How to Price Your Jewelry Designs
Figuring out how to price your designs is one of the least glamorous parts of
running a successful jewelry design business. Pricing your designs can be
tricky, especially if you design one of a kind pieces, but it is an essential
step you must take to turn your hobby into a profitable business. Once you
understand the costs of your business, and what you expect to profit from
your work, creating a formula to price your designs is a simple process.
1. Keep a "recipe book" to record exactly what was spent to create each
design. You will basically need to price each item used in your designs. For
example, if you pay $1.50 for a dozen sterling crimp beads, and you used 2
crimps beads in your design, you would divide $1.50 by 12 (12.5¢ per crimp
bead), and multiply by 2, totalling 25¢ for the crimp beads in this design.
This makes it much easier to calculate the exact cost of each design.
The more meticulous you are about calculating expenses, the better your
pricing will be. Even the packing materials you use for the design and the
shipping costs of the supplies should be accounted for. Keep receipts - this
will also come in handy during tax time, if you want to deduct business expenses.
Remember that materials cost is only one aspect of the costs involved in your designs.
2. Record your time spent on each design. How quickly can you design and
complete your jewelry? Second to quality, speed is a key factor in
profitability. If it takes you 30 minutes to recreate a design, you would
charge differently than a design that takes 4-5 hours to create. Write your
time spent in your recipe book. Decide how much you would need to pay a
worker to do your job, and pay yourself at that rate. This is a vital
aspect of the costs involved in your designs; don't ignore it!
Sooner than you think, you may decide to hire a friend to help you prepare
for a show or party. The hourly wage paid to a worker, whether that person
is you, or someone you hire, must be built into your price scheme, or you
will not be able to remain in business. If you begin by charging $10 per hr
for your work, and a necklace takes you 2 hours to make, you will add $20
to the materials cost of your necklace for your time. As you become more
experienced, you will charge more for your skill and expertise.
3. Add Overhead and Profit. Everyone has a different method of calculating
their overhead costs, but there is ALWAYS some overhead. What is overhead?
Overhead covers a myriad of "hidden costs" and ignoring it is a fast way
to underprice yourself out of business.