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Why is retail pricing typically 2x wholesale?


#1

First, let me begin by saying that I am aware of the plethora of
discussion about wholesale vs. retail pricing on this forum, for
which I am grateful.

I want to ask a question and perhaps begin a conversation about why
retail pricing is typically 2x (and often more, now) wholesale
pricing.

I am a small artisan jeweler, selling directly to the end user (the
person who will wear my jewelry). After I calculate my wholesale
price, why do I need to mark it up 2x in order to retail it? I am
not a brick-and-mortar gallery. My overhead is built into my landed
cost, as is profit. This question came up when my husband asked about
how I price my work. I explained it to him: I calculate the wholesale
price, then double it for retail. His jaw dropped. Having been in the
computer, stereo, and other manufacturing industries for years, he
was shocked that the profit margin was so astronomical. No other
industry that he’s aware of DOUBLES their landed cost. So why do
jewelry stores & galleries?

So let’s ask the question: what if I decide to wholesale to a
gallery? They will want to take the price I give them and double it,
at least, correct? Then the gallery owner will want to make sure
that my jewelry isn’t being sold elsewhere for less – for example,
on my own websites. Well, I can’t compete with that. If the retailer
wants to mark up my work by 2x or even 3x, great! (They may not be
able to sell it for that much, of course.) But does that mean I
have to then publish their price on all my websites so that we’re not
competing with each other?

Perhaps a solution is to take my name off the work I wholesale to a
gallery, as painful as that sounds.

If someone can explain to me what I’m missing, I’d love to hear it.
Remember, I am a small, one-person shop, not in the business of
production jewelry.

Thanks, everyone.
Barbara


#2
I am a small artisan jeweler, selling directly to the end user
(the person who will wear my jewelry). After I calculate my
wholesale price, why do I need to mark it up 2x in order to retail
it? 

You don’t. You can sell your work for whatever final selling price
you feel is fair to both you and your customers. Wholesale and retail
are marketing levels, not cast-in-stone pricing levels. However,
consider: If you really are wholesaling, then you save all the time
spent working with customers, as well as attracting customers. So
with that less time spent, your costs are lower. On the other hand,
if your working directly with end users, are you still selling fully
production work or are you customizing things, which makes them one
of a kind and more costly than a wholesale line. So consider just
what you’re really doing. It may not be full retail, but it doesn’t
sound like it’s totally wholesale pricing either, that reflects your
cost. In the end, you can price however you wish, so long as you make
your desired profit margin and can find enough customers. If you’re
not selling to retailers, then your price is the only one, and it’s
simply your price. Don’t worry about the terms retail or wholesale.

But keep in mind, too, that if you CAN get the equivalent of full
retail price, and you’ve got adequate customers at that level, why
would you charge less? Customers say they love a bargain, but in the
end, they value an item based on what they paid, not on what they
might have paid elsewhere. Selling low only makes your work look
cheaper, while making you work harder for the same money. If selling
cheaper gets you more customers, though, then there is some point
where there is a balance between low price and more customers, and
high price and fewer customers. Finding that price point is the whole
point.

This question came up when my husband asked about how I price my
work. I explained it to him: I calculate the wholesale price, then
double it for retail. His jaw dropped. Having been in the computer,
stereo, and other manufacturing industries for years, he was
shocked that the profit margin was so astronomical. No other
industry that he's aware of DOUBLES their landed cost. So why do
jewelry stores & galleries? 

He’s missing a whole lot of other industries. Try clothing,
furnature, anything in a department store like Macy’s or almost any
business in a shopping mall, and most other better retail stores. The
percentage of stores or types of industries that charge less than
double is considerably in the minority. It’s pretty simple to tell.
If the store is always busy with people lined waiting at the cash
registers most of the time, then their total volume will be higher,
and turnover time on merchandise may be fairly quick. Many items
might sell in weeks or even (grocery stores) days, rather than a
being in stock for a year or more, so their profit margin, figured
annually on that item, is larger than a store (like many jewelry
stores) that may have items, often costly ones, that turn only once
a year or less. And in the case of jewelry, not only is the
merchandise costly, but it’s costlier to buy and keep in inventory,
to insure, and to sell, since most jewelry stores need to spend some
effort and money on an image of prestige and quality, etc. Then there
is advertising and all the other costs in running a good business.
The average jewelry store will have lots tied up in merchandise, and
several employees who may spend significant time simply waiting for
customers or sales, even if they keep busy. Some stores may have to
pay their bills on only a few sales per day, at least in comparison
to those big box stores or highly competative marketers who move a
lot of merchanise fast.

The simple answer for your husband, though is that stores that
charge a higher profit margin are not doing it out of blatant greed.
They’re charging what they do simply because they must, in order to
stay in the black and make an acceptable rate of return on their
investment (time and money). Even with a three x markup, many jewelry
stores operate on single digit profit margins by the time the books
are closed at the end of the year. But again, I stress, if he thinks
this markup is unusual, he’s deeply misled. It’s not just the norm
for jewelers. It’s the norm, 2x or 3x markups for most retail sales.
Even many internet marketers are not charging much less, despite the
impression they may wish to give. And some classes of especially
inexpensive merchandise can sell for much higher markups. Go into a
Target store and look at the rack of costume jewelry earrings selling
for five bucks a pair. Likely, they cost fifty cents each, but the
retailer had to buy a whole rack full at a time. Some won’t sell,
others will disappear into pockets, and a square foot of floor space
has to earn it’s keep whether it’s selling thousand dollar stereos or
five buck baubles. Highly competative markets with merchandise that
sells quickly, at stores like best buy, or shops like walmart of
costco or your local grocery store, can charge less simply because
they’re making the profit they need with a lower markup due to the
higher volume of sales they can generate.

So let's ask the question: what if I decide to wholesale to a
gallery? They will want to take the price I give them and double
it, at least, correct? Then the gallery owner will want to make
sure that my jewelry isn't being sold elsewhere for less -- for
example, on my own websites. Well, I can't compete with that. If
the retailer wants to mark up my work by 2x or even 3x, great!
(They may not be able to sell it for that much, of course.) But
does that mean *I* have to then publish their price on all my
websites so that we're not competing with each other? 

Usually, yes. The moment you’re using the services of a gallery to
present your work, you’re whole pricing structure has to accomodate
that fact. You still need to charge enough to the gallery so your
percentage, whatever it is, is what you need. That has not changed.
But now you’ve got a business promoting you, advertising your work,
showing your work, etc. In essence, you’ve got a costly employee, and
the price the work sells for has to pay for that employee as well as
make the needed return on that investment to make it worthwhile. In
this case, that return is to the gallery.

Now, the moment you’ve got someone else selling your work at their
retail price, if you then sell the same stuff on your own directly to
customers, you’re cutting the poor retailer off at the knees. They
are quite justified i asking that you not undercut them. If they’re
going to sell your work, why would they do so if customers can go
direct? This is the same with wholesale/retail arrangements in every
industry. If you want a couch, you go to a furniture store. If
you’re lucky, you might find one on sale, but you still have to buy
it at the retailer. You can’t just call the factory and ask them to
ship you one at the wholesale price. As to what price you publish on
your web site, you’ll have to work that out with your gallery. If
you’ve one gallery, then often their price is the easiest. if you’ve
several, then perhaps an average if they differ. Some galleries will
even require that if you have private sales, such as through your web
site, that you then give them a percentage of that sale. Perhaps a
lower percentage, but even so, you may owe them something. After all,
perhaps your customer to the web site saw the work first at their
store. Maybe their sales staff spent time with them. Even if this
didn’t happen, they may feel entitled to a margin of that sort. Some
artist handle this simply by having all sales, even those originating
on their web site, run through their gallery as their representative.
This has advantages. The gallery handles the customer hassles, charge
cards, banking, etc etc. And it keeps the whole relationship between
you and your representative gallery uniform. These issues are some of
those stickier issues you have to consider and work out with your
gallery if you choose to be represented by one, before you sign the
contract. If they don’t bring it up, you should, just so everyone
knows what the expectations are before hand.

Perhaps a solution is to take my name off the work I wholesale to
a gallery, as painful as that sounds. 

Nonsense. Your name and signature are an important part of what the
gallery is selling. This is the same everywhere. You buy a brand x
item, because it’s got a reputation of being better than brand y or
z. That brand is important and meaningful to you and the selling
store. But you still buy it from that store, not the manufacturer.

The bottom line is you simply have to consider whether your markeing
model is wholesale or retail/direct. The way you establish your price
may be similar. But the price to the end customer has to be figured
differently. Don’t try to do it both ways at the same time, at least
not under the same “brand” name. If you sell good work through a
gallery, and another totally different line of work through your web
site under a different name, then likely, that can work. But again,
work it out with your gallery before hand.

Peter Rowe


#3

I don’t know what manufacturing companies your husband has worked
for but more often than not, wholesale can be as little as 10% with a
90% markup! When I was in clothing retail, it was keystone which is
double the cost plus 10%. I was in the cellular retail business for
many years. Some of the products we carried cost us only a dollar or
two yet typically, they were marked up anywhere from $9.99 to $14.99.
Why? Well, retail locations need to build in for theft, breakage,
giveaways, dead inventory and other losses. Their overhead is higher
than yours but that doesn’t mean you have to charge as much as they
do.

Here’s how I calculate my prices. [cost x 3] + wage (anywhere from
$5 to $25/hr). For example, I make a pair of earrings. My cost in
materials is $4.00 multiplied by 3 equals $12. It was an easy pair to
make, not requiring a lot of skill so I’m only going to give myself
$15/hr for the 30 minutes it took me to make. Now I’m up to $19.00.
This is the lowest I can sell this item and still make a profit, so
this becomes my wholesale price. My suggested retail will be $38.
That doesn’t mean I or the person purchasing the item resale has to
sell it for that price. I can sell it for less, but I shouldn’t sell
it for less than $19 or I’m losing. And the whole purchaser? Well,
she can sell it for as much as her market will bear. I may be making
and selling at craft fairs but she’s going to be taking it to a Bal
Harbour Boutique and can mark it up according to her customer’s
demographic. We all win. I get mine, she takes the chance the pieces
may sit for months taking up space and not selling at all.

There are all kinds of formulas out there for figuring out how to
price your pieces but it all comes down to what the customer will
pay. Eni Oken ( http://www.enioken.com/jewelry/pricecalc.html ) has
a wonderful Jewelry Price Calculator for Excel which gives results in
7 well-known price scenarios used by jewelry artisans and offering
optimal suggested wholesale and retail prices. It’s a GREAT starting
place to get an idea on the many different ways to easily price your
creations. You can choose which formula makes sense to you. After
all, you know your venue, your customer and what your market will
bear… Or you should and can adjust your prices accordingly. But
people who buy wholesale, like to think they’re getting the lowest
price.

I’ve only done 2 wholesale orders. I based their discount on the
number of items purchased. Minimum 5 to 15 gets 20% off, 16 to 30
gets 30% off, 31 to 100 gets 40% off, 101 and higher gets 50%. The
first wholesale order was for 25 pieces total, 5 pieces of 5
different designs. She got 30% off the entir= e order. The second
wholesale order was for 70 of the same piece. She got 40% off her
total. The both seems happy with the cost, I got a nice order that
paid for the cat food that month and I have no idea what has
happened to them. How or if they were sold or given away. I just know
that my jewelry is out there and when I think of it, it brings a
smile to my face. :slight_smile:

For Direct sales that I make, I will, on the other hand,
occasionally reduce a piece up to 40% off if it’s something I want to
get rid of and/or don’t want to make anymore. But it’s all just a
numbers game. If we could know exactly how much anyone is willing to
pay to buy a piece we’d sell it to them for that price, as long as we
made our profit.

But too often, new jewelry designers undervalue their work. Which
undervalues everyone’s work. Of course there are those out there who
over value it as well, but that’s just something we have to deal
with.

As I get better, I will value my work higher and charge accordingly.
Right now I’m a beginner, and I know it. I’m no where near where some
of you all are but when I make something well, of a good quality, I
want people to know it. Just as I slash the prices of those pieces I
think just aren’t up to snuff.

Okay, nuff rambling,. Night all.

Michele
MikiCat Designs
http://www.mikicatdesigns.com


#4

Barbara

Double cost is in more areas than you think. Yes computers have a
smaller markup but they sell faster than jewelry. The LONGER you hold
onto it, the higher the margin required.

There’s an excellent website to visit that explains it well:

http://www.retailowner.com

Here’s why.

Lets take computers and such. Now remember everyone checks on how
they do at the end of the year.

So let’s say “overhead” is $100,000 for the year. You must cover the
hundred grand and lets throw in $10,000 for net profit. So you need
AFTER PAYING FOR THE COST of jewelry (or computers) $110,000 in gross
profits.

COMPUTERS:

Buy it for $500 and sell it for $700
Profit is $200 and that’s 28.5% gross profit (markup is 1.4 times
cost)

So every time we sell a computer we make $200. Computers usually SIT
in a store for about 3 weeks.

There are 17 “3 weeks” in a year (17x3=51 weeks).

So if you buy on January 1st a total of 33 computers for $500 each,
they will all sell by about January 18th and you will have made $6600
in gross profit (33x$200=$6600)

So every 18 days you make $6600.

There are 17 cycles like this in a computer year (turn is 17) so 17
times $6600 = $112,200 in total gross profits.

In a year, keeping on the shelf at any one time 33 computers, your
gross profit will be $112,200. Overhead was $110,000, so the extra
$12,000 is your net profit.

In a computer store, the whole inventory sells off every 17 days.

(Click below and look at TURN=how many times in 12 months they sell)

http://tinyurl.com/ylsnql4

—Now lets look at jewelry—

Jewelry in NO WAY sells all of itself every 17 days. Jewelry
typically has a turn of “1” which means if you buy your entire
inventory on January 1st, all that you bought won’t sell for 365 days
(not 17 days.)

Let’s look at the numbers.

Remember we need $110,000 in gross profits to pay overhead and make
some net profit.)

So if we bought 33 rings that cost $500 each and sell them for $700,
we’d make $200 EACH when they sell. But history shows that jewelry
sells every 365 days, not 17. So like the computers, we’d still make
$6,600 in profit, but only once a year. Not nearly enough to pay
$100,000 in overhead.

So let’s double our cost and sell it for $1000. We’d make $500 each
and that’s $16,500 in gross profit. Still not enough to pay overhead.

So the computer store can keep in stock on any given day only $16,500
in inventory to pay overhead if inventory turns 17 times a year.

To have the same overhead, a jewelry store KNOWING it can only sell
inventory ONCE a year will need to:

Scenario #1:

  1. Selling at double cost (keystone) we need to make $110,000 in
    gross profits.

  2. $110,000 in gross profits needed, selling at double cost, we need
    to keep on hand 220 rings in stock ($110,000 divided by $500).

  3. We’d need to have an inventory level of $110,000 on hand at any
    given time or 220 rings.

  4. We’d be able to pay overhead and make a net profit.

So we need to now keep $103,400 MORE in stock than a computer store.

SCENERIO #2

  1. We’ll sell the rings for the same markup as computer ($500 cost
    sells for $700)

  2. At $200 in profit, we’ll need sell in a year 550 rings To be able
    to make $110,000.

  3. Investment in inventory is now HIGHER, having to stock 550 rings
    Rather than 220 rings. But we will sell for less markup.

The reality is jewelry needs a wide selection to be sold. Much wider
than electronics.

Most really good jewelry stores look for a turn of 1.25 to 1.45.
It’s almost impossible for a jewelry store to have a turn of 2 much
less 17.

When you buy clothing, they usually have a markup similar to jewelry
but instead of a turn of “1”, they have a turn of 3.5. Closer to 4
because there are 4 seasons in a year.

If you go back to retailowner.com you’ll find that jewelers don’t
have an OVERALL markup of 2 (50% margin) or even a markup of 3 (a
66% margin) because for every piece that doesn’t have good markup
(like diamonds), you will NEED a lot of jewelry that has a markup
HIGHER than 2 to make up for the poor margin pieces. A double your
cost markup is a margin of 50%, but most jewelers have a lower margin
of 44-47%.

So how do companies like Blue Nile and such sell so cheap? Blue Nile
has a markup of about 1.25-1.30 (margin of 20 to 25%). Blue Nile has
a higher turn than the rest of the industry and MUCH of their sold
inventory they don’t own nor stock. Much is special order or on memo
from their supplier side.

So in a nutshell that’s why jewelry has such a higher markup.
Because of such low turn.

The real answer to making money in inventory is not markup, which
everyone focuses on, it’s Gross Margin Return on Investment. Go back
to the retailowner.com site and look at GMROI.

If you’re doing well with a low markup, its because of your low
overhead, your needs are less than a traditional jewelry store.

Sincerely
David S. Geller
www.JewelerProfit.com


#5
I am a small artisan jeweler, selling directly to the end user
(the person who will wear my jewelry). After I calculate my
wholesale price, why do I need to mark it up 2x in order to retail
it? 

Thing are always priced to “what the market can bare”. This is the
only ‘formula’ that works. The more difference between what it cost
you to produce and what you can sell it for, the more profitable you
would be.

The terminology about wholesale and retail is not applicable to
artisan jewelers and others in similar circumstances.

The methodology is used for large scale manufacturing when costs of
distribution chain must be taken into account. The product is priced
at each and every point of the chain to keep costs under control. The
rule simple says that when product leaves warehouse to be delivered
to retailer, it must not cost more than retail / 2. It is a rule to
establish cost controls to reveal if there is a weak link in a supply
chain. That is why sales are possible.

A manufacture establishes ‘retail’ aka MSRP, which is Manufacture
Suggested Retail Price, which should leave retailer enough room to
adjust with changing market conditions. MSRP is based on market
research and wholesale is MSRP divided by what is known as 'keystone’
which is usually 3 and not 2.

Leonid Surpin
www.studioarete.com


#6

The reason jewelry is “keystoned” or doubled in price is to cover
costs at the retail level. Retail is expensive and unless a company
had the volume in sales such as Walmart or any other large
chain/mall store then it is completely resonable to double the cost
to cover overhead. The best profit for an artist craftsperson is to
sell their own work at retail with out the expense of a retail store
such as the internet. Selling direct then can net you 2 to 5 times
your costs. The reason I do this is for the design, the art of the
piece, to charge for design of an original one of piece is very
difficult. Also the client is getting all my experience and charging
for those intangibles is what the keystone is all about. I don’t know
if large companies keystone, they certainly discount and that has to
come from somewhere. The hard costs are easy to calculate, overhead
of the company location, materials, time and consumables. All those
things are considered for the wholesale price, you are paid for your
time which should include your hunting around for materials. Selling
the materials plus a percent should also be included in your
wholesale price. The gallery doubles it to cover thier costs, you
can’t sell to a gallery at you retail and expect to stay in business.
Your husband probably isn’t aware of the arts business, an artist
painting on a canvas who sells for big money isn’t charging for the
paint and canvas only.

Sam Patania,
Tucson,
www.bahti.com


#7

First of all you can sell your work for whatever you want to, there
are no rules, and second your husband must have never seen the markup
for furniture or clothes.

One of the aspects of the formula for markup that I do NOT agree with
is to double the cost of all material for wholesale. If you buy an
amethyst for $100.00 from Rio I don’t think you should mark it up
more than 20 to 25%. Your metal price yes but not stones. You have
to remember that galleries hopefully will give you many sales
throughout the year, in other words VOLUME, they take the risks you
take a lower markup. With you selling mostly one off work to
customers you should get that markup. You can only do so much work
with your hands. An electronics store can buy as much as the trucks
can bring them. Now here are several more reasons that you might not
get, the buying public has been trained about prices and what they
think they should be. If you make a ring just like David Yurman and
sell it for $200.00 when his sells for $1000.00 many people will look
at yours as inferior and go buy he higher priced ring. Now if you
sell if for $750.00 they will say wow what a good price. One of the
hardest areas to price is ones labor especially a newer artist, if
you give your work away cheap because you don’t think your worth the
time what will your customers say when you decide your worth the
right amount for your time. In other words you make a ring for Sally
today for $75.00 and 2 years later she loses it and wants another and
you charge her $200.00 for the same ring, she will think you are
cheating her. I just had a plumber come to my house and give an
estimate, it cost me $100.00. Notice I said estimate, no work done,
how much time do we spend with customers just talking, they need to
pay for that in the piece.

Bill Wismar
www.metalbendersgallery.com


#8

Actually, you can sell your art for whatever you want. There is no
law stating that you have to have a specific markup. However, you
should cover your costs (including your labor/design time) and make a
reasonable profit on your product. When I make something for someone,
I usually charge twice what the parts cost me. Deposit is for
whatever the components cost me, then the remainder is what I have
for labor and profit.

John


#9
I am a small artisan jeweler, selling directly to the end user (the
person who will wear my jewelry). After I calculate my wholesale
price, why do I need to mark it up 2x in order to retail it? 

Even though you are selling direct to your customer you should be
sure you can make money selling at wholesale then mark your stuff up
at least 2x. What if you are selling at a show and a gallery owner or
shop owner asks if you sell at keystone or wholesale? The quick
answer is yes; just take 50% off the retail price. You might lose a
potentially big sale as well as a profitable business relationship if
you fumble around trying to come up with a wholesale price.

Be sure to state a minimum quantity so you can weed out the mom and
pop convenience store owner trying to use their business license to
get a deal on jewelry for personal use.

Rick Copeland
Silversmith and Lapidary Artisan
rockymountainwonders.com


#10

First, I want to thank everyone who has not only written a reply,
but written AT LENGTH. I barely have time to scrape the dinner
dishes before I put them in the dishwasher, let alone spend that
kind of thoughtful time crafting areply to such a broad question.

I have come away with many valuable answers, not the least of which
is that the way I am pricing my work seems to be just fine. I am an
artisan jeweler and most of my pieces are one-off. They are labor
intensive and can’t be mass produced. I have been using Eni Oken’s
calculator (thank you, Michele, for mentioning that) for about a
year now. It’s extraordinarily helpful and very accurate, I now see.
David, I plan to check out your website immediately.

Peter, as always, thank you for your insight. Leonard, thank you for
reminding me that I am an artisan jeweler and not necessarily subject
to the pricing & merchandising schemata of the larger industries.

Best regards to everyone,
Barbara
www.gemellajewelry.com


#11

Hi Barbara,

Costume jewelry manufacturers commonly triple the prices of their
goods, then the retailers triple their costs for those goods to get
the retail price. Your $9.95 pair of earrings typically cost the
producer $1.10 to produce. An employer of mine who made Printing
presses visited a nearby medical equipment manufacturer and was told
by the owner that his devices were priced at 5 times the cost of
manufacture. I don’t think we will ever get an honest answer about
how much profit is built into the price of medicines and
pharmaceuticals but it’s definitely an obscene amount.

Raymond Brown


#12

Dear Barbara,

I may be able to shed a little light on this, or at least my two
cents. I am a jeweler who first sold my work on a wholesale basis to
galleries and boutiques for 8 years, and then for the past 6 years
have owned and operated my own gallery, selling both my designs and
those of other artists. I can tell you a couple of things: The cost
of running a retail store or gallery is astronomical, and without a
markup of at least 2x, it would not be possible to stay in business.
(Think high commercial rents, huge commercial insurance, enormous
advertising costs, utility bills at a higher rate than anyone pays at
home, employee pay and taxes, etc.) There are MANY costs that you are
probably not aware of, and there is a huge amount of administrative
work in a gallery- from inventory entry and control (a huge
time-eater), payroll, paying artists, ordering supplies, preparing
weekly print advertisements, marketing (another huge time-eater),
etc. A two times markup is really not sufficient to cover these costs
unless one has a very high volume operation…

In addition, most other businesses do mark up far more than 2x. Every
boutique that I’m familiar with marks up at least 3 times from
wholesale on clothing and accessories, and sometimes as much as 5x.
And don’t get me started on things like the medical industry, where
the markup for 2 Tylenol tablets can reach $30.00 on your hospital
bill. As for your concern that you will undercut yourself by selling
directly at wholesale prices, I have found from both the artist and
the gallery-owner perspective that it is only a miniscule number of
people who will ever find and compare your prices on a web site vs.
in a store-- it is really negligible and in my experience not worth
worrying about.

I hope this perspective is helpful. I really think you should sell
your work at the price that works best for you regardless of how your
other outlets price it. Best wishes!

Susan Russell


#13

Hi Barbara - I recently addressed the same issue myself. I am a small
(one person) shop doing mostly chain maille; I have a website, take
my own photos - I also put my things “on memo” or consignment in
several stores, and sell at art shows. Until this spring, my practise
was the same as yours - it’s called “wholesaling”, except we charge
sales tax (you do, right? Otherwise the IRS is going to want to see
the wholesale numbers for each buyer, is my understanding.) A few
posts to Ganoksin had some lovely responses telling me that I was
underpricing my things, and that would cause buyers to assume it was
cheap import stuff, or not real silver (!). For example I make a 30"
graduated sterling Byzantine chain that weighs 5 ounces - I was
selling it for $250. What those lovely Orchidians made me realize is
that, by charging labor+ materials, I lost money every time I sold at
craft fairs, no matter how much I sold. So now I have ONE retail
price for each piece - whether it’s in a shop that takes 30%, 50%, my
own website, art fair or at the hairdressers. This means I am not
competing with stores that sell my things, and that 50% of the retail
price pays my booth fee, my time to sell, my photography, my web
maintenance, my administration time, etc., while giving me
consistency in pricing and some leeway to reduce prices (at the
hairdressers, for example). The biggest surprise, for me, was that I
made the SAME amount of money - selling at double my previous price.
I sold half as many pieces, it’s true, but I wasn’t PAYING people to
wear my jewelry. Not only is it nice to make more money, it feels
more business savvy, and I’m not undercutting other jewelers. Take
the plunge on a trial basis, and see how it feels. If it doesn’t work
for you, then it doesn’t, but you can’t make a living charging by the
piece unless you’ve worked in an hourly wage for all the things you
do to support your business.

Just my .02, thanks to Orchid.

Blessings,
Susan “Sam” Kaffine


#14
Otherwise the IRS is going to want to see the wholesale numbers for
each buyer, is my understanding. 

Actually it’s the state, county, or city local taxing authority
that’s interested. IRS has nothing to do with sales tax.

A few posts to Ganoksin had some lovely responses telling me that I
was underpricing my things, and that would cause buyers to assume
it was cheap import stuff, or not real silver 

Never be afraid to charge what your work is worth. Many newbie or
part-time jewelers think they need to keep their prices low for
artisan made jewelry. You can’t beat Wal-Mart to the bottom so why
try? Then like I said in an earlier post if you get an opportunity to
sell a few pieces at wholesale and you can’t do it because you have
no place to move in your price. People buy one-of-a-kind artisan made
jewelry because they want something no one else has, so play that up
big in your sales pitch. Some customers like to support the arts.
These are the best kind. Also, tell people you are a local artisan.
In this economy people seem to want to support the local economy
rather than the big retailers selling all imported stuff. This has
been my experience in recent shows…

Rick Copeland
Silversmith and Lapidary Artisan
rockymountainwonders.com


#15
If someone can explain to me what I'm missing, I'd love to hear
it. Remember, I am a small, one-person shop, not in the business of
production jewelry. 

Well, right there is your answer. You’re not doing mass making
intended for resale thru various retailers.

So you are not a wholesaler, even if you occasionally sell to a
gallery. Your price is not a wholesale price, neither is it quite
retail. Your price is just that…your price, to your customer.

As to why key is traditional, its what works. Buy $100K a year in
merchandise, sell it for 200(assuming a good turn), overhead will
run 60-80K, that leaves 20-40 thousand dollars to live on… for the
year. Does your husband still think that’s an astronomical profit
margin?

So let's ask the question: what if I decide to wholesale to a
gallery? 

Then you have to decide what business you are in. Are you in the
’one to one’ business or are you in the 'sell fifty of these’
business? Its very hard to do both. If you decide you’d rather sell
fifty at a clip, you’d be well served to think of your wholesale
buyers best interests first. Like you said, he’d probably want some
assurances.

Remember that some things do not automatically translate well from
’onesies’ to ‘fifties’. What I do would never work in large lots,
this is my niche, it works, I’m fat, dumb and happy.

What would make you happy?


#16
The biggest surprise, for me, was that I made the SAME amount of
money - selling at double my previous price. I sold half as many
pieces, it's true, but I wasn't PAYING people to wear my jewelry.
Not only is it nice to make more money,...................." 

I’m confused. On one hand you say you make the same amount and on
the otherthat you make more. Which is it?

Jerry in Kodiak


#17

This turnover is one reason Costco can sell at attractive prices. On
average, all the stock you see stored above the sales levels will be
turned over within a week.

Mike DeBurgh


#18

So far in this thread i have not seen any one come close to what i
have imagined about retail markup. In my experience when a person is
in business of retail it does not really matter what the retail item
is, if the retailer makes an investment in a product there is a
relationship between the wholesaler and the retailer typically the
wholesaler does not want to involve themselves in the “special
circumstances " that are involved in dealing with the retail buying
public. This is where role of the retailer steps in to perform a
vital service to the society and economy, they fill the gap where the
” risk " of dealing with the public exists. Dealing with the public
is risky the wholesaler does not want to make this costly investment
they just want to make product or deal in volume sales.

The wholesaler as a form of polite etiquete and sustainability for
thier market should not cross this line and sell direct to the
public and if they do they should be concientious of their retailers
and sell the product at Manufacturers Suggested Retail Pricing or
MSRP.

This being said, keystone pricing comes into play, when you spend
your money on a product you need to sell it for a price that alows
enough money to #1 replace the product with another one #2 pay the
taxes on your capital gains #3 have enough to eat pay the rent and
hopefully live in a healthy happy manner. the bigger counter top
catalogues show prices at 3X markup in the jewelry biz - best regards

goo


#19
I'm confused. On one hand you say you make the same amount and on
the otherthat you make more. Which is it?

Sorry if I was unclear, Jerry in Kodiak. I meant, selling at
wholesale pricing, I made $1700 at a show, selling X amount of
pieces. After I doubled my prices, and was selling at retail, I
still made $1700 at a show and sold 1/2X pieces. Less work, same
money. In my statement, I do not say that I make more money, I say I
charged more (per piece) and made the same (total) amount (at the end
of the day). Again, sorry if it was unclear.

Blessings,
Susan “Sam” Kaffine


#20

Sam Makes an important point here.

Less work, same money.

Years ago when my hands started to give out, my docs told me to stop
making jewelry. Funny thing about doctors. They tell you stuff like,
you can’t make jewelry, or play the guitar any more, or you have to
take three weeks off of work.

My option was to to work retail.

I’d rather chew tin foil.

So… I gave up my trade shop job making a jillion pieces a day
and went into high end custom.

Why? I can now make fewer pieces,thus saving my hands, and charge a
lot more money.

It was a lean year and a half and then things took off.

In our case it was “Less work, MORE money.”

Have fun and make lots of jewelry.
Jo Haemer
www.timothywgreen.com