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Real-World Pricing


#1

I am looking for input from jewelers who have what they feel is a
viable, real-world method of setting prices for their work.

The reason I am asking is that I will be doing a live webinar on
December 11th for Interweave, on How to Price Your Handmade Jewelry.
I have my own ideas on this, of course, but the presentation will be
of much more interest if I can offer a broader range of expertise.

So, what would you have liked someone such as you are now to have
clued you in on when you were just getting rolling?

Thanks for any help you choose to give me. I will give attribution
in my presentation to anyone I quote or whose ideas I use.

Noel


#2

Maybe, also, just say no. I was asked for a price to do a job, I
didn’t want it, so I quoted what I thought would be too much, and it
was accepted. Oh well, I made the ring.

John


#3

Noel- My mantras…

Never ever apologize for your prices. Never bargain to get a
commission. It cheapens your skills. And folks who shop by price
only will never be faithful clients. They always go to the next
cheapest jeweler. We always at least keystone our costs and charge
$75.00 to $100.00 per hour at the wholesale level. Then we let the
store or gallery decide what they want their markup to be. Don’t let
them tell you what you should charge.

It’s ALL about perceived value. “Wow! That much?! You must be really
good.” Always remember we are the experts. What we do is magic. If
it was easy everyone could do it.

Know when to say “no”.

And Last of all…Have fun and make lots of jewelry.

Jo Haemer
timothywgreen.com


#4

When I asked this question of my father forty years ago, he said
time, material, some for the shop and some for you. He also said take
your cost and triple it. My current formula is the sum of material at
cost (including shipping), my time (currently $45/hour and I assume
that it takes an hour to work an ounce of silver), 20% for the shop,
10% sales and administrative cost, profit (variable depending on the
type of sale: direct from the shop, internet site, consignment shop).
A typical invoice uses this formula plus whatever tax and shipping
and handling cost I might incur. I am retired and now have a lot of
time, so I don’t get caught up in how long it takes to make a piece.
Most of my pieces are big, so an ounce/hour works. I have never had
to make my living making and selling jewelry. At the end of the year,
I spend most of what I have made on new tools and material and close
out the year with little profit. This may not be real world, but it
is my world. This is all tied up in a spreadsheet that I will share
on request. Happy Thanksgiving to all who celebrate it!. Rob

Rob Meixner


#5

What I never realized was the expense of all the things outside of
making jewelry.

Overhead - or more precisely, the costs of things like tags, show
set-ups, packaging and basic shop supplies like tape, sketching
materials, software or tech products like computers or tablets if
needed for dedicated studio use, hours put into 'administrative’
tasks…

I see so many self- or even university trained jewelers who sell on
Etsy, who’s work is priced at a point so low I wonder how they can
even afford their materials!

Cheers!
Becky


#6

It’s taken me a long time to learn how to “just say no” - but I’ve
got there at last! If I don’t want the job, I say so - very politely
and I try to add regret into it too, for nobody likes to be refused.
My stress levels have gone waaaaay down.

Janet


#7

When I was setting at my bench for other wholesalers/ retailers I
said to them the following phrase!!! “Price - Quality - Speed. pick
two
!” Sometimes I refused their work because I won’t cheapen myself
just to put more money into their pocket, at my expense! One busy
client stopped giving me setting, because he found another setter
for.10 cheaper per stone…his honest reason! Gerry


#8
Maybe, also, just say no. I was asked for a price to do a job, I
didn't want it, so I quoted what I thought would be too much, and
it was accepted. Oh well, I made the ring. 

At a store I worked at a guy came in and asked what would it take to
make a platinum key-card to open the door of a car. It was a gift to
the top salesperson for selling the most race cars that year. Trust
me, this company was loaded! I went and made sketches, got pricing
from the jewelers even as they laughed, sourced pricing to custom cut
a diamond for the center of the card, hand engraving (Hours and
hours), sending out for lapping as it was a huge flat surface, laser
engraving the thumbprint of the salesman on the back of the card, and
purchasing one huge sheet of platinum (The size and shape of a credit
card). Made the estimate and added 20% for “just in case” because
hey, there was no way anyone would spend that much on a key-card,
right?

When I presented it to the client, I was all business. no laughing,
joking or anything. I gave my presentation and then waited for the
client to say something. I was expecting a joke or something.

What I got was:

When I went back and told the jewelers in the back that I had just
made my presentation for the key-card they wanted to hear about how
shocked the client was and how fast did he run out of the building? I
just handed over the check with lots and lots of zeros and then
laughed at the look on their faces.

I asked the owner if we could use the profits for that job to be
earmarked for tools for the jewelers.

You never know what is a good price until you run it by the client.

Gerald A. Livings
Livingston Jewelers


#9

Gerald makes an important point here. Never ever sell by your own
wallet.

Too many of us do that. “$50,000.00?! Are you crazy? I would never
spend fifty grand on something like this!” Jewelry is a luxury item.
They came to you to buy something nice. Treat them like they are a
gazillionaire. Show your work as if it was the most precious thing
in the world. Raise the bar and you and your work will get treated
with respect. Your reputation will grow in the direction you
present.

Have fun and make lots of jewelry.

Jo Haemer
timothywgreen.com


#10
Gerald makes an important point here. Never ever sell by your own
wallet. 

I like this point a lot-- May I quote you?

Noel


#11

Raise the bar and you and your work will get treated with respect.
Your reputation will grow in the direction you present.

Jo as usual, nailed it. The only thing I could really add is that
the more you can do that other people can’t, the more you can charge
for you time.

Dave Phelps


#12

Pricing is such a tricky thing. I remember when I started out on my
own how surprised I was that there are no hard and fast rules about
how to price your work. Typically people just look at what other
people are charging and think they can’t charge more and in fact
that they better charge less if they want to sell anything. Even
thought that’s not a good way to price work, there is some truth in
that if you’re just starting out, all of your work is somewhat
routine and you’re selling in the same venues.

Here is my point of view on the big subject of pricing. If you are a
talented goldsmith, silversmith, metalworker, you have a wide range
of options as to what work you produce. Most of the skills you use
are fairly interchangeable when moving between metals and final
product. As an example, if you can make a beautifully crafted silver
ring with faceted stones you can probably also make a beautiful gold
and diamond engagement ring or one with a rare and valuable colored
gem. My point here is that if you want to do this for a living and
you need a certain income to get by, you have the ability to choose
work that can be more profitable for the same effort and time. It’s
a matter of identifying a market and working toward it. Not always
easy but as has been said, if it was easy everyone would do it.

Then setting your prices. It’s all time, materials and overhead. You
should keep your formula simple but you really need to think it
through carefully. How much do you want to earn each year? If you
work full time, divide that number by 2000 and that is your hourly
rate. How much is your overhead, shop rent, phone, power, tooling,
etc? Pad that a little and divide that number by 2000. Then
materials, typically people use a range of mark-up depending on the
cost of the material. Very inexpensive materials might be 200%, as
the cost of the materials increase the mark-up decreases. It’s a
personal choice.

What you are left with is a number for your combined overhead and
time plus a percentage for your materials. That makes your prices
very easy to calculate. In time you can just look at a piece and
you’ll know how much you want to charge for it. Also, in time you
will see if you’re not making enough money and you can increase your
rate or material mark-up as you see fit. Keep in mind that not all
work is particularly price sensitive, you don’t always need to
consider what others are charging if what you are making is not
widely available.

Last, costs are what can kill your business. Don’t spend more than
you need to on anything, no tools you don’t need, keep inventory to
a minimum, make your own coffee. You get the idea.

Mark


#13

Mark, that was one of the most complete, clear, and concise pieces
on pricing that I have read. Well done!

Cindy
Cynthia Eid
Cynthiaeid.com


#14

rule of thumb I was taught for manufacturing - i. e. not art.

wholesale price ~ 6 x materials costs.

i. e. wholesale cost = materials cost + (2 x materials cost for
premises) + (3x materials cost for staff/expertise/advertising etc.)

I expect art is not dissimilar, depending on the level of
repeatability…

less repeatable = greater markup required…


#15

Hi Paul,

wholesale cost = materials cost + (2 x materials cost for
premises) + (3x materials cost for staff/expertise/advertising etc.)

It seems that everyone has a different way of pricing their work
but, that sounds like an incredibly high mark-up for materials…

You would charge $12,000 for a diamond that is really only worth
$2,000?

I guess it could work if you are well established and have a loyal
following but, I couldn’t do that and make a living.

How is it working out for you?

Tina


#16
i. e. wholesale cost = materials cost + (2 x materials cost for
premises) + (3x materials cost for staff/expertise/advertising
etc.) 

Paul- What about labor?

Jo Haemer


#17

if you are buying and selling, not manufacturing, the formula
doesn’t work. It’s really about the manufacturing…

Ignore the diamond as a fixed cost, think about the mark-up of the
ring…

what value is the gold in the ring, compared to how much you would
charge for the completed ring…

last factor 3 x input cost includes staff = labour


#18

So, I am a beginner and have recently spent countless hours trying
to figure out how to price my pieces in a way that I feel comfortable
with. I have a hard time with multiplying the cost of materials by
some random factor, since everyone seems to use anything between 2-5
with no real reason for which one. This just feels too arbitrary for
me. I kind of like the idea of finding your average over a year for
overhead and such, but since I’m just starting out I can’t really do
that. What I have finally adopted that makes sense to me is:

materials + 10%

I adjust this percentage per piece, depending on how much wasted
material I had, or any materials I didn’t actually calculate, like
jump rings or whatever. The 10% base usually covers wasted materials
and overhead (I don’t have a whole lot of overhead just yet, so it
would just be saw blades and what not).

labor + X

I put in my hourly rate, and then if any part of the piece required
me to go to a studio then I add some extra overhead here. If I can
calculate how much time I had to pay for at the studio for a
particular piece then I will add that, but usually when I go in to
the studio I am working on multiple pieces at a time, so I will just
add a percentage according to what portion of the piece required
studio time.

Once I have these base costs then I add a percentage for profit to
the total in order to get my wholesale cost. Right now this number is
close to 10% because I don’t feel like my craftsmanship warrants
anything more yet.

And, because I currently only use very inexpensive materials. Mostly
copper and brass with highlights of silver. However, when I feel more
comfortable with my craftsmanship and I start consistently using more
expensive materials, this percentage might go up.

After calculating my wholesale cost, I simply double that price to
get my retail cost. The prices that I get using this formula seem to
match pretty closely with what I had in mind for how much I felt like
the piece is worth.

This formula gives me the assurance that if I sell my piece at a
gallery, I will still recover the money I spent on materials and
overhead, I can pay myself a wage to live off of, and then I get some
money that I can use to invest in new tools or classes or whatever it
may be that will help my trade.

So, this pricing scheme makes total sense to me, however, I recently
had a friend who has been doing retail for a long time tell me that
my pricing formula was wrong and that it doesn’t work for the real
world. I’m not sure if she thinks my prices are too high, or if I had
just pushed some buttons because I was using a formula that she
wasn’t familiar with despite how much longer than me she has been
doing retail. Either way, aside from irritating me to high heaven,
this did not deter me from my pricing scheme for two reasons. One is
that when I applied her formula to my pieces (which was 3x material +
labor, period, for retail) and then I subtracted the 50% that a
gallery would take, I found that it wouldn’t even leave me enough to
cover material and pay myself a living wage. And two, I had just
spent a lot of time researching pricing formulas and reading blogs
from artists and jewelers more experienced than myself. And, much of
what I read emphasized how too many beginners (and seasoned sellers
for that matter) price their items too low because they undervalue
their work and their time, or because it is just a hobby for them.
And that pricing too low not only undervalues you, but it undervalues
all jewelers and artists if buyers can get quality items for cheaper
elsewhere.

So, since this thread is about ‘REAL-WORLD pricing’, I’d like some
more opinions about my formula. I feel like it’s totally reasonable
(and perhaps even too low), but at the same time I understand the
importance of not pricing yourself out of the market. I don’t think
I’m pricing myself out of the market, but when I look on Etsy at what
others are charging for specific items the prices seem to have quite
a range. So, what say ye seasoned Orchidians? Is it wishful thinking
that I could charge enough to cover my materials, pay myself a
salary, and have some money left over to invest in furthuring my
craft, AND that people would pay it?

Thanks for being so helpful and awesome Orchid community!

Melanie


#19

Melanie,

Wow, the formula your friend gave you leaves you making much less
than when you followed your own.

I would suggest that you stick to your present formula, and then when
you begin to sell more, and begin to add more expensive materials
then raise it accordingly.

Alma


#20
when I applied her formula to my pieces (which was 3x material +
labor, period, for retail) and then I subtracted the 50% that a
gallery would take, I found that it wouldn't even leave me enough
to cover material and pay myself a living wage

Melanie, I use that formula for wholesale prices, not retail. Damn,
if it was for retail pricing I wouldn’t make muchof anything! I
double that for retail, adjusting one way or another, mostly up.