I understand that a lot of people trying to price their work by
using formulas of one kind or another. The idea is taken from
manufacturing processes, where one type of design is made in large
quantity. it is foolhardy trying to adapt volume pricing
methodology to pieces made by hand, one at a time.
Leonid is right on. Valuing custom or hand-made work using any
cost-plus formula is not really the best way to do it. It is very
easy to over- or under-price your work significantly. Using a formula
like David Geller posted in a concurrent thread on how to sell custom
is often a good place to start and can keep you from losing your
shirt, but the one piece missing in his formula is perceived value.
There is no formula that can determine this. That is something only
we, our customers and our work can place.
It doesn’t matter how fine the stones are, how much money, time, or
anything else that we put into it, if the customer doesn’t perceive
it to be worth more to them than what we are asking for it, they
ain’t gonna buy it. Even if we price it below our cost of the
Why can StarBucks get $4 or more for a cup of coffee that costs them
no more than fifteen or twenty cents to make (and people think
jewelry mark-ups are high - yeesh!)? Why do Hearts On Fire diamonds
sell like hotcakes at nearly double what comparable diamonds are
priced at on-line? Or David Yurman or any number of other designers?
The prices these fine folks command are certainly not derived from
any “cost-plus” formula. They are all masters of creating and
developing a perception of high value in their customers’ minds, much
higher than the mere retail value of the components and labor. Their
pricing strategies are based on a sense of exclusivity, desire,
romance - in other words, they are appealing to the right side of the
brain. If you can get the emotional right side to tell the reasoning
left side that the emotion it is feeling is alright, the price is
fair or even a bargain for what they will be getting, you have
created a value that is not tied to, and in fact defies any formula.
Practice pricing in your head. Figure out the minimum price you need
to get using something like David Geller’s formula for each part of
what you are planning to create (never use the word “make” when
applied to your jewelry. We don’t “make” jewelry, that’s what they do
in factories. We “create” beautiful things - perception, perception,
perception). Add 20% if it’s going to be a cool piece, 50%, double or
even more if it’s going to be something really extraordinary. You
must learn to do this in your head, and you must be able to do it
quickly. Don’t write any prices down, use only spoken numbers, say
things like “this design will only be twenty nine ninety” instead of
"it comes out to about three thousand", don’t say the word “dollars”
(or pounds, whatever your currency is), avoid technical jargon
(unless you’re talking to an engineer or that’s part of the magic
they want to be a part of) and return to the desire and romance
(right brain) as soon as possible. Allow and even help the right side
sell the left side, don’t let those pesky little numbers the left
side wants to play with get in the way any more than you absolutely
have to. Written prices are far too left-brained for something as
beautiful and creative as what we do.
Don’t be afraid to try this. Quite often a higher price is far more
attractive to the romantic bride or groom than any formula or “%
Off” ad. Think of the StarBucks little crepe paper band, how much it
actually costs versus how much value it adds to a simple paper cup.
That’s what your stamp or signature should do for your creations.
I can’t say it enough, we and we alone create the perception of
value in our customer’s minds. Value your work more highly than you
already do and see if it doesn’t become more valuable in your
customer’s eyes as well. You might just surprise yourself.
Will this work online? I don’t have a clue. I’m not sure that most
people shopping online are looking to purchase a truly hand-made,
one-of-a-kind creation as much as they are looking for a bargain on
something pretty. Both of these could be describing exactly the same
piece and price. But the perceptions of its value will be far
different (caused by the completely different triggers created by
these two descriptions) and will set up whether the customer is going
to take another look and think about buying it or keep on surfing. I
think it would work just fine if creative, careful wording is used.
You might try both strategies and see which one works best.
Whatever the selling medium and regardless of the formula used to
price it, no piece of jewelry will ever bring more than scrap value
if it has no additional perceived value. And there is no mathematical
formula that will ever tell you what that should be. All a formula
can really tell you is whether you have an expensive hobby or a