There’s more to selling your jewelry than just using quality jewelry supplies. As we head into the busy holiday season, lots of jewelers have questions about how to price their work. The Halstead Grant is a powerful tool for examining your business. In it are several questions about pricing strategy, how you will pay yourself and build your business. This salary pricing study will help you outline your costs and create a pricing plan that works for you.
Plan Your Business
When you are starting a jewelry business, it is more than a full-time job. Even though you may be self-employed, you still should plan for a living wage for your labor including both jewelry production time and administrative time. Industry magazines and books cover this topic with great frequency because it is such a common problem in the world of jewelry and American crafts. Many designers do not calculate a sufficient salary into their pricing scheme and end up barely covering their costs. Other overhead costs are often ignored.
There is no one hourly wage or annual salary that fits every operation. As an entrepreneur, it is easiest to start with the standard of living you are accustomed to and work backwards through the numbers to determine your price per item. Consider salary along with your pricing in order to match your revenue needs with a cost analysis. We developed the following simplified worksheet to help you analyze your finances and price your jewelry accordingly.
How it Works
Fundamentally, your costs are divided into overhead and variable costs. Overhead costs are fixed and do not vary based on the number of items you produce. Nonetheless, they are still business expenses that must be covered by your sales. Variable costs are the labor and materials that go into each piece of jewelry. These costs depend on your production volume and the specific designs being made. Both figures should be calculated into your pricing scheme.
You will probably have to make some assumptions if you don’t know all of the numbers required, or if you are projecting rapid growth. Play with various figures to get an idea of how they affect the pricing formula. We recommend counting your administrative salary separately from your hourly production wage, even if you perform both duties. If you are creating a jewelry line you will eventually need to hire employees. This labor will be a separate expense. It is better to plan for that ahead of time and make sure your pricing covers staffing. Likewise if you are currently working out of a home office but will need to expand into a studio space soon. Think ahead when planning your costs.
For the chart above, divide the Step 1 total by the number of jewelry items you sell monthly. Add the Step 2 total and the Step 3 total to get the base price you should charge for a piece of your jewelry. This worksheet yields your minimum price to break even and cover your expenses. It leaves you no working capital to invest in the creation of new product lines or business development activities. It does not cover losses from dead inventory that never sells or sits on the shelf for many months before converting into revenue. Furthermore, it does not yield a net profit after paying your bills. It should be your bare minimum price.
Check out the Perceived Value Podcast interview with Hilary Halstead Scott on earning a living in jewelry and how to start a new business in the field.