How do you price???

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on Aug 19, 2008 9:12 AM

Jim,

First, a couple of additions:  The mileage rate for car use for charity work is over $0.50 per mile in the US; business rates are greater -- check with the tax instruction book.  Property taxes, rent, etc., are also part of your overhead.

Next, I bead for fun; I am NOT beading for money, so I give a lot away, and for others I charge enough to cover replacement costs for my supplies -- if I were selling, I'd need to be faster, and use a much higher hourly rate than most would suppose.   [Anecdotal evidence -- I gave my sister-in-law a netted necklace, s/l emerald green.  A lady who saw it wanted to know if I sold at the local 'Ren Fest '-- the over-head there would have dictated a price in excess of $120.00, possibly over $180.00: I valued it at $60.00 to $80.00].  {It also helped that it was a perfect color for my S-I-L's red hair.}   And, I sold a pair of square stitch earrings for $15.00 (parts plus a tad for the pocket), that the buyer would have paid $25.00 - $30.00 for.  It most definitely requires having the right product AND the right market.

I just cannot justify $20.00 any hour for most of my product, but it is fun to make, and I do have some idea of the value of what I make. 

Uniqueness is first, market is second, and I would add quality of components appropriate to the market (e.g. 38% lead crystal for high end products, not 14% lead crystal)-- the difference is obvious!

This is too long.

Stan B.

Stan B.

Lakeland, MN

USA

Ignorance is curable; Stupidity has neither cure nor excuse.

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Sheila H wrote
on Aug 19, 2008 9:36 AM

Jim - I think that you make some valid points. I think that the way to be successful is to find your own niche. That maybe something simple, it may be the PR aspect. Everyone is different. 

As the old saying goes " You can sell a pencil for $1 million dollars, but you have to find the buyer " or something along those lines. For me ( I do simple stringing ), I have been selling a lot of little small simple bracelets for $5-$10 ( for which most of these I had less than $2 in supplies and about 15 mins of time doing the work ) but most of those have then requested either earrings to match or bought another bracelet. 

This is allowing me to get my name out there. I have some pieces in a hair salon in the little town I live ( Population 1800 ) and we are a rural farming community. Almost everyone that goes in there is in there every couple of weeks. I have found that I have to switch my pieces out every week so they will continue to look. The first couple of times I went every two weeks and people noticed that it was "the same stuff". So I started going every week. Even in my area most people can afford $5-$10 but for some that it about it. Anything more is an extravagance that they cannot afford when they are 30 miles from grocery store, gas station, etc at $3.70 or more a gallon of gas. 

I have pieces ranging from $3 ( cell phone charms ) to $25 ( necklaces ). I am looking at it in this regard ( I have been doing this one year ) that someone is not going to buy a $50 necklace the first time. I myself would not. I would buy something cheaper to see how it lasts, the workmanship, etc. Then after wearing it, loving it and not having issues, I would not hesitate to buy a more expensive piece from that person.

I have one lady ( who is home bound during hot humid weather due to lung disease ). She bought one necklace for $25. Since then, she has bought and or commissioned about  $400 worth of jewelry. Necklaces, earrings, bracelets. You name it. Now she is showing me pieces in catalogues to see if I can make her something similar. It would have cost her $150 out of the catalogue. I have $15-20 into it, I sold it to her for $45. She loved it and ordered more. I still have 2 commissioned necklaces with earrings to match to do as well as a earring/necklace/bracelet set that I am making bigger for her as she cannot wear it and needs all the pieces larger. Her exact words to me last weekend " I love your work and I don't care what it costs me." Her brother bought her the set of jewelry and then passed away shortly after. She wants to be able to wear it but had not found anyone to do the work that she trusted. Along came me. She is my business at this time as she keeps me busy and I try to keep her happy. 

If the first piece would have been $50 I don't believe that she would have ever bought it. She also likes that I will come to her house, make sure the fit is the way she likes it, etc etc. I know that she likes lever back earrings and magnetic clasps due to her arthritis. She can now say that she want her necklace in red and gold with her usual. I know that is 38 inches long with magnetic clasp. There is where the PR and customer satisfaction comes in. 

Do I think that every piece should be $5 - Oh NO! Do I think that every piece should be $100 - On No! I think that you have to find that happy medium. I think that having simple pieces priced at $10 that you can make a profit off of is fine. But I also think that people that put 6-8 hours into weaving a piece should have it priced at more than $10. But I also know that if every piece on the table is $50 or $100, then I will walk on by. I think that you have to have a few pieces that anybody can afford. That for me is my draw. 

I would like to think that someday I could retire from my jewelry business, but in actuality I probably won't, not in my area. Is it something that I can do and enjoy and make a little money on the side? Absolutely! and I intend to. I also think that pricing is determined by your end goal - retiring or enjoying. 

I think you are right in that you have to make something unique but we have seen postings on other threads about how unique our ideas can or cannot be. 

I guess my main point it that I think that you have to have a few pieces that are lower priced to hook the customer in - then you can increase your prices on the commissioned pieces or more elaborate pieces. 

I think that your location also plays a big factor in figuring your prices. The same piece of jewelry that I sell for $10 could probably sell for $25 in a large market like Indianapolis. But for me to try that would be ridiculous - at least until my name it out there more and people trust my name and workmanship. My name only means so much to start out. I have to stand behind that name to really get it to mean something.  

I do appreciate and respect your thoughts/ideas on this as that is how we all learn. Sorry for such a long posting.

Respectfully...

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Jim Juris wrote
on Aug 19, 2008 11:31 AM

 Hi Stan,

I know that I didn't mention all of the overhead that there is for a jewelry business.  I just pointed out the obvious ones. 

It is important not to under estimate the amount of overhead a jewelry artist charges in their pricing formula.

I am like you.  When I make jewelry it takes me quite a while to make something so I would not charge someone for 5 hours of labor when the average jewelry artist can make the same item in one hour.  I would have to base my pricing formula on a reasonable amount of time that someone with experience could make the same item that I make.  I want my work to last, not fall apart in a couple of weeks or months.  Quality workmanship is very important to me.

I am not suggesting that you charge $20 per hour for labor.  If I was very good at making jewelry, that would be a different story and then I could possibly justify charging $20 per hour of work.  Chance are that if I did excellent work and I was fast at making a necklace I could probably make a necklace in about one to one and a half hours.

I think that most people would be able to justify charging around $10 to $12 per hour for their labor.

Remember that it is easier to lower your prices than to raise them.

Thank you for responding to my post.

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Jim Juris wrote
on Aug 19, 2008 12:23 PM

 Hi Sheila,

I can see you selling a simple bracelet for $10 when you only have $2 for material costs and you can make the bracelet in 10 to 15 minutes.  I can't see you selling that item for just $5 because you are underpricing your work.

$2 X 3 times your material costs = $6, plus $1 for overhead, plus $3 for fifteen minutes of labor (which works out to $12 per hour) = $10 selling price.  That is a fair price in my own opinion.  If your overhead is more, than you would have to increase your selling price.

I don't see anything wrong with selling these bracelets for $10 because they are priced correctly and you are making what people want to buy, not what you want them to buy.

Making repeat sales is also very good because making the first sale is the hardest sale to make.  Hopefully they will be your customers for life.

When you apply the same formula that I used above to your $45 necklace I think that you can see that you are way under pricing your necklace.  Using the same formula for the necklace; material costs $17 X 3 = $51, plus $5 overhead, plus $12 for one hour of labor = $68 selling price.

I am not trying to tell you how to run your business, but I want to point out that I feel that you are cheating yourself.   In fact, I would continue to sell the way that you are for this one lady, since she is a good customer of yours, but I recommend that you increase your prices for everyone else.

You need to make enough money from your jewelry sales so that you can put money from your profit back into your business.  You need to constantly market your business so that you can continue to stay in business.

You don't have to market only to the area where you live.  You have the whole country that you can market to.  Don't limit yourself to just one little town.

One way that you can market your jewelry is by blogging.  Blogging is a easy and great way to get the word out about your business.  Blogging is free.  Write something on your blog every couple of days related to jewelry.  Build up a following.

Another thing that you can do to get the word out about your business is send out a press release.  Press releases are not free. 

I wrote about the fastest way to success on another forum and I said that if I was starting a jewelry business I would use postcards to market my business.  Everyone reads postcards. 

You could purchase a list of names for your target market and mail out postcards to people all over the country.  It would help if you had a website when you do this.

Having a web site, purchasing names for your target market and using direct mail costs money and that is why you have to raise your prices.

I would target my market like this.  Woman, ages 30 to 60, income of $50,000 or more per year.  You may also want woman that are homeowners.

You could purchase names for your target market by a state or several states, or by certain zip codes.

Sending out direct mail takes time but it works.  I used direct mail many years ago when I was selling insurance products in order to obtain new clients.

I hope that I have given you some ideas and that you put them to use. 

Good luck with your jewelry business.

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Sheila H wrote
on Aug 19, 2008 5:42 PM

 Jim - I think we will have to agree to disagree. Again, I am in this to enjoy it.

I guess from my stand point, I don't do things that I don't want to receive. Such as the postcards and mass mailing. When I get those at home, straight to the trash. In my previous jobs we tracked customer referrals, from all that I say from my experience, those type of mailing don't work. To me this is an added expense that I don't need. I would prefer to put that money towards more beads, supplies, and craft show booth rentals.

I think this comes down to simply a matter of what each person wants out of their own business. I do this because I enjoy it. I enjoy seeing the sheer happiness on someone's face when they get their piece of jewelry. I love the fact that every time I see them they comment on how much they love it and the compliments that they get.

For me, this is about a creative outlet and the enjoyment. It is not the bottom dollar. For people that this is their sole income, by all means they need to be more competitive in a lot of ways. But for me and my business, that is not how I will do it. If they like it, they can buy it. If they love it, please buy more. If not, maybe next time.

Again, respectfully, I think that we have to agree to disagree. Just two different points of view.

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Jim Juris wrote
on Aug 19, 2008 7:30 PM

 Hi Sheila,

I am not trying to tell you how to run your jewelry business.  I am just offering you my advice.  If you don't choose to take my advice that is fine with me.

God luck with your business.

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DebWAZ wrote
on Aug 30, 2008 6:58 PM

Shiela and Jim,

You both have good points about pricing. Some of it is knowing your market, but also knowing what you want or expect out for your work. Selling for "pin money" is very different than trying to make a living.

One of the challenges of owning an LBS is customers who come in and ask, "What should I charge for this?" We use the formula of 3x your materials + "something for your time". I have a friend who sold a beautiful square stitched panel necklace for $120 because she didn't have enough confidence to price it well. She had over $80 in materials and at least 50 hours in her time. By the time we priced it out and figured by the hour, it came to about 23 cents an hour! It should have been more like $250 - $350, depending on where she was selling it. She's learned her lesson - somewhat, but she's still hesitant to put what she thinks is a "hefty" price tag on it, but she's learning!

For most instances, 3x materials + "something for your time" (though nowhere near $10-$12/hour) is a comfortable amount for most people. As has been said, you can always lower your price, but it's dang hard to raise it!

My 2 cents, as always.

Deb - AZ Bead Depot

Deb

azbeaddepot.blogspot.com

 

 

 

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Sheila H wrote
on Aug 31, 2008 6:51 AM

 Very true Deb! I do think it is all in your perspective. I also think that is the hardest part of this business.

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popnicute wrote
on Sep 6, 2008 10:05 PM

hey, i'm pretty sure i have posted a long reply here about pricing.. didn't it get through or am i looking at the wrong thread? D:

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MaureenR@12 wrote
on Sep 7, 2008 6:20 PM

 Several years ago I bought Eni Oken's Price Calculator for $5.00.  It is an Excel spreadsheet with formulas built in.  You plug in the cost of your beads and how long it took you to create.  What I like about it is that it gives you several different price ranges for both wholesale and retail. 

We rarely use the optimum price since it seems too high for our customer base, but this helps us make decisions about the price. 

http://www.enioken.com/jewelry/pricecalc.html

This is the link.

 

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popnicute wrote
on Sep 8, 2008 12:34 AM

I read this formula on another forum: I think he said he read it in Art Jewelry mag.

Cost of Goods Sold (COGS) = Material + Labor

Wholesale Price (WP)           = 2 x COGS

Retail Price (RP)                    = 2 x WP (or 4 x COGS)

 

So for example if your Material cost $5 and your doing it for 7 hours. your hourly wage is $10.

COGS = $5 + (7 x $10) = $5 + $70 = $75

WP      = 2 x $75 = $150

RP       = 2 x $150 = $300

 

Retail Price is the price for your customers. If you follow this formula, you sure will get your capital back fast enough.. if your jewelries are sold, of course :P

wrote
on Sep 8, 2008 12:57 AM

Hey Maureen, thanks for that link.  I keep meaning to make my own spreadsheet, but for $5, what the heck.  At least it's something to play around with and not as expensive as other programs.

 

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on Oct 3, 2008 7:19 AM

Jim,  I love your point that when your underprice your work you hurt yourself and all jewelry artists.  I specialize in original peyote stitch designs.  It always bothers me when I see people on the internet and at other places selling their peyote work at church bazaar or sweatshop prices.  Someone who sells a peyote stitch bracelet for under $25 does not value themselves, their artistry, or any other artist.  I am quite fast at this form of beadweaving, but I know no one who can finish a peyote stitch bracelet so quickly that $25 is a fair price.  I know many people will do almost anything to make a sale (undercut prices, copy designs, etc.) but I hope that most of us will sit down, take stock of ourselves, and have the integrity to price things in a manner that will not hurt our artistic community.

 

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Jim Juris wrote
on Oct 4, 2008 1:02 AM

 Hi Kathleen,

Thank you. 

I have some new things for people that sell jewelry or any type of craft items to think about.

Imagine if I was selling my widgets for $X and that I was not charging as much as I could for them.  Lets say that I sell 10 widgets for $X each and every month without fail.  Also assume that I never sell any more or any less than 10 widgets each and every month. 

Now imagine I come up with this brilliant idea that I will charge $X + an additional $10 for my widgets.

Forgetting about the $X that I make on my widgets and just taking the $10 per month increase in my selling price of widgets, times 10 widgets that I sell each month comes out to $100 per month, $1,200 per year, $12,000 in ten years, $24,000 in twenty years.

If I took that money and put it towards my retirement and invested it in a mutual that made only a 6% return each and every year forever, never increasing or decreasing from %6, that would make the money that I put in each year ($1,200) double every 12 years, using the rule of 72.

If I found a mutual fund that made a 8% return each and every year forever, that would mean that the $1,200 would double in just 9 years.

Since I am trying to be very conservative with this analysis, lets say that I stopped selling my widgets after 10 years and that I now had a total of $13,000, a $1,000 increase on my investement over the ten years, from my $10 increase in the selling price for my widgets.

I could take a nice vacation, put the money towards buying a car, if I had young childred I could pay part of a childs education, pay off credit card bills, or increase my monthly retirement income.

What I am trying to show is that you lose a lot more than you think by charging low prices because you could put the money that you make from increased prices for widgets to work for you.

Before anyone wants to tell me that there is no such thing as a guaranteed return on a mutual fund, I know that.  I sold mutual funds many years ago.

You also can not do over what has happened in the past.

 

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murphyhors wrote
on Oct 9, 2008 8:03 AM

Wow!  You guys have quite a dialogue going here!  I am a hobbiest in the beading world and have never really explored the business aspect thoroughly.  It's causing me brain damage to think that hard ...  Certainly, for those who are truely artists in beading, it seems apparant to me why the prices can be high.  If you are a hobbiest like myself, I'm glad to make enough to keep my addiction going.  I have sold peices for $200, and I don't think I'm at an 'Artist' stage yet.  People who really appreciate the one-of-a-kind jewelry produced, understand the value.  Those who don't appreciate it; never will appreciate anything truely artistic.  I run into some of that with my husband's photography as well.  The truth is, we want customers who can appreciate the 'Art'. 

I have appreciated reading this dialogue though and find it VERY enlightening!

K.C.

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