Trying to remember my class in pricing... boils down to:
a (Material cost per gram)
b (Number of grams)
y (Hourly rate)
z (Number of hours--fraction if under 1 hour)
(a * b) + (y * z) = actual cost
I'm NOT picking on you here, but it's not quite that simple, and I
hope the instructor did not really make it seem so.
What this class left out:
Shipping costs to you, insurance, the time it takes to put it on
your inventory, time on the phone, time searching catalogs, time
searching the Internet, time/fuel/ins. for running down parts in your
vehicle, travel costs to get to shows, finance costs of your credit
card, bank account & checking account fees, advertising, website,
inventory tax, the costs of collecting sales taxes, general office
costs equipment, repairs, paper, ink, outside printing, postage,
rent, phone bill, Internet service, gas, electric & water. Your shop
costs tumbling compound, buffing compounds, buffs, light bulbs, new
tools, continuing education, magazine subscriptions, and your
monthly/yearly Orchid donations...
You add all of these costs up for the year, divide it by the hours
you actually work, add your hourly rate, and then your materials -
now you have a break-even price. THEN add in your profit. Now you
have a wholesale price!
Further markups happen when the gallery or retail store becomes
involved. They have to make money too...
Someone wanna pick up/chime in here? I know I missed about 40 or 50
other hidden costs that should be added into the cost of producing
and selling a piece of simple jewelry - IF you want to break even -
much less make a profit!
I'd venture to guess that the high failure rates in turning a
home/hobby venture into a real business are founded in the failure to
take ALL costs into account when pricing the product.
Brian P. Marshall
Stockton Jewelry Arts School
Stockton, CA USA