Pricing for Success | Jewellery
Regardless of your area of expertise as a maker, only being a viable business will allow you to continue being a creative working in a business you are passionate about.
One of the most difficult and critical aspects to decide upon is the wholes sale or retail price of your Jewellery work and this blog provides some tips for getting this right.
COSTING & PRICING
There are various standard calculations that work for many makers for example ;
COST PRICE of materials/working costs x2 (or x3) + Your making hours charge + Miscellaneous expenses such as:
% to cover Utilities/Consumables
% to cover Workshop rent (If applicable)
Average Delivery cost
Hallmarking (if applicable)
% for business promotion costs (if applicable)
Invoice/Payment charges (If applicable)
% to cover Service charges (Accountancy etc if applicable)
= Wholesale rate ( Your minimum selling price)
WHOLESALE PRICE x2 (or x 3)
+ Vat ( if your retailer is vat registered )
+ P&P (If you pay for this)
= Retail price
WHOLESALE PLUS PRICING
Another option is to add your required profit margin (Your wage) onto your wholesale price. This enables you to match selling price on your website to the selling price of the Retailers that sell your work, without affecting the profit margin you need to make.
Matching sales prices if you decide to sell the same product direct what from your website that you sell via a Retailer is an absolute must, in order to retain good relations and critically keep your coveted external selling arena.
Reverse pricing is a very useful exercise that can help you decide if one of your designs will fit profitably in a particular sales arena.
Following your research decide upon a retail price for your item eg What is the maximum amount of money you consider someone would be prepared to pay for a piece in the sales arena of your choice. This may mean selecting a price to be competitive to similar products on sale.
Your customer has no concern over the cost of your making/ how you earn your living, they may like your story and this will to some extent be persuasive and add a little more value (£) to your piece but only if you are a recognisable brand name.
Customers see an item, like it and decide to buy or not.
Decide upon your top retail price, deduct the vat, deduct any commission payable, deduct all of your attributed costs of making
= The pure profit this piece will earn you per sale.
What happens if you work out your retail price and you are pricing yourself out of the marketplace?
- Do you have any non material but valuable aspects about your work, such as Ethically sourced? Other influential factors can add value to your work and should be apparent if they reflect a point of difference on selling price.
- Can you make small changes to the design or production costs to be more competitive?
- Is this really a commercial piece of work, could you promote it as a bespoke or limited edition piece to add value (raise the selling price)?
What happens if you work out your retail price and it seems too cheap?
An item priced too cheaply could de-value an item in the eyes of your target customer, and affect your brand image.
Research is key to making sure you are viable and competitive and reverse pricing or Wholesale plus pricing can help you decide if and how to make changes that work for you.
What happens if this pure profit number is not enough or there is a minus figure?
Consider, how can this piece be made more cheaply to increase the profit?
Any other methods or techniques to reduce making time and cost ?
Is outsourcing a viable option for techniques where another person's expertise can reduce the making time?
Can a simpler design with the same ethos make a difference and turn this piece in to a commercial line?
Could using CAD Design and casting repeats create a more viable piece?
If none of these options works for you it means for this piece, you have beautiful exhibition or hero piece that you can use to promote your brand but this piece will not make you money.
- Hero pieces are still important, they prove your expertise.
- Wear these.
- They can still be sold as a bespoke limited edition pieces, which will require a different promotional strategy.
Some designs ARE commercial pieces and make small profits with multiple sales.
Some designs have the potential to BECOME commercial pieces
Some designs should be a luxury bespoke one-of piece and be designed for a different ideal client. Making a higher profit per sale, but fewer sales.
Some designs can only be HERO pieces, use these to showcase your expertise as Maker. (You made them once, the look incredible but you never want to make the exact item again!)
Some design won’t make the cut in terms of sales potential. Re-design / redevelop and move on.
Price Increases & Retailers
At some point during your relationship with any Retailer you are in partnership with, you may need to tackle increasing the price of items that you have previously agreed a wholesale or retail price for, this might be for items they have purchased for stock or items they accept on a Sale or Return basis.
it is important for your Retailer to know as soon as possible that it will cost them more to wholesale purchase the same items in future.
Communication is important and you should inform your Retailer about your planned price changes as soon as you realise during making, that your cost have increased and this will impact the profit of your future sales. Explaining your reasons for a price increase is a good idea too.
You could offer your Retailer a wholesale purchase quantity incentive or options to assist with the price transitions, further notes below;
Purchased Items (Wholesale/ Cost)
Inform that you will be increasing the wholesale cost prices of identical new stock supplied from a date you advise, giving at least a couple of weeks notice is fair. Providing your Retailer with a a price list showing images to assist with quick identification of pieces will be helpful.
It will be the decision of the Retailer to increase the selling price of stock they hold pre price increase or not because they already own those pieces, however if you also stock the same pieces on your Website you should inform your retailer you intend to increase the selling price on your Website also and when you will be doing this because the selling price (RRP) of your work should be the same everywhere.
You might like to offer a discount on the first batch quantity wholesale purchase at the new price, it might help your Retailer ease into the new selling pricing.
Sale or Return Items (SOR)
Inform about your prices increase and explain your reason that is will cost you more to replace them in future, and request that they please implement new selling prices of your stock as per the list you provide.
Inform that any new identical items provided will be at sold at the new wholesale price.
You could offer them the opportunity to buy the stock they have at SOR at the old wholesale price.
You could offer to replace some or all of the SOR lines held with new pieces, that sell at the new price.
If you would like some individual help with costing and pricing and/or advice about the potential of a jewellery design check out this course link for details of our one-to-one mini course, taught by an experienced commercial jeweller.
COURSE: Costing & Pricing Mini course
ONLINE Jewellery Business Mentoring : Essentials for Selling 2 Hours
About the author
Dawn Meaden-Johnson is the Director and Founder of The Bespoke Jewellery Training Company and is a training consultant with over 25 years industry specific experience.
Originally a graduate Silversmith of the prestigious School of Jewellery in Birmingham, Dawn has a wide variety of experience over her career in different industry roles including 10 years at Jewellery Retail giants Signet Group in: Sales, Retail Operations, Export, Marketing and Merchandising roles at their HQ in Birmingham.
From 2004-2014 Dawn was short course and external training project manager at the School of Jewellery Birmingham City University (BCU) working with UK and International clients.
Dawn founded The Bespoke Jewellery Training Company in 2014 and her priority now is providing clients and Companies with private tuition access to professional standard industry training in the studios of some of the most experienced and finest of Britain's Goldsmiths/Jewellers and Industry Specialists.
Dawn has been supporting Graduates and Designer Makers via Jewellery Business Mentoring. In 2017 The Bespoke Jewellery Training Company became an a Jewellery Graduate award sponsor at The School of Jewellery at Birmingham City University (BCU), where upon graduation, prize winners are selected to receive a 9 month Graduate Jewellery Business Mentoring programme delivered by Dawn to assist their transition into industry business practises.
On occasion Dawn does still make contemporary Jewellery and in recent times her work was selected for the "Beyond the Blue" exhibition at Gill Wing Gallery in London.