Jewelry Pricing

Is Jewelry pricing giving you a hard time? - It shouldn’t. Just follow these simple formulas to make sure you are not losing money when selling your piece.

Categories for selling jewelry:

Retail: Price that stores will sell your jewelry.
Wholesale: Price that you would sell to a store if they buy a specified amount of jewelry.
Direct: Price that you would sell to a friend or at craft shows.

Jewelry Pricing Formula Components:

Total Material Costs: sum of EVERY BIT of materials used for the jewelry piece: wire, glue, seed beads, beading wire, packaging… everything!

Total Labor Cost: your per hour cost x time spent. If you spent less than an hour, here is an example showing how to find the labor cost: I charge $7.25 per hour and I made a necklace that took me 15 minutes to make, I would use the following formula: $7.25/60min=.12 cents per minute, so .12 x 15 min= $1.80 for labor.

Total Overhead Cost: overhead is the indirect cost that you incurred in order to be able to make jewelry; like electricity, tools, office supplies, etc.  The way I track my overhead is to maintain a separate bank account and use it only for business expenses (Material, Labor, etc.) and every 3 months calculate my average overhead cost. How? Add the sum of the Indirect Costs (Overhead) and divide by the sum of the Direct Costs (Material and Labor). For example, if your indirect costs for 3 months are $360 and direct costs are $1,800 your overhead rate is 20%. In general I always get an average of 10%-20% of overhead.

Jewelry Pricing Formulas

• Wholesale: ((Material Costs x 2) + Labor Cost) + Overhead Cost
  First find the Total Material Cost x 2
  Then add the Total Labor Cost
  And lastly add the Overhead Cost
  
• Retail:   Wholesale Price x 2
• Direct:  Wholesale Price x 1.5
  

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Does it seem like a lot? IT’S NOT. Let’s find out the real profit using the example above.

Wholesale Price :$20.00
          Take out the Overhead cost: $20.00 – $3.45 = $16.55
          Now Take out the Labor Cost: $16.55 -$7.25 = $9.30
          Finally take out the Material Cost: $9.30 - $5.00 = $4.30
Wholesale Profit: $4.30

Retail Price:$40.00
Because this price is what the store is going to sell your piece to the final client, you will not profit from the Retail Price. In this case, the store will get a profit of $40.00- $20.00 = $20.00

Direct Price:$30.00
          Take out the Overhead cost: $30.00 – $3.45 = $26.55
          Now Take out the Labor Cost: $26.55 -$7.25 = $19.30
          Finally take out the Material Cost: $19.30 - $5.00 = $14.30
Direct Profit: $14.30

Based on the jewelry pricing formulas shown here, if you still think that these prices are too high, try reducing the labor cost by speeding up production time, looking for cheaper materials, or as a final resort - lowering labor wages.

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