Sunday, July 6, 2008

Pricing your creations, wholesale and retail

So I've been doing a lot of research on pricing my jewelry and I have decided it will take a couple years of being in business full time to really figure it out.
Right now I know this is the equation for a wholesale price:

3 x materials + labor = wholesale price

wholesale price x 2 = retail price (normally this seems right, can change)

So your materials are what you use to make that exact piece of jewelry, wire, solder, and stones.
Labor is what you want to be paid an hour. Now this is where it gets hard. Say your work 50 weeks out of the year, 40 hours a week (ha ha, I'm sure we all work more than that!), that's 2,000 hours a year.
But that 2,000 hours is not just spent on making jewelry. You have a lot of selling costs, show fees, traveling, meals, advertising, professional photography, brochures, business cards, mailings, worth of your time while selling, website and/or blog, and so on.
So you have to take into account the extra time you will be working but not necessarily making jewelry.
So say you want to be paid $30 an hour, you might need to up that to $45 in your equation to cover the extra time spent on all other aspects of business.
You also need to add in studio costs somewhere: rent, office supplies, phones, utilities, insurance, losses, professional fees, publications, memberships, cleaning, new product design time, shipping, oh yes and tools!
I've read that it is good to add up all the studio costs and divide that by the 2,000 hours and add it into your wholesale equation. The problem is right now I'd have to estimate those things. I don't actually own/rent a studio.
So all in all pricing is something that must be worked on over time and studied. Reading up on economics can't hurt! I feel like I'm chasing my tail thinking about all this!

1 comment:

Whitney J. Marsden said...

Good post Valerie... very valid and thought provoking. Pricing is so hard. By the way, your profile pic is great!