Considering Selling Your Artisan Jewelry Online?
Pricing tips by Ruby Lane
There are many reasons people are moved to create handcrafted jewelry. To create jewelry and a profit at the same time is an art in itself, and many artisans fail to master this one. While successful shops must have certain business skills, we have never met anyone who began creating jewelry so they could sit and fine-tune profit margins and rates of return on materials.
Many commercial jewelry shops have followed other industries in recent years and turned their repair benches into profit centers. In these situations, high shop overhead costs, including equipment costs, must be recovered, along with the costs of employee salaries and benefits. The costs of all materials must be recovered. Only when revenues exceed these costs does the bench produce any profits.
Your situation as an artisan jeweler and craftsperson may vary from this. You may be a bona-fide business with a studio or shop dedicated to jewelry production. You may have the same business situation, but operate out of a home location. Or you may work out of your home on a more informal basis. You should consult with an accountant, attorney, or tax or business professional to see that your method of operation is most beneficial to yourself financially. Many areas of the country have Arts Councils or business incubator projects which may provide helpful information.
Your marketing and branding effort will have a bearing on your pricing. Several of the most highly regarded jewelry stores in the world make their own items and also sell items made for them by others. Some of these pieces are identical to those available elsewhere, yet they may bring a premium price when sold by the better known and highly regarded store. The magic of the name and image add a perceived value to the piece. Similar price difference can be seen in the vintage costume jewelry market. You may see two similar pieces of jewelry, both composed of plated metal with simulated stones. One may merit $20 in the market-place, the other hundreds of dollars. The higher priced one may exhibit better workmanship or more original design, and perhaps is a rarer and hard to find piece, but the difference may also be due to the "magic" of the name.
The level of skills and originality of design will also have a major bearing on your work. If you have strung some rather conventional amethyst beads on a coated cord, crimped the ends securely, and attached a standard clasp, you deserve a return and profit on your labor and materials. If you do the same task but use some rarer gemstone beads, something that not everyone else is using, you deserve a bit of a premium for the added unique nature of the materials. If you use these same beads to create a stunning and unique design, seen nowhere else, you deserve a higher premium.
As complexity and skill levels increase, your wage should also increase, as in any job market. If your work includes investments in equipment, you will want to recover your costs over the lifetime of the equipment, as well as a return on that investment. If you invested the money you spent on a kiln in the financial markets, you would want a return on it, and you should expect a return on the money if invested in a kiln.
If you are working with precious metals, remember the cost of your materials fluctuates. Always look to the replacement costs of these materials when pricing an item. Those gold beads you bought when gold was $350 an ounce will cost more when you replace them in a market where gold is $900 an ounce. Use the new higher replacement cost when pricing the item. When the price of precious metals declines, you may find that you have to take a reduction on some items, where component value is the primary pricing criterion. Unique design work helps lift your piece above the level of this "commodity pricing".
Similar situations happen with gemstone materials. Pay attention to market fluctuations.
Prices and availability may vary widely, and different suppliers may charge vastly different prices for similar material. Your preferred supplier for turquoise may also be the supplier of last resort for pearls. You may find cost benefits by sourcing items from many different suppliers, but you may also find cost benefits from finding several suppliers that can take care of all your supply and material needs, and consolidating shipments.
Many times a jeweler has ordered that one piece to finish a job and found that the shipping costs exceeded the cost of the component. You may find it beneficial to keep an adequate inventory of your most needed components and materials on hand, and may benefit from quantity discounts. Remember that these components, sitting there waiting for use, cost you money. This is money that could be in a finished piece of jewelry, earning you a profit, but it is sitting there in a parts container. We would never recommend passing on a quantity discount. Price the item as though the components were bought individually, as this will help to compensate for the money tied up in the parts inventory.
Sometimes you will be offered great deals on large lots of stones or on slightly irregular stones. Remember the cost of holding this extra inventory until sold, and realize that irregular stones may merit lower prices in the market place, or consume more of your bench labor to be used at all.
At least one guru of jewelry repair recommends these guidelines for pricing:
- Multiply the cost of components by a factor of 3 when pricing.
- Multiply labor costs by a factor of 3-4.
These figures are recommended for bricks and mortar jewelry shops, which probably have higher overhead costs than your individual operation does, especially in the area of employee expenses. Repair work may also incur unforeseen labor costs which cannot always be recovered.
Ask yourself these questions when developing a pricing policy:
How much do I want to receive for my labor? Minimum wage? A living wage? A premium wage commensurate with my skill level? In my own days at the bench, my hourly fee often increased after being billed for services by another skilled worker, such as a plumber or carpenter. It helped remind me that I deserved the wage of a skilled worker.
- Do I have an accurate picture of the costs of all materials and equipment?
- Am I receiving a fair rate of return on my materials?
- Am I making enough profit to maintain and replace my shop equipment?
As you develop an identity as a craftsperson, you will see what sells best for you, and may wish to focus on that market. Perhaps it is jewelry wardrobe basics at a moderate price. If so, always be sure to feature a few fancier creations, offering your clients an option of a little pricier piece. If you specialize in higher end pieces, be sure to have a few moderately priced items, to offer entry level pieces to customers that like your work, but cannot afford your other selections currently.
Ruby Lane is home to over 2,000 individually-owned shops from around the world offering antiques & art, vintage collectibles and jewelry. Visit www.rubylane.com