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Wholesale pricing, what's your formula?


#1

You may have seen in my other posts that I am struggling with pricing
on a platinum men’s band. The discussion has inspired me to take a
poll on wholesale pricing. If you would, please share your formula
and also share if you have different formulas for different types or
price levels of product. I’d really appreciate as many responses as
possible!

Thanks,
Annie


#2

10/10 One of the first jewelry teacher’s I had told me to figure your
material cost x 5 retail. Wholesale is 1/2. I’ve seen other methods,
but this is the simplest for me & it all came out about the same.
Only thing he did say, it also depends on the degree of the
difficulty of the design, so he might have added extra for that…

Sharon Perdasofpy


#3

Hi Annie,

Here’s a little look into the tradeshop business, from my
perspective. I hope it’s helpful to you. I would have loved to have
known this stuff twenty five years ago.

I generally charge half of Geller’s Blue Book for straightforward
labor and repairs, more for what I really excel at, less for work I
must charge less for because of competition or market forces. 30%
over cost for findings and stones, 10-20% over for metals, depending
on the finished weight of the piece, the type of metal and the labor
involved. That’s my pricing structure in a nutshell.

There is an old adage that there are three things a wholesale client
can ask for - low price, quick turn-around and high quality. They can
pick two, I set the third.

I deviate down from the Blue Book when there is a ton of stone
setting that’s really quick, like tennis bracelets, and things like
that. I can pretty much guarantee that if you try to charge someone
$11 a stone for a 56 stone square prong tennis bracelet they will
likely stare at you in open-mouthed amazement. The current trade
price around here for tennis bracelets is between $1.50 and $3 per
stone depending on the type of bracelet and the type and cut of the
stones. If you can set 60 stones an hour, that’s pretty good money
for a benchie. Even 30 stones an hour pays better than a lot of
other stuff does. It may be boring, but the experience gained and the
money earned make it well worth the effort to seek out this and other
types of production work.

I charge extra for setting stones that are not consistent in size
and/or cut. Setting cheap, lumpy goods is a real p.i.t.a, and I get
paid for their savings in per-carat price. I play that by ear and
adjust based on the extra labor involved. Tell them an extra buck a
stone. Sounds cheap, but it comes to $50 or $60 for the extra hour or
so you’ll spend on a tennis bracelet cutting each and every seat
differently.

I deviate up from the Blue Book when I am doing something that other
shops either can’t do or don’t do as well. $150 per hour is my
wholesale rate for this kind of specialized work (which is really
only a little over what I can make setting tennis bracelets, so it
really isn’t that high). This kind of work generally is done by
estimate, so I break the job down into individual tasks, figure how
long each task will take if all goes well, what the materials are
going to cost and estimate the job based on that. My estimates stand,
unless the client changes something like carat weight or type of
metal, so I’ve got to figure the time right if I’m going to make
decent money doing it right. Those extra little details can eat up a
lot of time if you’re not careful. If you’re going to charge that
kind of money, you better be able to deliver; your work better be
top-notch and clean and be able to stand up to the microscope, even
if it takes you a few more hours than you planned on. You might not
get a second chance if it’s not.

Another little tip, pick up a pawn shop or two. You’ll see a lot of
junk, they’ll want it cheap and fast, but they are rarely picky and
pay cash (real portraits of dead presidents, you’ve seen them,
they’re kind of green in color) on delivery. Meaning, when you
deliver it to them, not when they deliver it to their customer like
so many trade accounts seem to think the term means. They can end up
being surprisingly good accounts, for a lot of really different
reasons. Mainly, they know how to make money. You can learn a lot.
(Wink-wink, nudge-nudge, say no mo’, eh?) Just make sure you have a
tea-ball for cleaning their stuff. You’ll spend hours looking for
stones in the bottom of your ultrasonic if you don’t.

One thing I used to do with new accounts (I’m not accepting those
anymore) is to look around at what’s in the cases and ask for a copy
of their current price list. That will tell you what kind of jewelry
they buy and what they are accustomed to paying for certain things.
This can give you insight as to where you might get a little
resistance or maybe a bit more $$$ than you currently do. It is also
important in finding out exactly what you will be working on. If they
are selling it, you’ll be working on it. If you see glaring
differences in their pricing structure and yours, or jewelry that is
poorly made (do pawn shop jewelry for a year and you’ll be able to
spot that junk from across the room - without your glasses) or has
impossible to recreate finishes (a lot of European designer jewelry
has very creative finishes that’ll have you scratching your head),
it’s better to address it up front so there are few surprises.

It is also a good idea to get a feel for what kind of client they
are going to be, and adjust your prices accordingly. Ask them why the
last shop didn’t work out or why they’re ready for a change or what
is most important to them in a trade shop. Ask them if they are going
to have different standards for different customers or different
types of work. That’s not as rare as you might think. Some want cheap
repairs, but only the highest quality custom work. Others want
exactly the opposite. Most will want a mixture. One store I did work
for put a gold star on jobs indicating a special customer, needing
the highest quality and best service; red stars on jobs needing the
lowest price or easiest fix. Pretty good system.

See the current thread entitled “Magnification frustration” for an
example of someone you may need to have a heart to heart with the
owner or manager, adjust your prices upward for, or avoid taking on
altogether. That would be an account that I would charge $150/hour;
I’ll do the best work I know how and they can study it all they want.
Or they can make a choice as to which is more important, the price or
the microscope. Sometimes, the client doesn’t get a second chance.
Don’t be afraid to fire a wholesale client that is not profitable for
you. Wholesale’s a whole different mindset compared to retail. There
are more good clients than good trade shops, way more. It’s OK for
you to be picky too, ya know. If you’re good, before long you won’t
have to go looking for them, they’ll find you.

I’m not taking in new trade accounts anymore. Too much work for too
little money and all the hassles of hand-holding with ignorant
tightwads with microscopes and shrinking schedules are just not worth
it to me any more. The retail side of the business, the two or three
really good trade accounts we have and the odd small production run,
pave’ or engraving job that comes our way are keeping all three of us
benchies plenty busy. The general public is a lot more fun to work
with, a whole lot more appreciative and pay more. Most importantly,
they pay on delivery instead of 30, 60 sometimes 90 days later. It
really stinks when you need to pay a supplier for stuff you ordered
for a client that hasn’t paid you yet, so you can order more stuff,
to do more of their work, so you can get paid even later. No thanks.
Had my fill of that garbage.

But I will also add that retail isn’t a walk in the park either. You
trade one set of demons for another when you sign that first lease.
This can be one tough business, even in good times, no matter which
side of the wholesale / retail line you work. You better love it, or
you’ll end up hating it.

Enjoy the journey. It’s a real trip.

Dave Phelps
precisionplatinumjewelry.com


#4

Hello Orchidans,

As a member of the Professional Development Seminar committee I’m
writing to ask if the community can help with a project.

As you may know, the PDS is a three hour program that was developed
to offer solid, nuts and bolts on establishing,
maintaining and building a career as an artist and maker. The PDS
takes place once a year in conjunction with the (annual) Society of
North American Goldsmiths conference. The next conference is in
Houston, TX March 10-13, 2010 and will mark the first year that the
PDS will be an official part of the conference.

Part of this next year’s PDS programming-- and continued lunch
discussion – will focus on PRICING, looking into the different
strategies that makers have evolved to establish a price for their
work. We want to know what goes into this often difficult process:
if people use specific formulas, if they find market comparisons, if
there are differences in establishing wholesale and retail prices,
etc.

If you sell your work in a gallery, online, from your studio, in your
own retail venue or via Craigslist; if you work on a consignment
basis, as a production artist as a one of a kind maker, via
commission or purely on a custom basis we would love to hear from
you.

Our goal is to present a variety of pricing strategies, from specific
formulas to more creative approaches, and help PDS participants to
develop a REALISTIC method of pricing or to perhaps fine tune their
current method.

Thanks for any help that you can lend.

Andy Cooperman
On behalf of the PDS committee:
Harriete Estel Berman, Don Friedlich & Andy Cooperman.


#5

Andy - sounds like a great program!

I’m in a very rural area of SC, have my studio in my house (well,
under it to be precise!), don’t run a bricks and mortar store, and
sell to galleries and shops wholesale and by consignment, and do
retail shows.

My approach is that wholesale is half of retail, and consignment is
somewhere in between, depending on the gallery. I have heard of
galleries wanting 50% or more for consignment - that makes no sense
to me when I can sell it outright for 50%.

I price so that wholesale covers materials, overhead, and time with
a small profit margin. Then retail sales are “Christmas” - really
nice profit!

I tweak that a bit depending on the design and labor factors, the
artistic “punch” I think the piece has, and the materials. So
inexpensive materials are marked up at least 4 times for retail.
More expensive might only be marked up 1 or 2 times for retail. If I
think the piece really has “punch”, and can pull in a bigger price in
my market I will adjust upward to what I think it can bring.

Not a precise formula, but one that seems to work for me.

I think what bothers me the most in working with other artists is
when they change the price on a given piece depending on where they
are showing it, and when they just don’t comprehend wholesale/retail
pricing. I hear “well I can’t sell that at wholesale” a lot - which
says to me that they ARE pricing it at wholesale, just selling it at
retail at that price. Which undercuts everyone - other artists,
retailers, etc. I used to own a gallery, so I really understand the
costs and risks associated with retail, and have no desire to
undercut my retail partners! I think this is probably one of the most
misunderstood things in pricing.

Beth Wicker
Three Cats and a Dog Design Studio
http://www.bethwicker.com


#6

That’s a difficult question to answer for those of us who don’t
wholesale, as a rule. Sometimes things come up anyway, that require
me to come up with an answer. I ask myself to answer these questions
before I price my one off work: How much do I have in it in
materials?

Are the materials extremely rare/unique? How much time, relative to
my other work do I have in it? How successful is the piece?

Bottom line to answer your question? How little would I accept for
it without wanting to slit my throat!?

Here’s what I came up with when I did have to come up with a real
"wholesale price" for a sale to Saudi Arabia. I simply deducted my
average show cost of sales from retail and left it at that.

That’s the reason I don’t/can’t wholesale. I just don’t have 50% to
give from my retail prices. People say, well, just raise your prices.
Why wouldn’ t I want to do that?

  1. My sales at shows would go down appreciably which means my income
    drops, and I have stress at shows instead of ( generally)feeling
    pretty good about things.

  2. I would be pressured to produce more work than I do now, which is
    impossible without making lesser pieces.

So my question to you and your panel would be: How can you keep your
prices as low as you feel comfortable so you are successful at shows,
while having a higher price when you are being represented by someone
else? I haven’t found a good answer for that question.

Best to you all, Marianne


#7

When I was studying business management, the very first thing we were
told was business such as ours, go under because the person unprices
their work.


#8

Beth, thanks for your thoughts, and I agree with you about the
basic premise; you can’t have it both ways. So I don’t.

At this point my pieces run between 5-45K. That puts me among the
highest priced jewelry artists at the craft/art shows that I do.
Because I’ve chosen shows over galleries, and because my production
is so limited, I am pricing my work where it is still possible to
have successful shows rather than holding out for even higher prices
( which is always an option) and having financial stress at home.
That is why I don’t’ work with galleries except for exhibitions.

We all need to find our niche. I have been very happy in the one
I’ve been building for a long time. I encourage you and all the other
dreamers out there to put your dreams into your reality; keep
stretching that reality to encompass your dreams and you’ll love
working and grow your capability and widen your horizons.

This is very mushy, I know. Can’t help it.It’s 10:20 pm and I just
came out of the studio. 3 weeks before leaving for my last show of
the year, the pieces are finally coming together and it’s exciting
and I’m over tired.makes my emotions real close to the surface.

Have a great fall, ya’ll! marianne


#9

Marianne, I found this not to be true.

When I started wholesaleing, I raised my prices so that I got 2 X
cost, plus labor, plus 15% studio overhead, for wholesale. I got
double that for retail. My retail sales numbers at shows stayed
about the same, for less merchandise. I win! And now I can wholesale
all these designs, or consign them, or give discounts to preferred
customers, or whatever I like. Note: this is production cast
sterling jewelry. High end jewelry perhaps can’t be done 4x markup on
materials. I strongly suggest that you try it. I was afraid, too, but
it worked out fine. If I “can” do it, why can’t you? Maybe you could
try it with just one new collection of work.

M’lou


#10

Wholesale or retail you should price to what the market will bear.
If you can’t make a reasonable profit at that level you have to go
back and lower your costs somehow.

A blanket “5X material=retail and half of that is wholesale” is not
going to cut it when certain materials/conditions are involved,
especially if you wholesale. Ex. if you set some diamonds in your
work and try to sell to me, I’ll tell you flat out I won’t pay you
$2500/ct for $1000/ct goods. Not because I’m a chiseler…but because
I won’t be able to sell at inflated prices. The retailer would be
thrilled to get 2500/ct, stupid to pay it. If you are wholesaling you
should realize that the reason a retailer is buying from you is to
resell at retail market prices. He will keep buying as long as you
fill his needs. You have to make him money. Yes, he makes his profit
on your back. Its just the way it is. If you do not like the slim
margins at wholesale…go retail. Margins are fatter but the overhead
is too.


#11

Thank you for responding, Neil, about higher-priced goods than what
I could accurately address. My formula is for production-cast
sterling only, with lower priced stones, if any. As I said, it works
for me, in that market. So, you beginners using silver and garnets
and such, this might fit you.

M’lou