Deciding on a price to charge for your work is a dilemma that every jeweller has to face. We all want to be able to make a decent living designing and fabricating jewellery but at the same time there is a worry, especially in the current economic climate, that too high a price will have a negative effect on sales.

So how do you decide what to charge?


The first step is to decide the base cost of your jewellery. This calculation should include materials and packaging for that piece, plus a proportion of the following:

- cost of postage to receive your raw materials
- hallmarking costs
- utility bills (electric, gas, phone, internet, rental/lease)
- printing costs for marketing materials: business cards, leaflets, posters, catalogues
- photography costs (either professional fees or camera, software, lights, lightbox)
- workshop storage/shelving/furniture
- stationery
- trade subscriptions
- tools
- equipment
- display props and materials for photography and sales
- stall costs (if exhibiting)
- shop fittings
- staff costs
- merchant fees for credit/debit cards
- website development and hosting
- computer, specialist software, printer, paper and inks
- cost of any stock that is given away for promotional purposes

You may also want to factor in the cost of any possible shrinkage (damage or 'wear and tear' to stock, fittings, display materials, tools etc., imperfect raw materials, theft, complimentary repairs and adjustments)

It should also include a charge for your time. This would encompass the time that it took you to make, wrap, package and post/deliver the piece, as well as a proportion of the time that you took:

- designing and developing the jewellery
- ordering materials
- researching and writing your blog
- taking and editing photographs
- maintaining your website
- managing your accounts/inventory
- marketing your jewellery, whether online or in person. Many successful jewellers now spend something like 50% of their time on marketing. If you don't factor this cost into your jewellery you could be halving your hourly rate!
- staff training

Being able to calculate your material and time costs is the basis of any pricing formula .
Artists often have their own chosen formula for calculating a wholesale and retail price for their jewellery and here are some of the most common ones that we have come across:

 
(Materials x 1.5) + (time at hourly rate x 3) = trade price. Multiply by 2.4 for retail price (inc VAT)

(Materials + time at your hourly rate) x 2.5/3 = wholesale price. Multiply this by 2.4 for a retail price (inc VAT).


All of the formulae result in a wholesale and a retail value. A wholesale rate is the price that you would sell your jewellery to a gallery, shop or distributor for. They would then usually double the wholesale  (to cover their own overheads) and sell your jewellery at the retail value to members of the public. If you choose to sell directly to the public, then you use the retail price. The advantage is that you make a better profit margin; the disadvantage is that you have to actively sell each piece instead of handing that job over to the retailer.

Very often, retailers won’t mark your work up by 100%. If you sell your jewellery to a gallery in an upmarket area they may want to charge 200% - 600% of your wholesale price, whereas an online retailer  may work on charging a commission between 30% - 50% of your retail price or they may accept your trade price and work on doubling it plus VAT (x 2.4).

The aim is for customers to be able to purchase your jewellery at the same price, whether they buy from you or from any other source. Anyone undercutting the retail price of your product (whether it is you or one of your retailers) is going to create a disharmonious situation that will ultimately result in a loss of sales for you.

The gallery charging 500% mark-up on your pieces may give you the confidence to follow the same pricing pattern; if they can persuade someone to pay that much for your work, why shouldn’t you? Alternatively, you may choose to reach an agreement with the gallery to supply them with an exclusive range, ensuring that there is no conflict of interest.
In the case of using a retailer who only uses a 30% margin, the ideal scenario is for them to sell the piece at the usual retail price leaving you with a higher profit margin.

If you decide to approach a third party to sell your jewellery, it is essential to enter any negotiations with a clear grasp of your carefully costed wholesale and retail costs. If you have made the mistake of selling directly to customers at your wholesale price, you will leave yourself in the position of either being unable to sell your work through any third party or squeezing your own margins beyond comfort!
Whilst it is sensible to review suppliers and work practices in order to bring costs down, shaving margins too far can have a negative effect on your own income.

As British jewellery makers, we can never compete on price with foreign imports: a CAD trained jeweller with 2-3 years’ experience in India can earn less than £200 a month, a less skilled worker, around £75 a month. Where British designers and makers can compete is with innovation in design and quality of workmanship; by driving down our own prices, we undermine those attributes in the eyes of our customers.

When we see an item of jewellery at a knockdown price, how many of us see a bargain and how many of us see a piece of poor quality, mass produced jewellery?

 

Jayne Coulson

44 Hockley Street

Hockley

Birmingham

B18 6BH

Tel: +44 (0)121 507 0994

Company number 07258309

ICO Registration No: ZA460029

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