Bead Jewelry | pearl jewelry | Pendant

This week's Featured Item!

Starting and running a jewelry business.
(part 3 in a series)

In the first two parts of this series we covered your cost of materials and you saw a list of expenses you will probably encounter. Based on what you have seen, I hope you can realize that the cost of all the components in your creations is much more than the base price you paid.

There is another factor that must be considered in developing your own retail prices. If you sell your creations through agents and/or retailers, they will be expecting one or more of the following; a wholesale discount or a consignment discount, plus (perhaps) an agents’ fee. Also, if you give a discount to any of your friends, relatives, and/or retail customers, you must take this into account, and build this into your retail price. Otherwise, perhaps unknowingly, you will lose money.

This is part of the reason our “ BASIC RULE” states:
YOUR MATERIAL COSTS X 3(at least) + YOUR DESIGN & CREATION TIME, + “NAME RECOGNITION”, + INTRINSIC VALUE.

Before I discuss figuring your own value, I’d like to show you a few examples of bead jewelry pricing I have seen:

1) A few years ago, in Honolulu, Hawaii, I visited the jewelry department in the famous, high end, Texas based, department store. I saw beautiful, and exquisite, jewelry created with gem beads. The price tags on the jewelry were what I would expect of such a fine store. One necklace, in particular, stood out in my mind. It was a 17” necklace of strung jasper nuggets with a sterling clasp. The price tag was, approximately, $600.00. The basic cost, of all components, would have been around $10.00. While I was there I saw three gem bead necklaces sold. No one tried to negotiate the price.

2) Last year I was in the Beverly Hills (CA) branch of a famous, high end, New York based department store, and, of course, I visited the jewelry counter. Again, I saw beautiful, and exquisite, jewelry created with gem beads, and, again, the prices were consistent with such a fine store. Here two necklaces caught my eye. The first, by a “famous designer”, was created with polished (fragile) calcite crystals, strung with a silver clasp. Tag price, around $500. Components cost, around $12.00. The second necklace, also by a “famous designer”, was created with African, sequin like, thin vinyl beads strung with a 14k lobster claw clasp. Price tag - $600, materials cost – around $35. While I was there, I saw a number of people being shown, and purchasing bead jewelry. No one tried to negotiate the price.

3) Last year I was at an Arts & Crafts Show in Los Angeles (venue fee = $275) where I saw a lady selling beautiful, gem bead necklaces. She had them priced between $35 & $50. Her materials costs were between $15 & $20. As I watched, some people looked at her jewelry, a few made offers, and all passed on. I heard one old lady offer her $20, and she turned her down.

These are examples of some common extremes in pricing. They show how designers with very differing ideas of self worth figure their selling prices. It is important to take into account that the designer in case #3 was selling at her retail price. Where as, the designers in cases #1 and #2 had sold their jewelry to the stores at reduced, wholesale prices. I have heard that these stores mark up their jewelry approximately 2 ½ times.

Based on a 250% mark up, the necklace in case #1 wholesaled for $240, case #2a wholesaled for $200, and case #2b wholesaled for $240. As you can see, even at their wholesale prices, these designers are making a good profit, and, people are buying their jewelry, too. Of course, these designers are aiming at “higher end” clients. If you were to compute your direct sales prices using the same creation value and mark up system these designers used to compute their wholesale prices, you could sell your creations for 60% less than those “big name” designers, receive a reasonable income, and still have a small discount “fudge factor” to work with.

By the way, while at the same Arts & Crafts Show as case #3, I saw another person selling gem bead jewelry for considerately higher direct “wholesale” prices. One $2000 necklace caught my eye. It was a multi-strand Ruby nugget necklace with a 14k clasp. I recognized the ruby nuggets, because they had been purchased from our parent company. The total materials cost for that necklace was $250. As I watched, there were a lot of lookers and a few buyers, too. The designer offered to sell me the necklace for $1500.

Now let’s discuss your own value as a designer/creator of your jewelry. In part 1, we said the “buyer is purchasing your vision and expertise” (including your invested time), not “just a piece of jewelry.” So, what are your time, vision, and expertise worth?

Before I go any farther, I have received a few comments on my statement, “hourly fees run between $25.00 and $75.00/hr. (& more).” I was told that hourly fees should start at $50.

Here are a few things to look at to help you figure your “basic billable hourly fees.”
· If you have (or did have) a regular 40-hour/week job, add up your hourly wage , plus of all your benefits (medical, over-time, advancement, paid vacation, company discounts, social security, retirement plan, education, etc.). This is your low base.
· How much do others receive for the same job, designing and creating jewelry?
· Figure your monthly comfortable income needs and divide by the number of billable hours you can work in a month. (Your income needs must include paying for the Costs of running and promoting your business and the benefits you would receive if you were an employee).
· If yours is only a part time business, for “a little extra income”, use all of the above as a reference, and don’t forget, your time, vision, and expertise are very valuable.

Next week I will finish basic pricing your jewelry, including name recognition and intrinsic value. I’ll, also, discuss: pricing your market; experiences with different pricing methods; starting a business; finding sales venues; promotion; etc. Plus, I will supply you with some references.