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Starting and running a jewelry business.
(part 5 in a series)

The next important component of pricing your work is its INTRINSIC VALUE. Webster’s Dictionary defines “Intrinsic” as, “belonging to the essential nature of a thing (the ~ worth of a gem)”. Now, how does this pertain to your beautiful creation?

· The intrinsic value of the gemstones, and other components, you use, should influence the final price you give your creation. A ruby is a valuable, precious gem. The fact that you are able to purchase $10/ct. rubies for $1/ct. doesn't’t devalue those rubies. So, use the gems, or components, full value, as it’s intrinsic value.

· Research the marketplace for personally designed and crafted jewelry that is similar to yours. If those pieces are selling for higher prices, they will influence intrinsic value of your work. (Name recognition can, also, influence either price.). At the same time, if stores are selling imported jewelry, that is similar to your work, for very low prices, that, too, will influence the intrinsic value of your work. Based on that, it makes sense that you shouldn’t try to compete with those under priced, mass produced imports. Use your own creativity and produce your own creations.

· I’ve sold my jewelry creations in numerous art shows. Sometimes there were other designers, in those shows, that were selling their own jewelry, equal to my work, but at much lower prices. When their low priced work wasn’t very good, or very creative, it usually didn’t really influence the intrinsic value of my work. On the other hand, when the low priced work turned out to be very creative and well made, it did effect the intrinsic value of my work.

As an example, a few years ago, I was showing my jewelry in a better art show in the Los Angeles area. One of the other vendors was selling his jewelry, and it was very similar to my work. His work was very creative and well crafted, and he was selling his work for half the price I would have. I visited his booth and complimented his work. Soon we were discussing pricing. He explained that he was a well-to-do doctor, and he created jewelry as a creative outlet. He, also, stated that he had no interest in making a profit, (he needed a business tax loss), and that he was thrilled that people liked (and purchased) his work. Obviously, he continued to under price his work.

Although, I could have let his pricing influence the intrinsic value of my work, I decided not to let it. I continued selling my work at my prices, and I did pretty well, although I did lose a few sales to him. By my maintaining my prices, my intrinsic value stayed the same. All, in all, both of us made a number of sales, maintained our own prices, and I made a profit.

· Intrinsic value can influence how a buyer values your work. If your work is priced below what a buyer would expect to pay, the buyer will not have confidence in your work, and might assume it is nothing more than a cheap, mass produced, import.

Five years ago, I was showing my jewelry in an expensive, indoor, 3 day, Arts
and Crafts show. There was a lady, one aisle over, selling her jewelry in her, brand new, beautiful, expensive, booth. We got into talking, and she said that this was her very first show and that she was uncertain about her work. I noticed that most of her necklaces had $30 ~ $40 price tags. I saw that her work was very nice and I suggested that she raise her prices. Her response was, “No one will buy my jewelry if I raise my prices.” We discussed her costs, value, and pricing, and then I returned to my booth.

The following early afternoon, she visited my booth. She was crying, and told me that no body was buying her jewelry. I told her, that since she had nothing to loose, she should try raising her prices by 300%. She said that she couldn’t do that, but she would experiment with doubling her prices. An hour later, she returned to my booth. She was beaming, and said she had sold two necklaces. She told me that she appreciated my counseling, and she would re-evaluate her pricing before her next show.

So, “Intrinsic Value” can also be defined as “perceived value.”

Another important consideration is “Price point”, or determining the clients and price range you are targeting. Before you start your business and purchase your jewelry supplies, you should make the following decisions:
· What price range do you want to sell in?
· $25 ~ $50, $100 ~ $200, $500 ~ $1,000, $2,000 ~ $10,000?
· Who do you plan to sell to and what is their income/sophistication level?
Neiman-Marcus or Wall Mart or Swap Meet?
· Will you be selling in Beverly Hills or in a low-income community?
If your prices and intrinsic values are too low, they won’t sell in Beverly Hills.
If your prices and intrinsic values are too high, they won’t sell in a low-income community.
(In either community, if you try to sell Rubies at low prices, the buyers won’t respect your work or believe the Rubies are real.)
· Will your buyers be “high income-young urbanites”, “old rich”, seniors, or people on a fixed income?
· Do you want to work with plastic, Austrian crystal, Agates, Amethyst, or Alexandrite?
Platinum, 22k gold, 18k gold, 14k gold, gold fill, sterling silver, pewter, gold/silver plate, or less?
· Do you prefer quality sales, or quantity sales?

Once you have determined your “Price Point”, you can proceed with your planning, supply purchases, design, and the crafting of your jewelry. If you do not do this, you can end up very frustrated and broke.

In the next week, or more, I will cover experiences with different pricing methods, starting a new business and your requirements; useful books & magazines; frustration & burn-out with under pricing; etc. Plus, I will answer the questions in part 1 of this series, and e-mails I have received.

Note: The purpose of this series is not for me to tell you exactly how much money you must charge, that is collusion (illegal). Instead, it is meant to be a guide to help you understand some of the basics of business, how to understand and calculate your true component costs, and determine the value and selling price of your jewelry.

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