Pricing Tips for Jewelry Artisans
inJanuary 11, 2008 - 8:14am
How we love to hate pricing our work. Whenever the subject of pricing comes up, what you usually hear is a collective moan from the jewelry artisan group. But we must get past the self-created agony and be pragmatic; we must transition from creator to businessperson and price our work objectively.
The first step in pricing your work objectively is to consciously make the transition from creative person to businessperson. If you want to make money by creating art jewelry then you must first acknowledge you are a small business owner. Once you do this, you will come to realize that running a jewelry artisan studio can be profitable. The decisions you make for your business can be guided by good business practices. Designating yourself a small business owner will empower you to start thinking and acting as a professional. And, in turn, this will allow you to separate yourself emotionally from your work, creating an atmosphere where you can make decisions that are in the best interest of your company. Not an easy task by any means - but necessary.
Second, you need to know what others charge for the same or similar type of items. Take the time to study the market, include different regions of the country and different venues for selling in your analysis. Notice we said, "the same or similar items". Comparing your work to 'mass-produced' handcrafted jewelry is not a good choice, and will likely lead to financial ruin, as the cost structure for pricing mass-produced items is completely different. Determine the price range from lowest to highest, compare the quality of your materials, the uniqueness and craftsmanship, and decide where you fit within the group, and price your items accordingly. When you are first starting out it is wise to keep your prices towards the lower end and raise them, as you become better known. However, this does not mean practically giving them away. It is important to feel good enough about your work to understand its worth. If you don't understand its worth, neither will the marketplace.
Third, make sure you pay yourself a sensible hourly wage and cover your costs. Remember, this is not a hobby - it is a business! The easiest method for doing this is to take the hourly wage and multiply it by the number of hours it took to create the art, add the cost of the materials plus a small percentage for profit. As you progress and gain a better understanding of the financial side of your business, you will also want to add overhead costs such as rent and utilities.
Keystone. It is important to understand that in the traditional retail world, many wholesale businesses add a margin of nearly 50% to the wholesale price of an item, after all expenses have been included. These businesses, in turn, sell their items to retail stores, who subsequently double the wholesale price to arrive at the final retail price! Adding a full 50% margin to the price of the item is what is traditionally called "Keystone" and it is a commonly used pricing structure. Now you may say, "I can't possibly add that much to my items and price them competitively!" But pricing your items without including all expenses and at least some percentage of profit, however small, will inhibit you from continuing to produce and sell your work over the long haul.
Finally, perception is everything. Items that are priced too low can turn off customers. Price items cheaply, and they will be perceived as cheap. This is not a designation you want! Price your items to cover all your costs, make a profit and create a successful business that will allow you to continue to do what you love.