In a world of growing entrepreneurship, there are 32.5 million small businesses to choose from in the U.S. With so many people selling handmade products, you start to question how much you're worth.
But you've got to put your self-confidence to the test; pricing your items isn't all about stamping a cost on your forehead. Your homemade products take time and effort, and you should be putting that into the cost!
Making handmade jewelry requires great effort and attention to detail. Whether you are creating your product for a small business or as a hobby, it's important to get into the routine of pricing your items accordingly. It will be a helpful skill to master if you continue your journey as an entrepreneur!
Are you a homemade jewelry creator who is lost on how much to charge your customers? Are you experiencing some self-doubt and would like to know the technical way to formulate a price? Don't fret, we've got your back!
Continue reading to have the ultimate artist's guide to pricing handmade jewelry!
The Go-To Pricing Formula 📝
When in doubt, many smiths abide by the reliable pricing formula. If you're just beginning your business, this may be the perfect place to start.
The pricing formula is the following:
- Materials + Labor + Expenses + Profit = Cost of Product 🎉
This formula helps make sure you understand the foundations of pricing a product. By knowing what constitutes materials, labor, expenses, and profit, you'll navigate pricing your handmade jewelry efficiently.
The materials you use to make your jewelry costs you money, so you must include that in your sale's price. This includes materials such as stones, packaging, thread, beads, glue, and more that you would use to make your handmade jewelry.
Get into the habit of keeping your receipts, whether this is in a physical form or by email. Of course, you should have a business notebook as well, where you can track what items you used and how much.
It's easy to forget what you used when you're in the middle of creating a product. This is why you should practice these skills often, or you'll be losing profit before you know it!
If you're buying materials in bulk, you'll have to calculate the price of one single material. For example, if you purchased a bulk bag of 100 rhinestones for $20, then you need to figure out the cost of one rhinestone.
In this case, the cost is 0.20 cents for one rhinestone. 20 divided by 100 is 0.20. To check your work, multiply 100 by 0.20.
If you get 20, then you've calculated the correct amount. This simple math technique will help you make sure you aren't overusing or underpricing your product.
How long you take to make your product should be included in your jewelry prices as well. The faster you are, the lower the price. The slower you are, the higher the price.
This is assuming that you are finishing these products in a reasonable time. For example, a necklace may take longer to make than a bracelet, so it will cost more due to increased labor. Time is money, after all.
When making a piece of jewelry, time yourself to see how long you are taking to finish. Set an hourly rate and once you're done, multiply this rate by the time consumed.
When setting an hourly rate for yourself, do not be cheap. It is a good rule of thumb to multiply your hourly rate as an employee by 2.5 to receive your self-employed makings.
This is your moment to set your salary. Don't underestimate your success!
Expenses are going to be everything that is not related to jewelry. If you have a shop, it will be rent, electricity, fees, etc.
If you run a website, it would be the cost of running it as well as any extra marketing fees you have. If you do not have a shop, but instead use your home as a business, then mortgage or rent is included in this as well.
You will calculate expenses monthly. Work out the monthly costs and divide them by the number of products you make in a month. This will roughly allow you to know how much your expenses are costing you.
If you sold all your jewelry without adding on a few more profitable costs, you wouldn't be making much. You'd essentially be living paycheck to paycheck. When determining what's going to be placed on your jewelry price tags, make sure you know how to make a surplus.
The profit is the extra money you add to your sale's price so you earn income back. This will allow you to get more money in return, which you can reinvest in your business.
However, if you are distributing your products to another retailer to sell, it's important to give them the wholesale price. The wholesale price is going to be the same pricing formula, but not including a profit percentage.
Cost of Product 💲
After calculating, you'll finally run into the cost of your product!
If you are a beginner at selling handmade jewelry, this formula is great to start with. It'll give you an idea of all the different elements involved in a business. It will also help you become more diligent when creating products. You'll learn important skills, such as organization and time management.
The pricing formula is ideal to use when you feel lost at sea about pricing products. Whenever pricing gets difficult, remember to come back to it to make sure you're including the needed elements.
The Reality of Pricing Handmade Jewelry 📝
The formula for pricing products is helpful, but it's crucial to note that life does not always abide by calculations.
You'll run into a few instances where this formula will give you trouble. That's why it is perfect as an introduction to pricing, but it isn't our holy grail.
The reality of pricing handmade jewelry is that you'll experience extraneous factors that determine your price more than any formula. The following are a few aspects that will affect your sale's price:
1. Popularity ✨
If opal necklaces are trending on social media, then your handmade jewelry shouldn't be confined by a formula. You can consider hopping on these popular trends as often as you can. You'll have more leverage to increase your price, especially if your marketing and website are superb.
Don't feel bad about increasing your price! You will be surprised how many customers will openly support your business. Continue staying on top of the latest fashion and jewelry trends.
2. Beginner's Flaw 📝
Unfortunately, beginners are at a disadvantage if they are just now starting to make products. If it takes you four hours to finish a standard bracelet, it wouldn't be right to charge your customers an arm and a leg. You'll have to put in more work right away to make a profit.
However, once your beginner days are over and your hourly production rate is increasing, you'll be making surpluses in no time!
3. Material Quality 🤌🏻
The quality of your jewelry material is the single most important feature of your product. Jewelry that is made from real stones should be priced more than jewelry that is handled carelessly by a carrier.
For example, we pride ourselves in being a reputable stone distributor that produces the finest stones for jewelry making. We offer a variety of high-quality stones, ranging from freeform turquoise to calibrated gems. When finding supplier for your creations, you should certainly consider the outstanding quality!
How Do You Increase Your Prices? 🤔
As you begin to establish a foundation in pricing your handmade jewelry, you'll find yourself wanting to increase the sale's price. This occurs once your labor costs are decreasing and you want to make more income.
But of course, you can't raise your prices without changing what you're producing. The best way to increase your prices is to start investing in high-quality materials. The road to becoming a luxury company is closer than you think!
For instance, Turquoise Moose sources stones from Asia, Mexico, and Southwest US mines. No process mishandled these stones, as they are 100% natural and backed. When creating jewelry from these stones, you'll be able to factor our exceptional quality into your price.
Price Your Jewelry for Perfection Today ✨
With this short guide, you'll be able to navigate the complexities of pricing handmade jewelry rather efficiently. Starting with a formula is a great introduction, but a business is finicky, so it's crucial to know your way around some extra dollars.
Are you looking to increase your prices with some high-quality stones? Send us a note and we can supply you with the best stones on the market!