Figuring Wholesale Prices
To come up with your wholesale prices there are two distinct stages in pricing a jewelry item. As a jewelry manufacturer the first stage you must consider are the costs involved in producing the product.
The second stage must absorb the cost of selling the product, regardless of the means of selling you use. You may never wholesale a single piece, but you should know how much you have to add over and above the wholesale price to obtain a retail price.
Even though you may decide to start out selling your work strictly retail through craft shows, you should still figure your whole sale price, as your selling costs (booth fees, transportation, packaging materials, advertising, promotional materials, display fixtures, etc.) will be added to this price to arrive at a retail price for your products. Normally your retail price is double your whole sale price.
Many jewelry designers say they can't afford to wholesale their jewelry — that is, they can't give a discount off their retail price to a shop or gallery that wants to purchase in quantity for resale.
This is because these jewelry designers are selling their products retail at the first pricing stage, the wholesale level , and therefore have not adequately considered the second set of selling costs.
The first stage of your pricing formula should look something like this:
MATERIALS + LABOR + OVERHEAD + PROFIT = WHOLESALE PRICE
Examining each of these costs in your formula should give you a better appreciation of the complexities of pricing.
The total cost of all raw materials and finishing products used in making an article.
Labor is the value placed on the time you, or someone else, spends in making an item.
Above and beyond the cost of materials and labor, which are directly related to the jewelry you produce, you must also consider all the costs of being in business. Rent, utilities, phone, automobile, etc, are costs that are indirectly related to producing your work called overhead. In order to stay in business you must include these costs in your pricing formula.
Profit is the return you get for the whole jewelry project—for the creativity that went into it, the skills required to carry it out, and the risks undertaken. In short, for being an entrepreneur instead of just a laborer.
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