|Amethyst Rain Drops|
Year of Jewelry Week 6 Amethyst
I've been self employed pretty much my entire adult life.
Pricing work in some areas is easier than others.
Take for instance our construction business. You factor in all costs for the year, payments, insurance, fuel costs, utilities, rent/mortage, repairs etc etc. Then you estimate the number of working days in a year. Weather factors in here, below freezing temps, melt your brain temps, freezing rain etc etc you just can't work in some of that, some for only a short time. Then you figure the hours in an average work day and divide your expenses by your workable hours and factor in a percentage for profit (kids might need braces, you might want to go out to eat on occasion, you definitely need clothing and food) and tada! there's your price. Piece of cake.
Jewelry isn't so easy. It should be but it isn't. A lot of artists just don't seem to see the business side of it, it's all emotion there. The formulas for pricing are abundant and there seems to be one for every personality out there. Most aren't bad at all and will give you approximately the same price within a couple dollars, just different ways of going about it.
The one piece of advice I see floating around that REALLY bothers me is don't factor in your time. My major in college was business management, people time IS a factor in cost, see above. Your time HAS VALUE. Even if you work in gold and diamonds the worth of your jewelry isn't just the sum of its parts, the worth comes of you. It comes of your time and knowledge in putting those parts together in a way that someone else thinks is beautiful. Someone who loves it and wants it as their own. Should you ever become busy enough to need help I can guarantee they aren't going to work for free.
Even the popular materials only pricing takes into consideration the cost of time when explained fully.
Materials x 5
once for the cost of materials
once for replacement of materials
once for your time
once for overhead
once for profit
That formula doesn't work so well when you're recycling or reusing but it works fine for silver or gold etc as it does take into consideration the full spectrum of your costs. When applied to several of my own pieces it came close enough to my prices I felt comfortable discussing it here.
One more thing, you know I owned a B&M once upon a time and half a country away, when I bought wholesale pieces for retail I didn't ask what the hourly wage was so I wouldn't multiply that number. I just doubled or tripled MY cost and that includes your hourly wage. Think about that.
Then there comes the issue of comparisons. Don't base your prices on others. I agree to a point. You don't know if they're purchasing their materials at retail or at wholesale, you don't know what hourly wage they're charging or IF they're charging at all.
However, I absolutely believe in market comparisons. The power of the Perception of Value is potent. Jewelry is a luxury item, it is a fashion accessory. You want to be seen as elegant, or trendy, maybe even cutting edge, but you DO NOT want to be seen as bargain basement leftovers, wear today, throw away tomorrow. I suppose there are always exceptions but I am NOT one of them!
I don't willy nilly compare prices. I look for shops that are selling well and are selling items that are of a similar quality and style to mine. I look at the average pricing for simple, for elaborate, glass, gemstone and if I'm in the ballpark with my pricing I leave it as is. If I'm very high, I look closer at the materials gold filled and gold plate are not the same thing. Imitation gemstones don't price the same as the real deal. If I'm very low, I do the same. If it appears all else is equal I may adjust my price upwards or downwards as warranted. If I am secure in my price, knowing all is as it should be I leave it be.
Here's the kicker, I have very RARELY if ever lowered a price after this type of market comparison. I have however raised my prices on numerous occasions. Have my sales suffered? No they've increased. Is it because I raised my prices? I don't think it hurt, but to be fair it's probably just as equally important that I'm becoming recognized as an established fixture and not a flash in the pan here today and gone tomorrow. Online sales require more faith from your buyer than in person sales do. They want to know you're a real person and if they have a problem you'll be there to help. If they have family or friends that just have to have one too that their recommendation of you won't haunt them. Perception of Value increases with longevity as well.
Whatever formula you decide to use, make sure you are fair to yourself. EVEN if you're just a hobbyist looking to make what you love self supporting, or just having fun at it. If you happen to become the new IT, you'll thank me for making sure you have a working/living wage.
I worked the price backwards from one of Etsy's IT designers once, she had burned out and was considering closing up shop. She had made a lot of money but still had only paid herself 50 cents an hour per piece. Granted she had a very streamlined production process and could make quite a few in an hour her total wages for the amount of work was only $9 an hour. Less than minimum wage in her home state.
Don't confuse volume of work with volume by sales. She could make much more than she sold in volume, however you can only earn by what you sell. Those are the numbers I worked from, what she had sold.
She ended up selling her shop and the new owner raised the prices by $1 effectively doubling her wages and she hired a helper. That shop is still humming along in the top sellers list. Proving a living wage will not cripple your prices or your sales.
Thanks for stopping by, I hope I've given you some helpful insight into pricing.
We'll see you next time!