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Starting and running a jewelry business.
(Part 1 in a series)

Lately, a number of people have been talking to me about selling their jewelry creations and starting a business. I’ve been asked questions, such as:

· “My co-workers love the jewelry pieces I make for myself, and they want to buy them. How much should I charge?”
· “To afford my jewelry making addiction I must start selling some. What should I do?”
· “How do I figure my costs and selling prices for my jewelry?”
· “A woman told me that she would pay me my costs and she will wear my jewelry for people to see and I’ll get a lot of business. Is this how I should start my business?”
· “What jewelry supplies can I buy with out paying the sales tax (California)?”
· “My hairdresser has offered to sell my jewelry in her salon. She will display them and pay me after she sells them. How much do I charge? Do I need a written agreement? Who is responsible for the sales tax? Help!”
· “How can I make sales and charge the prices you (me) tell me to charge?”

MY BACKGROUND
I design and make beaded jewelry that I sell at fine art shows, through boutiques, and to a network of clients. I have run “hobby based” businesses for more years than I want to count. I am hired as a consultant on designing and making beaded jewelry, plus the promoting and selling of that jewelry. I am an active member in the L.A. Bead Society.

I used to teach a class at UCLA, and other schools, on running a “Hobby based” business. I toured the country lecturing on this subject, and people hired me as a private consultant. A number of years ago, my own business was audited by the California State Board of Equalization (the sales tax people) and I came through without a discrepancy or penalty. So, I think (and many other people agree) I know what I am talking about.

Let’s start off with a couple of quotes that I think are pertinent.

· “…(Charge) all the market will bear.” Ambrose Bierce
· “Make your own myths. That’s the way the gods started.” A famous philosopher from Poland.

PRICING YOUR WORK

A basic rule:
YOUR MATERIAL COSTS X 3, + YOUR DESIGN & CREATION TIME, + “NAME RECOGNITION”, + INTRINSIC VALUE.

YOUR MATERIAL COSTS:

Base MATERIALS COSTS include: Beads, findings, pendants, stringing materials and/or wire, packaging, and anything else included in the final delivered product. If you are able purchase supplies at a one time reduced price, it is best to use the regular replacement cost of those supplies in your calculations. Remember, your client might ask you to make duplicates, at the same price.

Secondary MATERIALS COSTS include:
Time and expenses incurred in finding and selecting your base materials (time, car mileage expenses [more than $.65 per mile1], parking, meals, etc. or time, phone and/or internet charges, shipping charges, etc. Add to this, credit card or bank interest/fees, and anything else involved in the procurement of your supplies. If you had an assistant do this work, add this expense, too.

[ Hertz study over 15 years ago. Includes: gas, oil, tire wear, general wear & tear, depreciation, insurance, etc.]

YOUR DESIGN AND CREATION TIME:

How much is your time, vision, and expertise worth? When a person purchases your creations they aren’t just buying the raw components (they could do this them selves). They are, in fact, purchasing your vision and expertise. They buy it because they love what you did with those basic components. As an example, Pablo Picasso applied his vision and expertise to a few dollars worth of paint and canvas to create his multi-million dollar masterpieces.

Again, how much is your time, vision, and expertise worth? I’ve heard all of these excuses. “My time doesn’t cost me anything because: ‘I’m not very good’; ‘I do it in my free time’; ‘I’m retired’; ‘I just love to see people wearing my creations’; ‘I just love making jewelry and don’t care about the money’; ‘I don’t feel it’s right charging people for my time’;” and so on. BALLONY! No matter what, if your creation is appreciated and worthy of your clients’ purchase, your time, vision, and expertise have value, and you should be rewarded.

Where do you start? If you feel you are worth $12.00/hr., “minimum wage”, or less, you might as well get a job at McDonalds, or the like, where you can earn a steady income, receive benefits, and have no business expenses. Jewelry and clothing designers/creators I have talked to said their hourly fees run between $25.00 and $75.00/hr. (& more). In a survey of self-employed people, crafts people, home based business people, consultants, etc. $25.00 tends to be the lowest hourly fee. If you call a plumber, mechanic, computer consultant, phone repairman, or the “Maytag Repairman”, you’ll be quoted a fees starting at $25.00 or more. So, in your calculations, I suggest a very reasonable minimum hourly rate of $25.00.

In the next few weeks I will finish the basic pricing of your work, including name recognition and intrinsic value. I’ll, also, discuss experiences with different pricing methods. I’ll write about: starting a business and the costs of doing business; sales venues; promotion; etc.