Hello!
Having worked exclusively in sterling for some time now, I find
myself wanting to experiment with gold in my designs. I’m hoping
that this transition will help my work to progress to the “next
level” -whatever that may be. (I imagine many of you have been
at this stage…looking at the next step head-on!)
My concern is pricing this new work. Specifically, how do you
price production pieces that were originally all silver, then
updated to have gold accents? How much of a price increase is
too much? (or is there such a thing?) Perceived value must come
into the mix, too, hm?
I’m so confused and a little intimidated by the whole thing. I’d
appreciate any advice you have to give!
Thank you!
Marlo M.
Dear Marlo, I teach a class in jewelry production . Here is the
base for wholesale / retail pricing in the traditional jewelry
manufacturer to store formula. First determine your out of
pocket expense. Include your time and materials. Let’s say you
spent 5 hours working on a piece and want to pay yourself $20.00
per hour. Your first cost is labor. Even if you don’t pay
yourself that, put some cost factor into the formula. Now add
all you materials that you bought. Let’s put that at $40.00. Add
them together and you have an initial expense of $140.00. The
wholesale to store profit margin is between 30% to 60% depending
on volumn purchase of status of name. Let’s add 50% and your
selling price wholesale to a store is $210.00. The store will
now mark the price up 100% or one keystone. A keystone is the
retail jewelers price code for one mark up.
Hope this is a little help.
TR the teacher
Marlo:
For production work, weigh the precious metals before assy.,
calculate your cost & mark it up then add for your labor and
viola! If you are especially pleased with the piece(s) add
something for the origionality of design. There’s really no set
way to establish value of a finished piece beyond the materials
and labor. It depends largly upon what the traffic will bear.
Hope this helps;
Steve
Thanks for the reply!
I was wondering…
Where is the cost for overhead in your formula? Is it supposed
to be included in the “profit margin”? If so, a 50% markup from
cost seems rather low…no?
What are your opinions on pricing your work to what the market
will bear - or, according to percieved value? It seems that the
ratio of cost to wholesale is much greater for gold work than
for silver work, since most people are willing and even
expecting to pay much for for work in gold or even silver with
gold accents…
Thanks for your help!
Marlo M.
Marlo: I’m assuming you were replying to my post. When I said
"what the market will bear" I ment you should price your work as
follows: add up your total expenses for metal & stones,
overhead, your time and then mark it up say 2 1/2 times for
retail. If your work sells well, you can feel free to add a
little more mark up until you sense resistance. Then lower
slightly until things sell well and you make what you feel to be
a good profit. It’s a nebulus thing, a “feel” if you will.
Comes from experience as much as circumstances. I agree that 50%
markup is way too low for retail. There are many misc. expenses
involved in our work that must be taken into account also. If
your just starting out however, you have to price your work
attractivly at first to get their attention… As to your question
concerning prices for varying metals. Your price should reflect
your lower costs for silver as opposed to gold or platinum.
Adding gold accents to your silver can make them more attractive
and slightly raise your expenses as well so you should price that
accordingly. Hope I haven’t confused the issue for you.
Best;
Steve
My father always said (and he should know-he taught in an MBA
program half his life) that if some people don’t walk away from
your product because of the price you aren’t charging enough.
Not all of the people but some of the people.
Steve,
I guess the bottom line is to price in a similar fashion that I
price my silver work. I think I knew that all along, but, I was
very intimidated by the large(er) numbers associated with gold
and thought there might be a “magic formula” that would make
sense of the whole idea of pricing to what the market will bear.
It all seems to come down to ratios, making sure you Have a
profit margin and how much you think your work is worth, hm?
My personal pricing strategy - Price it to the high end. It’s
always easier to reduce your prices than to raise them! 
Thanks for your help!
Marlo M.
off to buy more gold…and a good scale!
Dear Marlo, Your overhead comes into how much you need to produce
everday to meet your monthly expenses. There are two layers of
finances. The first is your price per piece. The second comes
from all your monthly expenses devided by the number of days a
week you produce and even to the hour. The price you charge
depends totally on the market. (Sorry to be realistic, but so
many don’t survive the process.) If you spend 30 hours on
something everyone is selling for $20.00 you will go broke.
Market research for you will consist of going to as many shows as
you can and finding similar products to that which you have.
Check the prices. If you can make something of your own at these
prices you amy be able to be successful. You will benefit
greatly from a Small Business Management course offered at a
local college.
Best regards
TR the teacher
Marlo:
Beware the discounting trap! Many retailers have seen their
intial profits soar with this method of merchandising, only to
crash in a few years. You can only play that game for a while
before your integrity is shot. My father had a saying; Anything
is only worth as much as you can get people to pay for it. In the
case of art jewelery, you have the edge of knowing they can’t go
down the road and find another just like it.
Reguards;
Steve