I have had several people ask me why I price my items the way I do. I read an article recently by Szarka from Magpie Gemstones that helps to explain it. Some of the article is technical, but the theory behind the pricing is the beautiful part.
This article is from Magpie Gemstones
Pricing is such a conundrum for so many artists and there are as many different formulas and ways to go about it as there are people. The most important thing I can say is stop giving away your creations! Value yourself, value your work, and value the people you are selling to. If you give away your work to them they will be undervalued as well. They deserve a hand made piece of art that they paid a fair price for!
How I price my work? Ok here we go on the ride of the mind of moi. It's scary in here so hang on.
We all have an absolute minimum we will take. What would you sell a piece if you had to put gas in your car in a desperate moment? Ok got a price on that necklace for such a situation? You should never sell below that price, ever! Well okay if you are stranded without gas or food, but for no other reason.
If you look at that number and you are selling within $10 of it you are doing yourself a diservice. The simplest formula in the world is sell for at least double that price!
You say, "well I am just doing this for fun". Would you sell your couch for less than you can replace it for fun? No. So don't sell your jewelry for less than that either. Ok I am done with the lecture.
I look at the cost of my supplies and I come up with a x's by that works for me. Let's say it is 2x or 5x. It doesn't matter. If you deal in a $600 strand of sapphires you may just 2x the price of your supplies. If you deal with copper it may be 5x. Look at what will work for you.
Remember you have to make enough money to buy more supplies to replace what you just used and you will not sell every piece you make you so you must factor that in as well. You want to keep making jewelry and you would like to improve on the quality of supplies you use over time.
Three or four times the cost of beads is a common factor that many use. That way you have paid for these beads, you can buy more beads (maybe even twice as many) and you have a bit of income left at the end. Have the beads pay for themselves, and generate more inventory and make the money off of the hourly wage you charge.
Then add on what you are worth an hour. Remember that you have to pay not only for the time to make the jewelry but also for time selling, marketing, shipping, and setting up displays, paying for booths etc. What you are worth an hour will be determined by how much experience you have. Can you whip out a cab with a gorgeous wrap in 10 minutes? Then your time is worth more than $10 an hour, more like $50 to $100 an hour.
So, for example I whip out 20 pairs of simple earrings for my earring display. They cost me .45 cents each to make and I can make 20 pairs in an hour. The price I come up with is 2.30. That is the minimum I can sell them for and still get 4x and 10 an hour. They were simple to make and not much skill required. If I pay myself $20 and hour they will still only cost 2.80. Now you would never sell your earrings for 2.80 (unless we are back at the I need gas scenario).
I take the $2.30 and times by 4 and they are at 9.20 or bump it to 9.99. That is my full retail price. At this point take a good look at them, will they sell for 14.99 in my area in a gallery, maybe 24.99? Then bump the full retail to that. Remember they are simple earrings and this is what a gallery can sell them for. I get 50% commission. But I can also offer to sell them at any price between 2.30 and $10.00.
I tell them if they buy $1000 worth they can have those earrings at 2.59 a pair. This gives them the incentive to buy out right, I get my pieces into a gallery and if they move quickly and I get discovered I can bump up my prices until I can keep up with demand. I can also send out a rep to sell them for whatever they want but I need something over my minimum. Make sense?
But what about a necklace that takes some time and skill? It works the same. A necklace cost me 15 to make times 4 is 60. I add my hourly wage, lets say 20 an hour. I times all this by 4 and get my high retail. 320 would be the retail price. But wait, I look at the piece and I know it will not sell for that. I go back to the drawing table and crunch my numbers again. I look at what I think it will sell for and I decide 199. Well 1/4 of that is 50 so I can double my price on the beads and make my hourly wage. Am I willing to do that? Then I decide. If that is all it will sell for then that is what I will have to take for it and reconsider replicating similer pieces in the future.
Now this is your base, lowest price. 50 is what I can sell it for and probably still get ahead. I want to sell it for at least 100 in most situations or I will be running myself out of business. At 50 I am barely covering my expenses. That is not a way to grow a business. I know at that price at least I am not loosing money, I can still pay the electric bill, and I can put gas in the car if I am selling a lot of jewelry.
It works the other way as well. Lets say a bracelet only costs me 1.00 but the time and skill to make it is worth far more than the value of the components. Then I raise the retail price to the cost I know the piece can sell for. There has to be a way to make money off of the art of jewelry making. That is the whole point of this endeavor. My years of skill come together to make a knockout piece then I will not give it away by any formula.
I decide this piece will easily sell for lets say 69. My absolute bottom price is 17.50. If it took me half an hour I make 27 an hour. Remember this is my lowest price. Hopefully I will sell it myself at a festival and make the profit from it.
The idea is to get into high end art shows and sell some of your product at full retail (you do not want to undercut the galleries that sell at your full retail price unless you want to loose that relationship in a hurry).
You want to sell some of your product at at least 50% of your full retail through consignments and "sales" you may run. Some of your product at the almost lowest price to shops etc to get exposure and some money running through your fingers to buy more supplies and do it all over again..... and you will have some that will not sell. Those can be reworked or sent out as a donation, given to events as advertising, gifts etc.....
Ok just one more lecture to those that are just doing it for fun or who do not want to make money off of their work.
Think not of yourself but of those folks that are not as fortunate as you and have to make a living from what they are doing. You are shooting them in the foot by undervaluing your work and theirs. You are worth it, and so are they. We are a community and lets work together to make it a vibrant one. Take a stroll through Neiman Marcus, a local gallery, or look at Jewelry in Barney's online. That should get you over your fear of charging for your time and supplies, and remember your pieces are unique.
There are so many more things I can say.
- I can talk about advertising and getting your work out there at a reduced amount to create excitement but not shooting yourself in the foot in the meantime.
- About donations done right can get lots of exposure.
- About mass produced articles that go by a different formula for shows to pay booth fee's.
- About having different lines that you can sell at gallery costs and not undercut a gallery and strain your relationship.
........ but these are articles for another day.
I am selling beads now so I have run into interesting obstacles. I will not approach a gallery where I see one of my clients selling. I will not compete with my clients. I will not do shows anymore for the same reason. I would not want to set up next to a client and compete with them. I am here to support them and help them get ahead. I do not believe in competition. I believe in everyone working together to create a vibrant, ethical community where everyone is successful in many different ways including our souls being happy.
Szarka
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