Friday, October 12, 2007

What's It Worth?

Ahhhh...pricing. The age old delima. It's a surprisingly touchy and personal subject. I am shocked by how personal some people take their pricing and any criticism or questioning about how they figure their prices.

Jewelry pricing is a tough one - especially handcrafted jewelry. You can find people selling handcrafted bobbles for as little as $1 up to thousands and thousands of dollars. Who is to say who is correct? If it works for them and they are able to sell why does it matter what they charge?

I think it does matter though. While I am just one random person in the universe and my opinion matters about as much as that rock outside, my views on pricing have changed drastically over the last few years.

When I first started creating jewelry to sell I worked with glass and base metals. I wasn't shopping carefully for wholesale - I just went to the local bead store and bought what caught my eye. Selling a pair of glass and base metal earrings for $5 when you first start out isn't completely unreasonable.

One thing I didn't think about when I was selling those $5 earrings - Are the people buying $5 earrings the same people I want to target in two years? What about when I start using sterling silver, or gold, and gemstones? The type of customers who want $5 earrings aren't as concerned about the type of materials I use - they just want a cheap pair of cute earrings. There's nothing wrong with that, but spending time building my customer base with these people doesn't make a ton of sense.

Additionally, it never occured to me that while the materials going into the earrings may have cost me $1 out of pocket, there are tons of other expenses that aren't as tangible - "Overhead."

Things to consider when figuring out prices:
  • Electricity - Yup - it takes power to create. Lights, drills, tumblers...stuff takes electricity to run and help you create
  • Rent - Sure you're working at home but you're using space in your home that would otherwise be used for something else. If you were to try to create elsewhere you'd have to pay rent. It's not free to use space at home either.
  • Tools - It takes quite a few tools to create good jewelry. My husband swears that I do not need one more hammer. He's wrong. I have all sorts of pliers and cutters and hammers. They cost money. And I use them to create my jewelry.
  • Mileage / Wear & Tear - Whether it's driving to the post office to mail orders or driving to the local bead store for that emergency bead run, you put mileage on your car. It counts.
  • Shipping - Do you factor in the shipping costs from the bead store to you? I didn't. If I bought a strand at $10, that's what I thought it cost. Well, duh...if I ordered 10 things and shipping as $10 I need to add $1 cost to each thing I ordered.
  • Packaging - Whether you put an item in a small plastic zip lock style bag or you have gone out and had silky personalized baggies created, this cost needs to be recouped. Then there's bubble mailers or boxes, bubble wrap, tape, tissue paper, gift boxes, etc. It adds up.
  • Show Fees - Do you do shows? I hate them but I still do them. It costs a lot - it's not just the show entry fee. You have tables, table covers, canopy for outdoor shows, receipt books, pens, display items (busts, earring stand, etc.), and the list goes on and on. I'm always shocked how much stuff I end up bringing to shows.
  • Website - Do you sell online? Did you pay for your website? I did. It's not cheap (although for me it was soooo worth it). Even if you have a "Free" site (a friend or family member, or even you, created it) it's not free. You, or the creator, spent TIME making your online storefront. Then there's upkeep and maintenance. Oh and the cost just to connect to the Internet - don't forget that. Nothing is ever "free".
  • Photography - Take a picture, it'll last longer. But getting good photos is HARD! It requires a digital camera if you're going to do it yourself. Then you need time to learn and take good photos...which can take years. Don't forget photo editing software. And the time it takes to edit photos - which can range from 5 minutes to an hour for each photo. Don't even get me started on hiring someone to take good photos for you - it's worth it but your jewelry has to be priced higher to help pay for it.

I'm sure there are even more overhead type expenses I could come up with if I thought about it longer. But I think this list is pretty good. I don't see how anyone could really figure out a per piece cost from all of that, which is why it's so hard to factor overhead into our pricing - even though it is really important.

I think I need to go raise my prices now. That list depressed me!

Want more? Visit Rena's Home Jewelry Business Tips on Pricing. She's got some great articles. Eni Oken also has a price calculator you can use as a guide for pricing your work.

1 comment:

Nat said...

What drives me crazy are all of the fees involved in selling online. (Ebay...Etsy. Although Etsy is pretty good.). Paypal is a snake, I've decided.