When getting ready to price handmade jewelry, you have to find a balance between the cost your buyers are willing to pay and charging enough to make a profit. It’s a bit of a tightrope walk! If you’re struggling to price your handmade jewelry, there are a few questions you can ask, formulas to use, and adjustments you can make if prices don’t resonate with your customers. Ready to get your handmade jewelry pricing down to a science?
The first questions to ask to price handmade jewelry
There are two basic questions that every jewelry designer should ask themselves when figuring out how to price handmade jewelry:
1 | What are your material costs?
This may seem pretty straightforward, but it isn’t always. Depending on what medium you work in, you may have to make some estimates. For example, if you work with seed beads, it would be nearly impossible to get a solid price on a single bead. However, if you know how much a package of seed beads costs you and you know you typically use 2/3 of that package for a piece of jewelry, you can estimate that the material cost is 2/3 of that package’s cost.
If you’re working with larger beads, wire, cabochons, or whatever else your favorite medium is, it’s probably a lot easier. If you do wirework with cabochons, you know approximately how much wire you use to wrap that cabochon and you know how many cabochons come in a package. You then do the same math (one cabochon from a package of 4 = 1/4 the package price and 2 feet from a 20-foot wire spool = 1/10 of the spool cost) to find the material cost. Not too hard, right? ?
If you start making note of the package and individual item costs when you receive new materials, this will make your final calculations much easier! Don’t forget to take the little extras into account. The leftovers of wire, string, etc. and the findings such as necklace clasps and earring hooks are easy to overlook, but they need to be accounted for in your jewelry pricing.
2 | How much time does it take you to make a piece?
This one can be easy to forget about too. (It’s okay – you’re not alone!) If you haven’t tracked your jewelry making time before, I recommend a little tool called Toggle LINK. It’s a desktop and mobile app that you can open and hit a button to start tracking your time and then hit the button again to stop the time tracking. You can even categorize your time so you know exactly what time stamps correspond with which piece!
I know that time tracking can feel obnoxious, but it’s worth it. If you really just can’t bring yourself to do it, still try to get good estimates of your time. Without that, it makes it extremely hard to calculate a price and most jewelry designers underpay themselves when they don’t know how much time they spend making a piece.
Don’t forget to include the design time when pricing your handmade jewelry!
You’ll also want to track your design time. It’s easy to skip this part because it doesn’t always feel like part of the jewelry making process, but it’s crucial. Even if you’re just sitting down to decide what materials to use, that counts as time spent on a piece, so don’t forget about it!
Know your overhead when pricing your handmade jewelry
First, let’s define overhead. Overhead is also known as operating expenses. These are things that aren’t always directly related to a particular product but are expenses that your business has to pay. We’ll cover how to include overhead in your handmade jewelry prices in the next section. For now, here are some examples of overhead costs:
Listing fees or website hosting
If you list your jewelry on Etsy or a similar marketplace, you probably know all about the fees. These are directly related to a particular jewelry piece, but sometimes they’re more general. These fees need to be taken into account as you decide how to price handmade jewelry.
A lot of us don’t think about the ‘invisible’ overhead, especially if we work out of our home. But things like electricity, water, gas/heating, internet, transportation, etc. are all part of the cost of doing business! Since you can often deduct these costs from your taxes, the government definitely considers them a business expense, so you should too.
The best way to calculate the business overhead for these expenses is the same way you would for your taxes: square footage percentages. Find the square footage of your jewelry workspace and divide it into the total square footage of your house or apartment or teepee or whatever you’re living in right now. So if you have a 1500 square foot home and you use a 5’x5′ (25 square foot) workspace in your house, you would be using 1.67% of your home’s footprint and thus should use 1.67% of your utilities for your overhead calculation.
Using this example, if you spend $100 (for an easy, round number) on your water bill each month, you would include $1.67 of that as business overhead. And if your electric bill is $400 per month, you would consider $6.67 of that as business overhead. For transportation, you would just calculate your miles per gallon on your car and multiply it by the cost per gallon of gasoline (or just the cost of a public transit ticket if you use that) when you’re going on a jewelry-related excursion (be it a trip to Hobby Lobby or to a vendor show or what have you). Not too hard in the end, right?
Booth fees or show fees
You may not forget about these, but I know they can be hard to quantify. One way you can account for them is to divide the fee by 12 and include that amount in the overhead for the next 12 months. You could also divide the cost by the number of pieces you brought to the event and include that number in their prices. (Don’t remove that number from the pieces that don’t sell at the event, though! You still incurred that cost and need to recoup it!)
Payment processing fees
If you accept credit card payments, there are inevitable processing fees to go along with those payments. These can be written off on your taxes and there aren’t really any legal ways (that I’ve found, anyways) to avoid those processing fees. The best thing you can do is know that they’ll exist and build it into your jewelry prices if you want to (this is one of the only overhead costs that I’ll tell you is optional!).
So say you have a piece that, including all of the other numbers we’ll talk about in the price calculation section, you came to a $100 price tag. To include the processing fees, you would multiply $100 by 0.029 and then add $0.30 (or whatever your payment processor’s rates are; Square and most other processors are 2.9% + $0.30 per transaction). So that $100 price tag would then be $103.20. The processing fees on this total would be $3.29, so you would technically still be short $0.09, but it’s close enough for government work. ?
Any other expenses associated with your jewelry making
Everyone does business a little differently, so there may be other costs that I didn’t outline here. Just use the same type of math I’ve talked about for whatever the closest overhead category is and go from there. If you have questions about your specific expense scenario, feel free to drop it in the comments, too! I’d be happy to help you figure out how to calculate it.
Calculating the final price for your handmade jewelry
Here’s where all your numbers come together! Are you ready to price your handmade jewelry? Here we go!
Add 1.5-2x the material cost
You need to be able to have a little bit of extra beyond what you already paid for the materials so you can invest in more and possibly even better-quality materials. Without a bit of extra capital, it’s hard to grow and experiment with your jewelry pieces.
So for example, if your material cost was $10 (just for an easy number; yours may be much higher than $10 and that’s okay!), you would include $15-20 in your final price for materials cost.
Add your time x hourly rate
This is where many jewelry designers trip themselves up a little bit. You love what you do, you just enjoy making – that’s great! But you also have to make money for the time you put into this. Don’t sell yourself short by paying yourself minimum wage or less, but don’t get too crazy right out of the gate either. If you’re just started, you can experiment with your hourly rate (and if you’ve been doing this a while, you should still experiment too!).
For round numbers, we’ll use $20/hour. So if the necklace you just made took you two hours to source materials, design, and assemble, you would add $40 to your final price.
Mark up your time x hourly rate
You’re bound to forget a few tasks that contribute to your jewelry design. I recommend adding another 10% or so of the hourly rate you just calculated. So that $40 becomes $44. You can choose your markup and if you’ve been estimating your time, you may want to give it a bit of an extra markup!
Decide your markup for overhead
Speaking of markup, you need to do this with your overhead. I said I would talk more about how to include overhead, so here we go: overhead is the total of those overhead calculations (for the month you’re in), divided by the number of jewelry pieces you’ve made or plan to make for the month.
So if you calculated your overhead for the month to be $20 and you have made or plan to make 10 pieces, you would add $2 to your final price to account for overhead.
But wait, there’s a little bit more! Since overhead is so fluid and can be hard to calculate, I also recommend marking up your overhead costs a little bit, same as you did your hourly rate. There’s always something that slips through the cracks, right? You can choose your own markup, but for sake of example, if you used a 10% markup, your $2 overhead per piece would become $2.20.
Add all of these numbers together
Okay, now comes the fun part! Let’s add up all of the numbers you just calculated. I’ve created an easy-to-use printable worksheet to help you do this. Here’s how your final cost would break down in the examples we’ve used:
$15-20 material cost
+ $44 hourly rate
+ $2.20 overhead cost
= $61.20-$66.20 final cost
If you want to round that number up, go for it. Some types of customers are more drawn to round numbers; others like the $X.97 or $X.95, so you can experiment to see where your customers fall.
What to do if your handmade jewelry prices seem way too high
Now, I know that pricing can be tricky. What one person thinks is a reasonable price may seem absurd to someone else. If you’re running into pricing problems, remember that your pieces are HANDMADE. You can’t compare them to Walmart jewelry and your customers shouldn’t either.
If nobody is buying, though, here are some questions to ask yourself:
1 | Are you targeting the right market?
If you determined that your ideal audience is college students, for example… you’ll have to remember that a lot of them are broke. There are a lot of customers that just are not a good market for handmade jewelry. They may WANT to be a good market, but their values and wallet don’t agree.
Take a good hard look at who you’re marketing your jewelry to. If they are more likely to try to find a mass-produced piece of jewelry at Target than get a one-of-a-kind jewelry piece that will last, you may need to find a new customer base who truly values your work.
2 | Are you communicating the value of your jewelry pieces?
Speaking of customers valuing your work… are you actually showing them that value? Don’t be shy about telling them! They need to know if no one else will ever be able to buy this piece. If you carefully sourced your materials to make sure they’re high-quality and will last – your customers need to know!
If you’re not communicating the value of your jewelry, your customers may not understand the price tag when they compare it to department store jewelry. Make sure that you’re showing them why your jewelry is worth a premium price tag.
3 | How can you reduce your handmade jewelry costs?
If all else fails, there are ways to reduce your jewelry making costs. Here are the three top options:
1 | Can you reduce your material expenses?
This one is pretty straightforward. If you’re getting your jewelry materials from Michael’s or Hobby Lobby, you’re paying retail prices, including the retailer’s markup. A lot of retailers mark up their inventory by 200-300%! They need to make a profit and account for their overhead, but YOU don’t need to pay that markup, especially if you’re buying jewelry materials on a regular basis.
I highly recommend finding a wholesale jewelry material supplier like Fire Mountain Gems LINK. That’s the company that I’ve used for my own jewelry materials for years and they’ve been fantastic, but there are others out there. Just do a Google search for “wholesale jewelry supplies” and see what pops up. If there are specific materials you use, add those search terms too. Buying wholesale can save you a LOT of money in the long run!
2 | Can you get faster at making jewelry?
Your hourly rate is often the most expensive part of your jewelry price. Reducing your hourly rate hurts you in the long-term, so instead of doing that, how about seeing if you can get faster at making your jewelry?
Practice techniques that take you a long time to do right now. So if shaping eye-pin loops takes you forever, for example, practice, practice, practice! The more you practice, the faster you’ll get. The faster you are, the less time it takes you to make a piece of jewelry. The less time it takes to make that piece of jewelry, the less you have to charge your customers and the more likely they may be to buy! Win-win.
3 | Can you simplify your designs or jewelry making process?
If jewelry pieces take you absolutely forever to make simply because they’re intricate and thus time-consuming, you may need to think about simplifying your designs a bit. Or if it takes you a long time to finish a jewelry piece because you keep having to go find your tools and materials, you may need to create a simple process to follow before making each jewelry piece. Think creatively about ways you can simplify your designs or processes to make them more straightforward and less time-consuming.
There are other ways to reduce your handmade jewelry prices, but these are some of the first methods I recommend trying. If you’re still struggling with your pricing, drop a note in the comments and I’ll see what I can do to help!
If you’re ready to learn how to price your handmade jewelry sustainably, you’re now on your way! By being realistic about your costs, knowing how much time a piece of jewelry takes to make, and finding ways to reduce your jewelry prices (if necessary), you can price your jewelry in a way that is good for you AND your customers.
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