How Do I Price Handmade Jewelry and Crafts?
I’ve heard this question asked a million times. Most jewelry makers and crafters love designing and creating but have a hard time trying to figure out how to price handmade jewelry and crafts to make a profit.
Determining a selling price is difficult because there are so many variables such as: cost of goods including your materials and labor, overhead and what the market will bear. There is no magic one-size-fits-all pricing formula but there is a method that will allow you to price jewelry confidently. This is how I came up with my pricing handmade strategy.
When I started making jewelry I had dreams of one day selling to Nordstrom. I loved their jewelry department and thought that my designs would fit right in. Figuring out a wholesale price was my first step before determining the suggested retail. The wholesale would be the absolute lowest that I could charge and still make a profit. The store would probably triple their cost to sell at retail. If my wholesale price was too high then the items would be too expensive at retail. I would compare the prices of similar jewelry and realized there is a lot of competition out there. Many items are imported with cheap labor. Some of my designer friends did not even charge for labor. Yikes!
In the meantime I was selling to friends and at home parties. Even strangers would approach me to ask where I got my jewelry and wanted to buy the piece I was wearing! I needed a “direct” price that would be higher than wholesale since these customers were not reselling or placing large orders. However, I didn’t want to charge retail prices since I did not have the overhead of a store. It just didn’t seem fair. My goal was to have a formula that would work for wholesale, direct and retail and allow me to recoup my materials, labor and overhead and make a profit. I got a reseller license so I could buy my parts at wholesale. This was no longer a hobby. It was a bonafide jewelry business.
My “real” job was as a database application programmer so I created an application that would be my jewelry pricing calculator. It worked so well for me that a few years later I decided to market the program as the Jewelry Designer Manager. This jewelry inventory software allowed me to keep track of all the parts or materials I was using to make a piece and also include labor and “other” costs. I added a markup for my three pricing levels and was now able to price confidently. I knew that I was making a profit and that my customer was getting a fair and reasonable price. Pricing jewelry made easy!
The Jewelry Pricing Formulas
The pricing formula that I used to give me suggested selling prices is:
Sales Price = (Total Cost of Materials * Markup) + Labor + Other
Other can be used for overhead. You can determine a fixed cost you would like to set for each piece or it could be a percentage of the total cost of materials.
Later we had customers request this formula which marks up the labor. Personally I feel that marking up labor would make my jewelry overpriced.
Sales Price = (Total Cost of Materials + Labor + Other) * Markup
How to Mark-Up Jewelry Prices
Another question I am often asked is how much to mark up to price handmade jewelry. There is no standard markup and pricing depends on many factors such as the type of jewelry you make, market conditions, customer perception, competition, demographics, etc. The mark up can be different for each piece depending on the complexity of the design or if precious metals or stones are used in the piece. You may also want a higher mark up if the jewelry piece is truly a one-of-a-kind. You can play with the numbers and see which mark up gives you the selling price and profit that is realistic and makes sense.
You can also test different sales prices. Some people find that when they charge higher prices they actually sell more! Jewelry Designer Manager let’s you decide what is best for your jewelry business.
I hope this has helped make your pricing strategy much easier!