How To Price Your Jewelry: Wholesale Jewelry and Retail Jewelry
At Agapé, we sell wholesale jewelry to businesses that truly have a passion for the industry and are determined to make it big.
In this blog, we will talk all about the formula for pricing your jewelry. Whether you are selling your handmade jewelry or reselling wholesale jewelry through suppliers like Agapé, pricing it right will make your business more successful in the long run.
How To Price Your Jewelry?
When potential wholesale jewelry buyers approach us, one of the questions we most commonly get is, “How do I price my jewelry?”
We understand it can be a little overwhelming to deal with prices when starting a business simply because that is one of the key components on which the future of your business depends. By reading this article, you will find a pricing structure that works best for you.
Before we start, there is one thing very important to understand, and that is never to undervalue the jewelry you are selling.
That won’t cover the costs of your business and might even send a message to the potential buyers that your jewelry is too cheap, which also means low quality.
Calculate Your Fixed Costs
The fixed costs are also called your annual overhead, which is something you need to cover to run your business no matter how much jewelry you sell.
Here it is included:
- Online presence
- Marketing (online or offline)
- Delivery of materials
Calculate whatever of these you have in a single year and that will be the cost of your fixed fee for running your business. Now you know what you need to make in a year to cover these costs.
Calculate Labor Costs
If you are running a small business at first, you will probably be the sole employee initially. You will need to do administrative tasks like provisioning, documentation, customer service, packing and posting, and so on.
Set a fair hourly rate for yourself that will be added onto the cost of jewelry. Don’t be tricked into not paying yourself anything. This may be ok for a short while in the beginning, but afterward it will be tricky to rise the prices to start earning.
Also, as you grow your business, you will need to pay someone else to work for you and this will require adding onto your cost of materials and profit margin.
How Do You Find Your Hourly Rate?
Getting the hourly rate and pricing model right will require some calculations and adjustments but nothing you can’t master with this guide.
First formula to follow:
- Take your annual fixed costs and divide the amount by your annual profitable making hours.
- The amount you get is the minimum you should be charging for your hourly rate.
Second formula to follow:
- Calculate the materials and packaging costs and multiply them by 2.5
- Add your hourly wage to that amount and then add 10% for your annual fixed costs and accidental costs. As you can see, here you aren’t calculating the fixed costs but simply adding 10% as a general amount to cover them.
Third formula to follow:
- For wholesale sellers, this formula is especially beneficial. Take your annual fixed costs and multiply them by 4. This should cover all your expenses and enable you to set something on the side so you don’t lose out on money.
If these seem too complex at the moment, don’t worry, at the bottom of the article, we have written out practical examples and practices from real life on how to apply and calculate everything. In the meantime, read on to learn what else is important when pricing your jewelry.
Calculate Your Target Audience
Ok, maybe you can’t really calculate your audience, but you know what we mean. Determine who you’re selling to. Who is your audience, and how do they value what you’re selling?
If you sell to high-end consumers, then undervaluing your jewelry will ignore your shop and search for something of better value, thinking that you are selling low-quality items.
If you are targeting budget consumers and pricing your jewelry too high, you will get the same effect. No sale, this time, because people will think you are out of their budget.
Running a business is a blessing for real entrepreneurs at heart but it does also involve risk and unpredictable costs. This is why when calculating by the formulas we mentioned above, always leave some room for unpredicted costs, which could affect your profit.
Don’t Be Shy, Spy
Spying may be an ugly word, but that’s what competition research is all about. Search for similar businesses that sell wholesale jewelry and analyze the value behind their products.
If you are just starting out, it sure is tempting to drop your prices below what your competitors are selling for just to attract their customers.
This is fine as long as you are not selling below your fixed costs, as it will run you into a loss.
Then as your brand develops and you gain the trust of your customers, you can gradually increase your prices.
Don’t forget. It’s all about offering value. As long as you provide what you promise, your customers are happy to spend more for a high-quality piece of jewelry.
Real-life Pricing Models, You Can Apply
Here are the promised practical examples of how to apply the pricing formulas we talked about at the beginning of this article.
- Materials/Wholesale supplies + time + annual fixed costs. Then add 10% on top of that amount.
- Materials/Supplies (if you’re selling handmade jewelry or selling wholesale) + time + annual fixed costs + profit. The initial amount you get is multiplied by 2. This way, you get the wholesale price of your jewelry. To get the retail price, multiply that amount by 2, and you know how much you should charge.
- Calculate: Time+materials+overheads+hallmarking(if you do any)+packaging. The amount you get should be multiplied by 1.5, and you will get the wholesale price. Then the wholesale price should be multiplied by 2.4 to get the retail price.
How To Price Your Jewelry: Conclusion
After you do these calculations and get the needed numbers, know that it doesn’t end there. Occasionally, you should revisit your prices and calculations based on competitors and industry standards. This way, you will always stay in line with the real market value or even on the higher end of it.
Check out our collection and order our high-class wholesale jewelry for your business.