Since increasing profits are so closely related to sales and costs, you must consider both of them when looking for ways to increase your profits.
Selling more products won't mean much if your costs to produce them also increases. On the other hand, if you can lower your costs, your profits will increase even when you don't make additional sales.
Because of the high costs of marketing, it will be a lot easier increasing profits by decreasing costs than by increasing sales.
If you have been keeping accurate records on both tracking time and costs you will be able to analyze every stage of your jewelry from designing to production to selling. In this analysis, you will be able to logically see where it is possible to cut costs. A couple of dollars or even few pennies per item might not seem like much, but added up over the year will make a big difference.
Here are a few possibilities of where you could cut your costs to help increasing profits:
- Produce in quantity. If you are only making one or two items for each design, consider producing in quantity or making production pieces. You can save on designing time, material and labor costs. To see how you can save on these costs while increasing profits read this article: Unique Beaded Jewelry - One-of-a-kind Vs Production Pieces.
- Cut down the cost of your materials. Search out cheaper sources of supply. Buying your materials wholesale can cut your costs in half. If you can invest the money and buy in larger quantities, you will save even more money. Consider contacting other jewelry designers who might be willing to combine their orders with yours, then you both can take advantage of the lower wholesale price without the worrying of quantity purchases.
- Use materials carefully. Get the most you can out of each. Reducing the amount of material you use even by a fraction can save you money in the long run. Watch carefully how you use your materials to try and cut down on scraps and wastage.
- Buy less expensive materials. Where possible, without taking away from your jewelry designs. This doesn't mean use inferior raw materials, but cut back on more expensive materials where the justification of the cost is not really a necessary component of the final product. For example: Artistically, handmade lampwork spacer beads (just plain round and nothing fancy) may be just the perfect finishing touch on your handmade lampwork focal beads bracelet, but will the average craft show customer be willing to spend $20 more just for the spacer beads? You could still keep your designs unique and accent your focal beads with glass, crystals, gemstone or even pearls.
- Use more expensive materials. Ironically enough, if you use better quality materials, the price of your item could be increased much more than the increase in the cost of these materials. If your labour and overhead stays the same, then you are increasing profits per item. For example: A sterling silver clasp may cost you $5.00 and a pewter one only $1.25 but you will be able to justify the increase of piece by $10 to $15 or more if you use sterling silver clasp rather than a pewter one.
- Redesign your product. If you have a jewelry piece that is beautiful but due to both labor and material costs is priced too high to sell, then try redesigning and simplifying the construction of it in order to produce it more rapidly and cost effectively. Eliminate nice, but unnecessary, detail work in your designs. Try to design and develop your items from the beginning with costing in mind.
- Cut down on production time. To help in increasing profits, study time-management techniques and learn how to carefully plan and organize your time efficiently. Utilize basic mass production process. Producing your products in stages will greatly cut down the time it takes to produce each item. Analyze each stage to see where you can save even more time, finding even more short cuts. Although cutting corners will cut down on production time, but you must learn how to do it without compromising quality.
- Sell patterns or kits. If you have a labor-intensive product where you simply cannot cut down on production time, then consider increasing profits by selling the design as a pattern or as a kit. You could still charge for your design time, for materials and for overhead but there will be no labour charges. Many people enjoy making crafts themselves but do not have the imagination or creativity that goes into designing them, so instead they purchase kits and patterns.
- Give your jewelry piece a special name. To increase the value of your products and make them more irresistible to buyers, give them special names — or at least give your line a name. Attach a tag to your products with a special "sales message" on it, or a message written about the product and why it has been given that name.
- Have a range of prices for your products. Your sales are limited if you have all your jewelry pieces in the same price range. Having your jewelry at different price ranges will give you a broader customer base.
- Jump price. To increasing profits a little, jump the price a little. If your product is of good quality and fine workmanship then buyers may not be as averse in paying more for your items as you may think. If they will pay $13 for something, they'll certainly pay $15. If they'll pay $45, then why not pay $49. If a buyer really wants your product, then they will probably pay the extra couple of dollars to own it.
- Change your market. If you are having trouble selling your products at the prices you feel you must get in order to show a profit, then one possible solution is to change the market you are using. Some products sell better at craft shows, some sell better through the internet, some sell better through retail shops, and some sell better through home shows or studio sales. You may have to experiment a little here to find out which market is better suited for which jewelry lines. If you need a higher priced market, look for shops or galleries which generally serve a wealthier clientele.
Homework Is Your Key To Success
In the end, if you're trying to figure out if your prices are high enough, remember that it's important to do calculations on paper, taking in all the considerations that have been mentioned in this business guide. If you want to make a profit from your handmade jewelry, you have to get a little scientific about it.
Once you have figured all your costs and prices, you must now figure out, if you are not only covering all your costs, but also if you are making enough per hour in your home jewelry business to live on, and if there is enough profit left over for your jewelry business to grow on. If the answer to all three is yes, great, you are on the road to success. If no, then you must start to plan what you can do to:
- get a higher price for what you make;
- make more of something in a shorter time; or
- pay less for your raw materials.
While increasing profits your bottom-line figure at year's end will depend on how well you have done your homework.
Remember to make your time count more by keeping accurate records of all your production and selling costs. Once you develop a habit of doing this, it won't take long. Precise record keeping is essential to profitable pricing.
Your jewelry design is good and priced right, and it still isn't selling? Read the following article on what to do to make sure your jewelry designs sell.What to Do When Your Handmade Bead Jewelry Isn't Selling.
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