The tag on your jewelry items should always include your logo or company name, as well as contact information (website URL, email address, phone number, etc.).
Steps
Step 1. Always keep up to date a recipe book where you will accurately record all the costs incurred to create each item
Basically you have to attribute a cost to all the elements that become part of your articles. For example, if you pay $ 1.50 a dozen silver clasps and use 2 of these clasps for your item, divide $ 1.50 by 12 to get the unit cost of each clasp (12.5 cents). This will make it much easier for you to calculate the exact cost of each of your items. The more meticulous you are in calculating expenses, the better the basis for determining the final price of each item. You must also take into account the materials for wrapping and packaging, as well as the costs of shipping the materials. Keep the invoices, which is also necessary for keeping the accounts for the purpose of a correct deduction of expenses.
Step 2. Record the time spent on each article
How long does it take you to design and manufacture your jewelry items? Right after quality, speed of execution is a key factor determining profitability. If you take 30 minutes to reproduce a certain article, you will put a different markup on it than an article that takes 4-5 hours of work. Mark the time taken in the recipe book.
Step 3. Determine the selling price
Start with a formula, and then correct the final price by following the tips below. The formula to use, however, varies depending on whether you sell at retail (i.e. to end customers) or wholesale (for example to retailers who will have to resell your products in turn).
- Detail. Take the total cost of materials and multiply it by 2, 5 (some multiply by 3) and you get the base retail price. A spreadsheet is perfect for this type of calculation. Prepare a table with the raw materials used, the cost of your time, and set up a formula to calculate the price using the multiplication coefficient 2, 5 or other. If you do business in a shop or workshop, remember that there are additional costs to consider. Rentals, employee salaries, energy and heating, window dressing, fixtures, and taxes are all costs to take into account in your pricing strategy. You may come to discover that, in the context in which you operate, you must apply a coefficient not of 2, 5 but of 3 or even 5 to the total cost of materials.
- Wholesale. Multiply by 1, 5 (some multiply by 2). You can apply a lower mark-up to wholesale sales because you will be able to spend less time on the sales activity and more time on the actual production activity (advertising, order management, management of a website for online sales, shop management etc.). It is advisable to check if the market in which you operate is able to absorb higher prices (such as a multiplication factor 2 or 2, 5) than the one you have reached, following the suggestions set out below. Many jewelry manufacturers find that wholesaling allows them a good margin for profitability and growth. When you use the factor 1, 5 you are basically leaving the retailer a margin for the sale and also to possibly apply discounts on your items, in the event that certain models remain in stock for too long. These markups may seem high, but remember that you need to consider the time and effort you spend creating and producing your items, as well as the expense of the shopkeeper or retailer.
Step 4. Include the cost of your time spent on the activity
The difference between a hobby and a productive activity is that you have to have a financial return, so determine how much you want to be paid per hour and remember to include the cost of your work in the calculation of the price. For example, let's say the cost of raw materials for a certain model is $ 10.00, and you calculate a retail price $ 25.00 (using the multiplication factor 2.5). If you want to be paid € 10.00 per hour and have spent 2 hours to produce this item, then the basis for calculating the retail price will no longer be € 10.00 but € 30.00 (€ 10.00 of materials and € 20.00 of work). In addition, you may need to consider other additional costs, such as the cost of the shop or the time spent on marketing activities (for example for the purpose of creating a brochure).
- When deciding your hourly wages, consider your experience. How long have you been designing and producing jewelry? If you have a background, great experience, and a collection of great quality articles, you may want to value your time more. You may have particular advantages, such as a network of contacts and a refined catalog, which allow you to increase top-ups.
- Let's reiterate the concept: the fact that you get satisfaction from your job doesn't mean that you don't have to get paid. Make sure you are receiving at least the equivalent of a worker's minimum wage.
Step 5. Do some market research
Now, when you have established the desired selling price for your creations, it is time to test the market to verify that your production activity is profitable. Generally, it is best to start with the highest price that you think is acceptable on the market at the beginning, because you can always reduce it later.
- Have you received any offers to buy for any of your jewelry designs? It is a sign that there are good marketing prospects for your production. Friends and colleagues are very useful for checking the right price levels. Ask them what they think the value of your creations is, and how much they would be willing to pay for them.
- Examine your successes. Have you already sold your own jewelery in the past? This aspect is important, also because it gives you concrete information about the price at which you can sell your production. Friends and colleagues may tell you they would be willing to pay X for a certain item, but an actual sale is real, hard proof.
- Has your production been evaluated by a professional? The opinion of another craftsman can be helpful in determining the quality level of your work, and a reasonable selling price.
Step 6. Review your project
If you have received indications in the previous steps that the calculated sales price will not offer good prospects, you need to rework the project.
- If you find that a certain line of models is not arousing interest, think about how to change the style.
- Evaluate your choice of materials. Do you use very fine metals and semi-precious stones for your works, or less expensive materials? High quality materials can usually be sold at higher prices. You may be thinking of making both high-end items and cheaper designs. This approach could allow you to do business with rich and refined customers but also with buyers who pay more attention to the purchase price.
- Don't sell out just to try to enter the market (for example, don't sell to end customers at wholesaler prices). This would just get your customers used to prices that are too low, and later it will be difficult for you to raise them, jeopardizing the possibility of making your business profitable.
- It is best to redesign or completely discard items that do not cover their cost as described above. People are wary of products that are sold too cheaply; in general we have all learned the hard way that price is often an indicator of quality. Low prices are frequently linked with cheap materials and low-level labor. If you are having a hard time selling your produce, try raising the prices. It seems counterintuitive, but the result may surprise you. After all, jewelry is a luxury item, not a basic necessity.
Advice
- Your item tags should have your logo or company branding, as well as all contact information (website URL, email address, phone number). You can write your contact information on the back of the tag so as not to weigh down the appearance. The inclusion of these elements helps instill in customers the perception that yours is a well established and solid laboratory.
- It also implies taking responsibility for your products, the fact that you can be contacted in case the customer has any problems with your item. Last but not least, buyers often keep the tags of the jewelry purchased, leave them in the box.
- And maybe, since they have the necessary contacts, customers will be able to shop on your website when they want more jewelry or they will call you to have special items made for commission.
