[YAK] Economics of Pricing One-of-a-kind (long Yak)

Tom: You are quite right. Defining terms is very important–it
prevents fuzzy thinking and helps us to be sure we’re talking
about the same things at the same time. So I’ve done some
careful thinking about what I meant. First off–a fair price. I
really meant fair to me–to adequately recompense me for my
work–planning, actual handwork, creativity, etc; for materials
and overhead, and so that I can contribute to my own support so
that I can go on making other things. I agree that ‘fair’ to the
consumer is pretty much in the eye of the beholder but I have
clearly noticed from looking at other items in a Gallery, that
there is a fairly narrow range of prices at which an article will
sell. It seems to depend on other market forces, such a
location, material and probably the number of shiny stones in
it–but that seems to be a reality and to price an item way above
that price is probably futile if you wish to sell it.
Determining that price range isn’t easy. Next: I decide that my
item is worth, and can sell at X amount of dollars. Now if I
don’t have a direct customer with no middleman I could sell it
at that price and be happy. Enter the Gallery and either
consignment or sale. To make the amount of money I think I should
get, the price now has to be doubled. That price seems to me to
be too high for this particular item. That’s what I meant in that
second statement.

Now, about formula: One expert I read suggests pricing items at
61/2 times materials and time. Another says double the materials
cost and add time costs; another says take time + materials and
add 50% etc etc. I wondered what has actually worked well for
others. What works for you?

The next tricky issue is how much do we pay ourselves for our
labor (actual work, planning, designing, even thinking about what
we’re doing on a piece) The responses on Orchid range from
$20.00/hour to $65.00. Does this make a difference if you are
working in Gold or fine silver, or sterling, since Gold
(especially with seems to have a higher markup price
than silver ?

I know alot of this is very individual, but it sure helps to
have an ongoing discussion and to hear how other handle this- so
I’ll be looking forward to more from you. Sandra

Sandra Buchholz
Elegant Insects

Hi Sandra,

Sorry it’s taken me so long to respond, but this takes some
thought. I apologize in advance it some of what I’m about to say
sounds a bit cold-blooded, but law school does that to a person.

It seems to me that the most logical way to go about it is to
start with price and work backward. That is, figure out what
price range your best available market will support and design
pieces accordingly.

Let’s pretend that your market will support bracelets at $100.

Your formula needs to look something like this:

$100 = [MC x 2.5] + [L x $50] + GM

where MC= Materials Cost; L = Labor in hours; GM = Gallery

When you sit down to design your next bracelet, you either fit
it into the formula or you don’t make it. Does this mean that
you have to resort to cranking out assembly line schlock? No,
it just means that you have to think like an artist who needs to
pay the rent, utilities, grocery bills, etc.

If you are working in anything other than gold or platinum, then
labor is probably a larger cost than materials. So, design a
bracelet with several variations that can be added quickly.
Make them in wax, and send them out to be cast. Cast them
yourself if you must but, while you are doing it, ask yourself
whether anyone would really pay $50 per hour to have you do
this? If you have a teenager available, teach it to run a
tumbler (a 10-12 year-old would be better, as they tend to be
more responsible).

In short, do everything you can to maximize the percentage of
your time you can spend at your bench with a torch or tool in
each hand.

Does this make a difference if you are
working in Gold or fine silver, or sterling, since Gold
(especially with seems to have a higher markup price
than silver ?

I think I’ve got this one figured out! It’s not that Gold has a
higher markup price that makes the difference, per se. The
difference is that working in gold entails much higher MATERIALS
COSTS than working in silver. So what? So, suppose you were
going to make two identical bracelets, except that one is of
silver and the other 14k gold. Each one weighs 1 troy oz.

The silver bracelet begins life as $6 or so of raw material.
The gold bracelet starts out at about $300. (I haven’t checked
spot prices lately, so humor me.)

If each bracelet takes 4 hours to complete, you wind up with

Silver: [2.5 x $6] + [4 x $50] = $215
Gold: [2.5 x $300] + [4 x $50] = $950

Labor makes up 90+ percent of the price of the silver braclet,
but less than 25% of the price of the gold bracelet. (I’m
ignoring the whole gallery issue.) Prediction: the silver
bracelet won’t sell, but the gold bracelet probably will. Why?
Because $950 just FEELS right for a beautiful bracelet,
hand-made from gold. On the other hand, $215 just FEELS like
too much money for a silver bracelet, no matter HOW beautiful
and hand-made it is.

Consumers naturally understand that gold costs much more than
silver, but they have no idea (generally) how expensive and
time-consuming it is to run a business.

The moral of this story? Even if you can’t afford to work in
gold, you can’t afford not to work in gold, if you really must
do one-of-a-kind pieces.

I’ll stop here for now, I’m even depressing myself!

Tom LaRussa
Tom’s Gems – rough and cut gemstones

But all of this depends on two thing …and only two… your open
ion of your work and YOUR MARKET. … and if your market place
…whatever it may be doesn’t appreciate your work as u do then
it becomes very simple! One of TWO decisions… Find a new
market that appreciates your work … or sell at that market price

Your dealer, as most, see art as shucking corn(for lack of a
better term having to do with spades and manure) and u deserve
nothing for creativity, skill… only materials and labor… the
rest is your and only your decisio0n…