How to Price Handmade Jewelry & Cut Costs
Whether you are brand new to making jewelry or you’ve been at it for a while and just recently decided to try to sell your creations for a profit, figuring out how to price handmade jewelry is tricky. If you charge too little, you’ll fail to earn a lucrative income. If you charge too much, on the other hand, you could end up with mass quantities of beautiful jewelry that no one can afford to buy.
Unfortunately, finding the perfect “sweet spot” that allows you to earn a decent wage but isn’t off-putting to customers isn’t easy. It’s something that requires a considerable amount of time, effort, and planning. In the end, though, figuring out the right price is a worthwhile endeavor. In doing so, you can turn your jewelry-making hobby into a profitable business. Doing so also enables you to build a loyal fanbase of the exact type of customers you enjoy working with.
In this guide, we’ll be exploring exactly how to establish the perfect prices for your creations based on a number of factors. We’ll also touch on ways to cut your costs and maximize your profiles. While this information is vital for newbies, it’s also worth checking out if you have an existing jewelry business but are struggling to attract the right customers or pay yourself a living wage. Ready to learn how to price handmade jewelry and cut costs? Let’s get started!
Important Note on Pricing Handmade Items Too Low
Before we dive into the details regarding how to calculate the right price, we want to touch upon a common myth and explain why believing it tends to be detrimental. It’s a common misconception that you need to offer super-low prices if you want your hand-crafted items to sell quickly. This myth causes far too many small business owners to undersell themselves and charge way less than they should. In doing so, they cheat themselves out of earning a reasonable profit and force themselves to work harder just to stay afloat.
As someone who makes jewelry, you deserve to be paid for both your materials and your time. There is also absolutely nothing wrong with charging a premium amount for high-quality products. Your customers aren’t just paying for your creations. They are paying for your time and talent, too.
Keep in mind, too, that pricing your items too low could make people suspicious. If your prices are significantly lower than the average price for similar items, potential customers are likely to assume that your products are of subpar quality. They may even be concerned that it’s an outright scam.
The customers you do attract by offering rock-bottom prices may not be the type of customers you want to attract. Building your business around appealing to “bargain shoppers” usually is not sustainable when you design and sell handmade items. And when your entire customer base is made up of people who are only willing to pay pennies for your labor and talent, it becomes almost impossible to raise your prices without alienating the buyers you depend on.
The bottom line: Don’t be afraid to charge an amount that reflects what your materials, time, and talents are worth. Now, let’s figure out exactly how to determine that worth.
Calculate Supply Costs
Before you can even begin to assign a price to a finished product, you need to know exactly how much it cost you to make it. While the cost of your materials certainly is not the only factor that needs to be taken into consideration when pricing handmade jewelry, it does provide you with a solid foundation to build your price on.
Whenever you purchase any jewelry-making supplies, keep track of the cost. Be sure to include tax and shipping charges. Whether you’re shopping for semi-precious stones, beading wire, chains, or findings, you need to know exactly how much everything costs you.
From there, you need to break down the total price even further. With larger beads, for example, you may want to calculate exactly how much each individual bead costs you. If you’re working with smaller beads, you might want to figure out what the price per ounce is. You’ll also want to determine how much you pay per inch of chain and wire and what every clasp, split ring, etc. costs. This step is tedious, but it is vital in ensuring that you can determine the exact amount you spend to create each piece of jewelry.
Think About Your Overhead
If you are making jewelry at home and selling it online, you might think that you do not have any overhead costs to worry about. That isn’t necessarily the case, though. While you may not have to worry about paying to lease a space, rent warehouse space, hire employees, or cover the cost of utilities at your place of business, you do still have overhead. In fact, any expenses that aren’t directly related to your merchandise are classified as overhead.
The beads and wire you use to make your jewelry aren’t considered “overhead” because they are materials that become a part of the finished product that you are selling. The tools you use to create them, such as wire cutters and pliers, however, are. Other common overhead expenses include traveling to purchase supplies or sell at shows and office supplies, such as printer paper, pens, and business cards. If you have a website or sell on an online platform like Etsy, your fees count as overhead, too. Even the money that you spend to rent table space at a local craft show counts.
Jot down a detailed list of all your overhead costs. Even if it seems insignificant, write it down. If you aren’t considering your overhead when pricing your jewelry, you are losing money. It’s as simple as that.
When factoring overhead into your final price, you need to determine the overall overhead percentage. This enables you to come up with a dollar amount that needs to be added to the cost of each item to ensure that your overhead costs are covered.
Now it’s time to start thinking about how long it takes you to make each piece and what your time is worth. Whether you are making high-end jewelry that’s worthy of being worn by celebrities on the Red Carpet or you create lovely pieces that are more appropriate for everyday wear, you deserve to be compensated fairly for your time.
Think about how much you realistically want to earn per hour. Then, determine how much time it takes you to make a single piece of your jewelry. It is helpful to time yourself while completing a few of your typical pieces at your usual speed. If you make different types of jewelry that require varying amounts of time, time how long it takes you to make each type of jewelry. Then, average the times to determine roughly how long each of your creations takes you.
Keep in mind that your labor costs are added in after your material and overhead costs have already been accounted for. Based on your average time, calculate how much labor you’ll need to charge per piece in order to reach your desired hourly rate.
Formulas for Pricing Your Handmade Jewelry
At this point, you should have an abundance of information regarding exactly how much time and money you spend to create each piece of jewelry. You can now plug this information into a formula to come up with a final price. There are a number of different formulas out there, but for simplicity, many jewelry makers add up their total costs and multiply by three:
(Supply Cost + Overhead Cost + Labor Cost) x 3 = Final Retail Price
- Supply Cost: $3.75
- Overhead Cost: $1.58
- Labor Cost: $7.50
- (3.75 + 1.58 + 7.50) x 3 = $38.49
It’s also a good idea to establish wholesale pricing in case you decide to sell your product in someone else’s shop. A common formula for setting wholesale prices is:
(Supply Cost + Overhead Cost + Labor Cost) x 2 = Final Wholesale Price
Using the example above:
- (3.75 + 1.58 + 7.50) x 2 = $25.66
The formulas listed above work well for establishing baseline prices for your products. Keep in mind, though, that there are variables that should be taken into consideration. When selling any type of product, you always need to be mindful of your audience. If you plan on selling your handmade jewelry in a high-end gallery, your price will need to be substantially higher than it would be if you were selling at a local farmer’s market. Determining a target audience and pricing your products for members of that audience is crucial.
If you have calculated your costs and worked through the formulas listed above only to discover that you are spending way too much on your supplies, don’t panic. Many jewelry makers – especially those who are just getting started – overpay for things like beads and findings simply because they are unaware of how to get the best prices. Rather than lowering your standards and purchasing poor-quality supplies, keep these tips in mind to get the best possible prices.
Buying jewelry making supplies at retail prices is a big mistake that drives up your bottom line and, if you aren’t careful, cuts into your profits. For maximum profitability, buy wholesale. When you buy chains, findings, and crystal beads wholesale, you can get a much better per-piece price on the high-quality supplies you need.
Cut Shipping Costs
If you order your supplies online, shipping costs can add up fast. When you’re looking for beads for sale, try to find sellers that offer free shipping, and make sure you’re placing a large enough order to qualify. At Beads of Cambay, we offer free shipping on orders of $100 per more within the United States. Taking advantage of such offers can drastically lower your costs and keep more of your hard-earned money in your bank account.
Buy Quality Supplies
Purchasing cheaper supplies may seem like a good way to cut costs, but doing so can cost you more in the long-run. Cheap chains, beads, and findings are likely to break, tarnish, not be drilled or manufactured properly, etc. This results in excess waste and the need to purchase additional supplies to replace the ones you can’t use.
Using subpar supplies may also result in you needing to replace customers’ broken jewelry when it arrives damaged or falls apart the first time they wear it. You’re likely to lose customers, too, if you sell them products that look and feel “cheap.” Buying quality supplies may cost you a bit more upfront, but doing so will save you big in the long run.
Recycle Old Projects
If you are like most creative people, you probably have a vast collection of pieces that you’ve made that didn’t quite live up to your expectations. Instead of letting those pieces that you’ve deemed unworthy of selling go to waste, recycle the supplies in new creations. As long as the beads or other supplies aren’t damaged, there’s no reason why you can’t reuse them in another piece.
You could even scour flea markets, thrift stores, and your own jewelry box to find old, broken, and out-of-style jewelry that contains materials that can be used in new pieces. Upcycling is huge, and there’s something special about making a brand-new piece of jewelry using antique supplies.
As a jewelry designer, you need to set prices for your products that are fair to you and appealing to your ideal customers. Figuring out the “sweet spot” takes some time and effort, but in doing so, you will be well on your way to running a profitable business and doing a job that doesn’t even feel like work. Once you’ve come up with baseline pricing for your pieces, feel free to experiment a bit and record the results to determine the absolute best price for each piece you sell.