Pricing jewelry can be a very difficult chore for any artisan jeweler. Striking that perfect balance between obtaining the profit you need to survive as a business, and providing your artisan jewelry at a price that is fair to your target audience, can be seemingly impossible. How in the world do you offer a competitive price, without underselling yourself, and still make profit? I use an interesting method to price my jewelry that I doubt I am the creator of, but that isn't widely publicized as a legitimate way to price jewelry.
By Volume Not by Item
More often than not, when you search for tips on pricing your jewelry, you are returned a batch of articles detailing long formulas that result in astronomical prices, or simple multiplication that takes into account nothing but materials. Also, more often than not, these articles will ensure you that this is the only possible way to price while making a decent living.
I disagreed with this, and so I set off to find a way of pricing my jewelry that didn't require an hour of materials pricing and didn't result in huge prices I felt uncomfortable charging. What I found was that you can find the average price you need to sell your jewelry at, and use that is a base for pricing.
Here's how I do it.
Step 1: Find Your Desired Annual Income
How much money do you want/need to make in a year? You need to cover your costs and cover your living expenses and spending money, as well. Let's say that you spend $5,000 a year on supplies. Then let's assume you spend an additional $3,000 a year on show booth fees, website fees, packaging materials, and the like. That would result in an $8,000 per year estimated expenditure for materials and fees alone. Round it up to about $10,000 so that you can cover for lower sales or higher spending (as is typical when stocking up on holiday or wedding materials). Write down your Desired Annual Income. Be generous.
Step 2: Find Your Average Annual Production
You know what you want to make a year now. Let's say, for example's sake, you came up with $80,000 a year. This amount covers your supplies, but you need to account for your time, too. If you make 100 items a day, you'll have a much lower price per item than if you make 10. For our example, let's say you work 8 hour days (although we artisans know it's more), and you make 8 pieces per day. Round it down to 5. By being very conservative on your production and very generous on your financial needs, you create a large cushion to cover any glitches in the economy or your selling year in general.
You probably go to shows on some days, list online during other days, and maybe give yourself a day off, so for example's sake, let's assume a 5 day work week. That means in one week you make 25 items, and in a year you make 1,300.
Find out your production, and write it down as your Average Annual Production.
Step 3: Find Your Average Product Price
Now that you have your Desired Annual Income, and your Average Annual Production, you can use them to find out your Average Product Price, the price you need to charge on average to make your Desired Annual Income a reality and cover for any unexpected market changes.
For our example, $80,000 divided by 1,300 items a year equals $61.53 per item.
How is This a Low Price?
This example is assuming very high rates of material purchases, and very low rates of production. As an artisan, I know that an eight hour day is a fantasy. We often put in 11 hour days and produce 6 days a week using our extra day for a show, and we all know that, so your average will be different from this one. I was using easy numbers the sake of an example. However, even if this were your true number, guaranteed it is a lower price than a lot of formulas out there would have you charge. However, it still covers for your time and materials needs, as well as your living expenses.
Final Notes
Clearly, you don't want to price every single piece in your inventory the same way, so here are some final notes for you to consider when pricing your items using some or all of this method:
Don't be Static: Don't charge the same for every item. If you feel that some items should be priced higher and some should be priced lower, as you most likely will, you are more than welcomed to do that. However, you may find you don't need as big of a difference between prices as you originally thought, and that is where this way of pricing comes in handy.
Average Before You Average: By this, I simply mean to make sure that you take into account the large and small production periods of the year, which will correspond with the large and small spending months of the year. For example, during the winter holidays we typically sell much more, and thus make much more. The same goes for craft shows: typically in the month or two leading up to a big show, we make many more items than we ever would for a typical work week. Take a craft show preparation week, a holiday production week, and a slow week, average them for materials and production. This should give you a good number to use for your math.
Percentage Points: Make sure that you leave room for discounts. If you want to discount your items for shows, make sure you build that into your pricing. If your average price came out to $10 an item (it probably didn't, but let's just use an easy figure), and you know that at shows or online you give out discounts of up to 20%, I would price that item regularly at around $15 or $16 to make up for that.
I hope this has been helpful! Keep creating beautiful things!
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