Selling Costs You Need to
Include in Your Retail Prices
Learn some of the easily identifiable costs of selling that contribute to your selling costs.
Now that you have a wholesale price, you can double it to arrive at your retail price. If you are selling through shops or galleries they will most likely at least double your wholesale price. In effect, the store gets half and you get half of what the customer pays for the item. This is the traditional mark-up on items in the gift trade or business.
Many jewelry designers think shop owners are taking advantage of them when they take a 100 percent markup on their work. They must consider that the shop has many expenses to pay, including rent, utilities, insurance, salaries to sales clerks, advertising, and any other cost incurred to run a business. Since overhead costs in running a good store are high, and risks are great, selling your work at double the price you sell to the store is a reasonable mark-up. Like craftspeople, their profit margins are slim , their hours long, their problems many and complex.
When you are selling the items yourself, you will be using the retail half of the price to cover your selling costs. Selling may be much more expensive than you originally imagined.
Once you decide to sell your work yourself, you have become a salesperson in addition to being a jewelry producer.
Following are some of the easily identifiable costs of selling that contribute to your selling costs:
- Exhibition Expenses. Booth fees for craft shows, cost of materials for your booth, signs, and display items.
- Travel Expenses. If you attend out-of-town shows you should include your food and accommodations.
- Advertising and Promotion. Included in your selling costs are any expense involved in making your customers aware of your products. Printing of brochures, flyers or catalogues, and any advertising in magazines or newsletters.
- Packaging Materials. When selling your products directly to the customer you need some sort of packaging material for them to carry their purchases home. This would include gift boxes, bags, tissue, hand tags, and gift cards.
- Rent. If you were to rent a shop or studio the cost to rent, utilities, and cleaning supplies
- Your Portfolio. The cost of building your portfolio whether you do it yourself or hire a professional to help. This includes photographic expenses as well, such as the cost of film and developing, duplicate slides and prints, hiring a professional photographer.
- Your Selling Time. In your selling costs you must also consider not only the time you actually spend at the show sitting behind your booth, but the time spent packing up the jewelry the day before, loading the car, traveling time, unloading and unpacking when you get back — after all, you are losing these hours from production.
- Sales Help. You may need to hire help for setting up and dismantling your booth, as well as help in selling.
- Mail Order. If you sell your products through the web or mail order then you must also consider your mailing costs such as postage, shipping, and extra packaging materials.
Depending on how you decide to sell your work, you might find that you are spending as much time or more on selling your jewelry as you are in making them. Actually this is quite normal and to be expected, especially at first. You should soon become more knowledgeable about selling and get your selling costs in line with what your retail price allows.
If you go to shows, you might figure out how much you will need to make in sales to make them worth your time as a salesperson. You must always ask yourself whether the time and expense you spend in selling would be better used in production.
Craft shows, for example, should be carefully scrutinized, because they can be a drain on your productivity. Say you make $350 at a 3 day show, could you have made more if you had stayed home and worked in your studio? Of course many jewelry designers enjoy the direct contact with buyers and the camaraderie of other crafts people they meet at these shows, and they don't want to give that up.
If you are selling your jewelry to wholesale buyers then the actual costs of selling to retail outlets must become part of the wholesale price. Whether you do it yourself or have a sales agent or representative (who usually gets approximately 15 percent of the wholesale price as commission) sell your jewelry to shops for you, you still need sales literature, slides or photographs, order forms, samples, and anything else to help you get that sale.
You may decide to sell your work through wholesale trade shows in which you will need to account for your booth fees, table rental, materials for your display, signs, and promotional material. Again, all these costs of selling your products wholesale will have to be included in your wholesale price. Many craftspeople work their wholesale selling costs into their overhead when pricing their work.
When selling your jewelry both wholesale and retail, you must keep your prices consistent. Whether a customer buys your product from a gift shop or directly from you at a craft show, the price must be the same. For example, you cannot sell a handmade bead necklace to a store at the wholesale price of $17.50, in which the store will mark up to $35, and then sell that same necklace at a craft show for $25. You must keep your retail price consistent with your wholesale customer's retail price. Charging any less will jeopardize your wholesale customer's relationship, and you will find that they will stop ordering from you.
You may find that you will have some jewelry pieces—due to their high production costs—that will simply not sell if you have to double your wholesale costs. If so, then keep these pieces for craft or home shows only, selling them at a retail price you think the market can bear.
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