Wholesale Vs. Retail - Pricing Your Jewelry
A Jewelry Lessons member recently posted a question asking for feedback on wholesaling, specifically, pricing for wholesaling. Her question can be read at http://jewelrylessons.com/jewel/node/2669. I responded to the question but then decided to write an article on wholesale pricing as I have sold mainly wholesale, with some retail for a number of years and it took me a while to come up with a system that works for me.
My thought is that many of us under-price our jewelry, period. We feel “guilty” about asking “too much”. I mean, it is just a hobby, isn’t it? But this can be an expensive hobby. It is one thing to charge enough for supplies but are you charging enough for your creativity? What about when it becomes obvious that there is income to be made with this hobby? Let’s face it: If we are under-pricing retail, then pricing wholesale is next to impossible!
I recently took an intermediate forging class and the instructor was full of stories. We were briefly discussing pricing jewelry and he said, “One of my favorite stories is a colleague of mine was asked how long it took him to make a particular ring. He responded 30 years and 15 minutes”, the point being that his design and technique evolved over time – although a repetitive design may only take 15 minutes to make, how long did it take to get to that 15 minutes? It is hard to put a price on creativity and my opinion is that it boils down to your reputation and quality of work: Are you an established vendor at a farmer’s market or street fair? Does your quality of work match the price you are asking? Trust of the buyer, word of mouth, quality of work – some things come with time and can be a big part of pricing your jewelry.
Key Points for Pricing:
There are many things to take into consideration when pricing your jewelry. There are books (I know of two which are at the end of this article) and classes taught about pricing jewelry. I have never read one of the books or taken a class on the subject but over time, I developed my own system for pricing wholesale and retail. Some key ingredients are as follows:
1. Time involved
2. Overhead expense
3. Cost of supplies - are you purchasing supplies wholesale or retail?
4. What can the market bear?
What Helped Me Find My Niche:
1. Eni has a jewelry price calculator in Excel for $5 athttp://enioken.com/jewelry/tips_tools.html I purchased my copy a few years ago and use it all the time. The jewelry price calculator has many variables for wholesale and retail pricing. There are columns for itemizing components used for the piece of jewelry being priced, a place to enter your time involved, and wire cost calculated in inches and feet.
2. Keeping track of time is a necessity. If you are making 1 of a kind pieces that you played with (like we all do), then that is tough and you will have to use your best judgment on time.
3. Do you have an established hourly rate that you charge? I have a wholesale hourly rate and a retail hourly rate. I enter whichever rate is appropriate into my jewelry calculator.
Your 30 Years and 15 Minute Pieces:
I consider some pieces “money makers”. These are my “30 years and 15 minutes” pieces. For example, one of my money makers is a necklace that I wholesale for $100 and retail for $200. Here is the cost breakdown: The necklace takes me 1 hour to make with about $20 of material. Using the jewelry price calculator, I plug in my time and materials. The optimal suggested wholesale price is $59 and suggested retail prices range from $83 to $119.
Here is another nice money maker: I have a leather bracelet that I wholesale for $20 and retail for $30. This particular bracelet takes me 15 minutes to make with about $4 of material. Using Eni’s calculator, I again plug in my time and material cost. The optimal suggested wholesale price is $13 with the range of suggested retail prices being $18 to $26.
Both are good money makers but the necklace wins hands down - my point being whether you sell wholesale or retail, you can keep a profit balance between your products. I wholesale 1 of a kind pieces with established clients, making a small profit, because I know those clients are also going to buy my money makers, thereby keeping a nice profit balance.
In my examples above, it is easy to see the profit I make based on what I feel the market can bear, what I feel my creativity is worth, what I can get for my jewelry based on the repetitiveness of my client and my reputation. The calculator is a GREAT TOOL but cannot incorporate what the market will bear and what your creativity is worth because these are arbitrary factors that will change with time and as your expertise and reputation develop.
What the Market Will Bear:
The market is the customer and it is the demand on your product. Who are you selling to? Do you sell to an upscale clothing or jewelry store or are you selling to a store that is more mainstream? Likewise, what venue are you selling at? An upscale craft show? A swap meet? Home parties – high end or “working girl” party? What market are you targeting?
I will refer back to my necklace example in answering these questions. Remember, when using the jewelry price calculator, the optimal suggested wholesale price is $59 but I charge $100.
The first time I sold this necklace wholesale, I charged $60. My buyer sold the necklace the first day she displayed it in her store. Over the next two years and because the necklace sold so well and was in high demand, I slowly raised my price to $100. Last year (October 2007) when I raised my price to $110, my buyer was no longer interested in this necklace so $100 is what the market will bear for this necklace with this buyer.
In the above example, this particular buyer is a high end jewelry store. I have sold wholesale to a clothing store, not high end but yet more pricey than a mainstream store. When shown the necklace, she loved it but felt she could not purchase it for $100 and make her profit on it. She felt that if the necklace was $80, she could price it accordingly to make her required profit and have the price fit in with her store. I chose to not sell the necklace to her at a $20 loss because I know that my other buyer moves the necklace quite readily at the price that I want.
Let’s say I did sell the necklace to the clothing store for $80, it sold quickly, and the store called and ordered another one. At that point, I would make the suggestion that we go up in price by $5 – let’s find out what her market will bear. Will it still sell quickly or was she already getting top dollar for it?
Now, I decide to target a mainstream store. Will the necklace sell for $100? $80? Probably not. It will probably sell for that optimal suggested wholesale price of $60.
And believe it or not, some buyers won’t buy that $100 necklace even if they like it because they may think it is underpriced and are asking themselves “What is wrong with the necklace? It must be a poor seller”. Simply stated, what the market will bear boils down to who you are selling to and what they can afford to spend.
Wholesale Buyers – Some Things to Expect:
1. Wholesale buyers will try to barter with you to get your prices down. “I love this necklace but I don’t think I can make my profit on it” or “I mark up 3 times and that puts this necklace over the top for my store clientele” or “I just cannot pay my overhead if I reduce my price to 2.5 times mark up”…….I could go on and on – I have heard them all! When I first starting selling wholesale, green and naive as ever, I would buckle and lower my prices – I wanted to sell! Do you want to buckle or hold strong? Here is my story: I have a longstanding client who owns two jewelry stores. She marks up 3 times the wholesale price. Upon one of my return visits to her store to show her more jewelry I had for sale, she was on the phone so I was browsing and saw some of her prices on my jewelry and many were priced more than the 3 times that I had wholesaled for – HELLO! My prices went up after that visit, slowly and over time, but they went up.
So now when I hear “I love this necklace but…”, I may respond with “If you tell me how much you mark up, I can calculate if I can work with my price” or if I don’t want to barter and this is a new buyer to me, I might remind the buyer of the materials used in the piece and/or the complexity of design. Or maybe this is a well established buyer and I know their ploys to try to get me to reduce and I keep my necklace!
“I mark up 3 times…” I may respond with “What do you think you can get for it” and then I make my decision from there as to whether I want to come down in price or not.
2. “What if I want to buy 50 leather bracelets. Will I get a discount for buying volume?” If your answer is yes, know how much you will discount before being asked. Personally, I have no experience with this but I have never participated in craft fairs or wholesale shows, and the stores that I sell to are not chains so they don’t buy in quantity. Eni sells tutorials at volume discounts and there are many vendors who do this so this could be researched on the web to get an ideas of percentages to discount at.
I hope this has helped. These are just some basic ideas and guidelines. Really, I could write a book on this subject…….
Jewelry and Crafting Marketing Books:
Viki Lareau – Marketing and Selling Your Handmade Jewelry
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