell
the piece for AT LEAST $106.50.
Always remember that “down time” is an indirect expense.
Since materials costs flucuate, I suggest always taking the higher
cost. If prices have recently come down, you need to use the higher
cost you spent on the materials. If prices have recently gone up,
you need to take the higher price of your replacement materials.
42% is a minimum figure to shoot for, and it only works if you can be
accurate in what your costs are. Yes, there are many fine computer
programs available, but I learned bookeeping the old fashioned way -
a pencil, an adding machine, and a legal pad. I honestly think that
most small one or two person businesses would be best served by
actually computing the numbers themselves. This leads to an
understanding of the process, and highlights any obvious
discrepancies. The McBee One-Write Systems are outstanding for this
purpose. As the business grows, then a computer program becomes a
useful tool that is worth the expense.
This letter has grown out of control in length, but as I learn so
much from Orchid, I would love to give knowledge back in my own area
of expertise. Anyone who wishes specific help or answers is free to
email me directly and I will do what I can.
Donna Marie
What I was taught is that the markup of your piece should be 2.5 to
2.7 times the price of what it cost to make it. Which would make your
$10,000 piece retail for $25,000 to $27,000.
Nice chunk of change, that. ;}
That’s probably not going to work in this case. He has a large
diamond, which I believe is what the majority of cost in the piece
is. Margins are tighter on the big stones and customer’s shop harder
for them. They can come to you with all the cert specs from another
jeweler (or online site) and if you want, you can try to beat prices,
but you can get hurt if you don’t think the time you spend with them
doesn’t cost you something. Personally, I don’t stock large stones.
I’d rather let my supplier keep me stocked with good range of size
and quality, say .75-3 carats, mostly rounds. These they will rotate
and can call and I’ll drop ship to wherever they need a specific
stone. I glue CZ’s into the semi-mounts, sell (educate) the customer
on the major stone. Now, pricing most inventory is a matter of 1.25%
markup generally, but that’s not written in stone. If I’m custom
making something, I charge $60/hr. for labor, and I’m pretty good at
estimating that after nearly 30 years. I add to that about $30/gram
for gold, triple that for platinum. Stones under 1 carat will go for
100-125% markup, in other words, usually double what I payed. Large
diamonds are a different matter. If someone has been shopping
around, I’ll have to be competitive if I want the sale. 1-2 carats,
I may add 50%. A 2-3 carat diamond, maybe it’s only 20%. You have
to use your instincts a bit. Did they say “I was on odimo.com” or
use the words “rap-sheet”? Might be a touch harder to get a fair
price. . .and I’ll have to talk about “cut grades” and bring out the
“trust issues”, plus promise a good deal on the fabulous, unique
mounting, which I know the competition doesn’t have. Now colored
stones get a bit trickier. They have to be attracted to the stone
from the start. Again, I’ll use the same kind of “sliding scale”
logic, but since color is less commodified in the market, there’s
more emotion in the sale, more romance, and more margin. I pick
pretty, I sell precious. You can’t use a formula for a one-of-a-kind
piece. . .it’ sive OR too cheap) or you’ll screw yourself and figure
that out later. My theory is. . .“start high, you can always go
lower.” My opinion in this case. . .go for a 20-30% markup on the
large stone, then take a good shot at what you think you’ve got into
it in labor hours. Now figure what you want to pay yourself per
hour, and charge double that for labor. If it looks too high,
estimate what it would take you to produce a second piece (probably
half the time), and split the difference. Good Luck.
David L. Huffman
"....estimate what it would take you to produce a second piece (probably half the time), and split the difference. Good Luck."
This thread is enormously helpful. The principles of pricing jewelry
are not covered in the literature as well as methods of fabrication,
casting, etc. Also not well covered is the commodity/romance
difference in selling diamonds versus colored stones.
I would appreciate more on pricing one’s work and the business end of
jewelry. In that respect, I would also like to respond to Riccardo
Accurso’s query on providing business with a loud “Yes
Please!”
Many Thanks,
John McLaughlin
Glendale, Arizona
@John_McLaughlin
And disclosing pricing is the second industry "taboo"
I’ve broken on this forum. The first was to openly discuss
wages/salaries for jewelers. Interesting, we who labor with our
hands are expected to share freely our hard won skills and knowledge.
Those whos incomes come from marketing and investment strategies,
managerial finesse, etc. . .are not so free with what would help
their competitors. I expect to duck a few brick-bats shortly, then
we’ll see the discussion open up a bit. Here’s another couple tips for
the small retailer I’ve learned the hard way. . .
when you quote a price and part of it is based on your cost for
materials, and you get lucky and get a better deal on the materials
than you expected, what seems like the honest thing to do is to give
the customer the break. . . DON’T. a.) it was your good luck, you
deserve it. . .it could very well work the other way next time, and
try raising your price after you’ve already quoted it.
b.) what happens when they come back next month and want to more, at
the “lucky” price, and you can’t get the good deal any more?
when you make a mold of something, and you assume you’re going to
make another one some day, the temptation is to figure the price per
unit a little low, partly to make the sale, partly to be what you
think is more honest. REFRAIN. You may very well never sell that
piece again, never get the time to make another, or just go in
another direction with your inventory wherein that design won’t fit
in. In other words, fine . .fine. . .but don’t count on it.
Basically, the point I’m making (twice here) is grow out of the habit
of early business years of being generous at your own expense, and of
rationalizing it. It’s nice to be nice, but you’ve got to get your
orientation away from the merchandizer’s mentality that has come to
serve the big entities in the business. They sell price, and they
can beat you to death with it. Just imagine trying to beat Wal Mart
selling 10K and CZ jewelry. Sound grim? You must sell service. .
.perticularly your responsibility, start to finish, for the product
and the way it functions in the customers life (Dale Carnegie stuff
there). And while you’re at it, go ahead and sell yourself to people
like yourself, that’s what you’ll be good at. . .and like people are
tired of hearing me say . . .“don’t compete down”.
David L. Huffman (leaving the pulpit now, I hear growns from the old
guys).