Jewelry Pricing Formula

the two-step system I use
for pricing jewelry

© by Rena Klingenberg; all rights reserved.

Do you use a jewelry pricing formula to determine how much to charge for your creations? There isn’t one “best” formula for pricing jewelry – and most artists who sell their jewelry come up with their own price calculation procedures.

Important Elements of a
Jewelry Pricing Formula

In my opinion, using a jewelry pricing formula is just the first step in arriving at the final price of a piece of jewelry.

First, I use a calculation to determine a base price that ensures I won’t be selling the piece at a loss.

Then, once I’ve determined that base price, I adjust the final retail price to more accurately reflect the value of the piece to my particular market.

The key is to be sure that any jewelry pricing formula you use compensates you for:

  • your supplies
  • your overhead expenses
  • your time.

Important:

When you’re selling your handmade jewelry, it’s important to purchase your supplies at the lowest possible price – at wholesale or at bulk discounts as much as possible.

This jewelry pricing formula does NOT provide realistic prices if you’re purchasing your supplies at full retail prices from a local craft store or bead store.

For example, if your supplies for a pair of earrings cost $15 from a craft or bead store, but the same supplies would have cost you just $5 if you were purchasing wholesale or in bulk, you can see the huge difference that would make in the pricing formula’s final numbers! :)

The Second Step in My
Jewelry Pricing Formula

After using my formula, I add an important second step: Adjust the resulting price to reflect:

  • the overall outcome of the finished piece
  • how easily I could replace all of the elements in the piece if I wanted to make a similar item
  • what I believe people in my target market would be willing to pay.

Of course, these three points are mainly subjective, and require a bit of experience with your intended market. But I know I can’t drop the final retail price below the base price the formula gave me, without losing money on the sale.

My Jewelry Base-Price Formula

It’s a simple equation:

Base price =

(cost of materials + packaging) x 4
+ your pro-rated hourly labor rate

then + 10% of that total for overhead costs.

An Example of Using My Formula:

For this example, let’s say that:

  • you made a necklace using $5 of supplies
  • your packaging (tag, box, bow, bag, and business card) for this piece totals $1
  • the necklace took you 30 minutes to make
  • your hourly labor rate is $20 (of course, your own labor rate may be much different, depending on your medium, your speed, and your skill level).

Now let’s calculate:

1. First, figure out your pro-rated labor cost:

Your 30 minutes of labor equals half an hour. So half of your $20 hourly labor rate equals $10 of labor on this necklace.

2. Next, add up your cost of materials:

$5 of jewelry supplies + $1 of packaging = $6 subtotal.

3. Now multiply your total cost of materials by 4:

$6 x 4 = $24.

4. Then add your pro-rated labor rate to that:

$24 + $10 = $34.

5. Now figure your overhead, which is 10% of that:

$34 x .10 = $3.40

6. Finally, add the overhead to our $34 subtotal:

$34 + $3.40 = $37.40.

7. Our base price for the necklace is $37.40, which we’ll round off to $37.

That means we can’t price the necklace below $37 without losing money on it. Now we can adjust that retail price up a little or a lot – depending on the uniqueness and overall outcome of the necklace, how easily we could replace the components if we wanted to, and how much our intended market would be willing to pay.

Does That Seem Like
a Big Markup to You?

Many jewelry artists price their work by simply doubling the cost of their supplies – charging $10 for that necklace made from $5 of jewelry supplies. Unfortunately, it’s impossible to have a profitable business with that kind of pricing. It doesn’t cover all of your costs.

When you sell your jewelry, you need to be paid for the time, effort and craftsmanship you put into all the various aspects of your jewelry business, plus the cost of all of your overhead expenses, if you want to stay in business.

Your overhead expenses include things like your jewelry business website fees, jewelry displays, tools, insurance, merchant account fees for accepting credit cards, receipt books, digital camera (and its batteries) for photographing your work, jewelry magazines, workshops, etc.

If you’re in business, your jewelry has to pay for all of those expenses as well as your jewelry making supplies.

And after all the expenses are paid for, you’d like to have a little left over to pay yourself too.

That’s what I like about my jewelry pricing formula – by finding the base price, I know I’m not losing money when I sell my jewelry; and the final price more accurately reflects what the piece is worth to its buyer.

Why Multiply x4 in This Formula?

Thanks for asking!

Multiplying your cost of materials + packaging x 4 in my jewelry pricing formula sets your retail price high enough so that if you sell your pieces at wholesale or on consignment to a shop, you’ll still make a profit.

Wholesale and consignment prices are typically 50% to 60% of your retail price. So the $37 retail-priced bracelet in this example would be wholesale-priced at $18.50.

The shop owner who buys it from you at wholesale would then turn around and retail-price the bracelet at $37, and sell it to a customer who comes into the shop.

Your $18.50 wholesale price gives you a much smaller profit margin on your bracelet. So wholesale pricing usually requires the shop owner to purchase a minimum quantity of 6, 10, 12, (or however many) items at a time.

When you make and sell multiples of an item, your manufacturing and selling costs are lower, and you make up for the smaller per-item profit by selling more items at a time.

In contrast, when you’re selling jewelry pieces one or two at a time to individual customers (at shows, home parties, etc.), you’ll need to charge retail pricing to stay in business.

That extra money you receive when you sell your bracelet to a customer yourself (retail-priced at $37) gets eaten into quickly by booth fees, party hostess incentives, travel expenses, wear and tear on your displays, and other costs of selling directly to the public.

So multiplying your cost of materials + packaging x4 gives you the minimum retail price you can charge without losing money.

It also clues you in to the minimum wholesale price (usually half of your retail price) you can charge without losing money when you sell your jewelry to shops or other wholesale buyers.

What If Your Jewelry
Takes Several Hours to Make?

On a labor intensive item, how do you include your labor rate without charging really high prices?

Be sure to see my post, Profiting from Jewelry That’s Time Consuming to Make.

Does Pricing Your Jewelry
Make You Uncomfortable?

We have a post and discussion about Jewelry Artists’ Mental Money Barriers and accepting the money you’ve earned for your creations.

Related Posts Plugin for WordPress, Blogger...
Share

Be the first to know the newest secrets
of making and selling jewelry...


free subscription to Jewelry Business Success News

Comments

  1. Very interesting formula! I have been looking at several formulas because while my materials are low-cost typically, I can spend 1-2 hours on a small piece. I like that this formula includes a labor rate, and I can still make a profit on wholesale. Thanks Rena!

  2. I agree with Rose. Great formula and the simplest yet! Thanks Rena!!!

  3. Thank you for your kind feedback! I like this formula because it tells you the lowest price you can set without losing money.

    To me that’s the most important figure to know when deciding how to price my work, so I’m not losing money. Then I can go up from that lowest price if the piece warrants a higher price.

  4. Thanks Rena! I have been doing this all wrong and think that I may have priced many of my pieces too low. I will need to go back and redo some of my pricing, but as I’m just starting out, I didn’t want to charge too much in order to get business going. I’m still a newbie! Jay

  5. Maretha Hines says:

    Thanks for the advice regarding Jewelry Pricing Formula. Making jewelry is new to me and I love it. Presently I only make jewelry for friends and family. I feel guilty about charging money for my jewelry. I plan to donate some jewelry during the cancer awareness month. That will be the first time my jewelry will be given to someone other that family and friends. I will be retiring in a few years and hope that my jewelry will make someone happy and add to my income. I,m so excited and want to learn all I can about making jewelry.

  6. Elizabeth Simpson says:

    I found your pricing formula very helpful .thanks

  7. Pat Burmer says:

    Thanks Rena. I’m just newly getting into the jewelry making and your formula is straight forward even for me. :)

  8. According to this formula I have been losing money. Thank you for this tip. Hope it works, many seem to think am already over priced and all I have been doing is material cost + packaging x 3 +($3-$4 mailing if needed). I did the same thing for the 2nd piece of jewelry I might have made with the left over beads from the 1st piece. The necklace was $5 in material + Packaging x 3 + $18 and I had enough to make matching bracelet and sell $8. Your way makes much more sense and I would be more accurate with all my pricing.
    Thanks.

  9. oanh spano says:

    Thanks Rena,this is really helpful from you,very clear and detail.

  10. I work with only sterling silver and gold filled, which means my materials are more costly. Do you feel in this economy marking up precious metals 4 times is reasonable? There seems to be a fine line between over pricing (and consequently not selling) and under pricing (thereby cheapening your pieces).
    Thank you for your input.

  11. Maria Long says:

    Oh my God, thanks for guiding me with the pricing!! I was practically giving away my jewelry!! thanks for sharing all your tips with us! I appreciated it very much!

  12. Jackie Davidson says:

    I have the same thoughts as Nadeen (see above) — when I make a necklace with a lot of sterling silver chain, the prices with this formula seem high. I don’t want to lose money by underpricing, but I don’t want to lose sales by over-pricing. I have been getting my supplies at bulk discounts, but it still seems like my necklaces are $15-$30 in material costs due to the high price of silver. Also — if we don’t sell on consignment (where we’d only get 50% of the base price from the formula), isn’t it safe to charge a bit less retail, so we make more sales?

  13. Thanks Rena! I wish I had known this formula when I donated some of my pieces to an animal shelter for auction. The lady asked me how much it was all worth so she’d know where to start the bidding. I think I gave her a conservative number, but now I know better.

  14. Just a thought about how to price sterling items. Use the formula above less the sterling components…then add the sterling x 2.
    For example:
    add up the beads and extras (less clasp) and use the “formula” then take the price of the clasp and x2…and add that to it.
    Just a thought…

  15. Lorraine Dube says:

    Thank You for your information. As JJ stated, I too am new at this and your suggestion has been very helpful. All the responses were great. Again, Thank You

  16. Claire says:

    This formula seems a lot better than the one I was using before, but a lot of my pieces seem to be coming out a little too expensive to compete. Is this because of the materials I use? or is it that I don’t get my materials cheaply enough? I get all of my silver and copper from riogrande, so is there somewhere else I should go for bulk metals?

  17. Kathy Joyal says:

    I have purchased one of Renas booth books and found them a great help…especially for checklists for events. BUT I have always had a problem with the pricing of my stuff. Last night I sat down with my hubby (and business partner) and we printed out this formula so we can get better on track. I haven’t increased my crystal earrings in 5 years…now’s the time.
    Though when I use big sterling silver clasps I am only planning on x 2 the cost of the clasp (as I said above) Do you think I am wrong? I am looking for feedback here.

  18. Rena, I love your posts. They are so helpful and insightful, and help stamp out the quivers :)

  19. Hi all,
    Thanks for sharing your guide & info, Rena. I’ll try this to see if the prices are close to what I’m getting. I tried a similar formula but it seemed inconsistent with some work having expensive gems. After many frustrating late nights pricing, a friend shared the following & it’s worked for me. I sent it along if it can be of any help. This formula adds a percentage to supply cost to cover over head.

    1. ADD up all wholesale *SUPPLY COST including packaging if desired.
    2. Next MULTIPLY *SUPPLY COST x 1.25, which will cover overhead cost for time finding supplies, shipping cost from supplier…etc.
    3. Next ADD your wholesale *HOURLY LABOR cost for creating piece.
    You will have now determined your FULL BASE PRICE.
    4. Last multiply your FULL BASE PRICE x 2 giving you a true retail price.
    Most retailers keystone (double) the price. I can easily give them my wholesale price by dividing by 2.
    EXAMPLE:
    (supplies) $5.00 x 1.25 = 6.25 + 10.00 (labor)= 16.25 (Base wholesale)
    (Base wholesale) 16.25 x 2 = 32.25 (full retail)

    I’m now confident about my base & retail prices so, when approached at a show by gallery/shop owner I can easily know my 1/2 my retail price is covering what I need to get. If I want to adjust price for the (lighter in the pocket) audience, I can always offer discounts or specials. A 10-15% sale sign always helps them feel they are getting a better deal.

    I’m enjoying all the info on this sight! Happy creating!
    Robin

  20. SANJEEV KUMAR says:

    thanks
    i am looking that the formula is good to know the price of a product but it is alwayse difficult t o know that how much consumable we used to add in the cost.
    thanks

  21. Daniele albanese says:

    I had a question. What if you are making beaded rings, earrings and do forth with 20 gauge wire? Would the price be lower because I’m not using real gold, silver ect.? thanks for your help.

  22. Just found you and would like to get your newsletter.
    I am in need of understanding pricing. very hard for me to figure. And competition on Etsy is rough. I have looked at Etsys way of pricing,I like how you price and will be trying it. Thank you Rena

  23. Kathy Joyal says:

    I personally like Renas pricing…it made me look at how I was under-selling some of my pieces that were taking quit a bit of time to make. I am now able to sell wholesale and still make a profit. BUT I do adjust the pricing a bit different as I stated above when calculating those pieces that have my large and most expensive sterling silver clasps.
    Its great to be able to post here and read other peoples posts.

  24. Kathy Joyal says:

    Hi Danielle
    Let the prices you pay for supplies and the formulas dictate. Silver plate should sell less than sterling silver.
    Daniele albanese says:
    I had a question. What if you are making beaded rings, earrings and do forth with 20 gauge wire? Would the price be lower because I’m not using real gold, silver ect.? thanks for your help.

  25. Monica Miranda says:

    Hi!
    I’m Brazilian and I have been living in Australia for 1 year. I have finished my jewelry design studies in Brazil and I want to start my business here in Australia. You have no idea how much your web site is helping me. Thanks! :)

  26. Jaishri says:

    Thank you! I was so confused about it! You helped me a lot. Now I am sure i will get good profit without any guilt.

  27. I’m enjoying your site. Thanks!

  28. I use a software package that has 3 different levels of pricing – Wholesale, Direct, and Retail. The package came with 3 percentages pre-set, and I think they were 2x, 3x, and 6x, although I’m not positive on the lower end because I played around with them. The way it works is similar to Rena’s formula as it takes those percentages times your total material costs, then adds labor and “Other” which I guess is where you would add your 10% overhead and supplies. I haven’t been putting anything in “other” so am probably underpricing, as I was thinking that the “Overhead” was covered by the 2x, 3x or 6x formula.

    In this market, I really DO have a problem with the 6x Retail formula. The prices seem outrageously high. So, most of my sales are around the Direct level or somewhere in between Direct and Retail, depending on what I think the market will bear. I suppose I will need to rethink this a bit if I ever want to wholesale or do consignment, something that has been crossing my mind more lately.

    Thanks for this post that I finally just read! Great article, as are most articles and videos on this site, Rena!

    Deb

  29. Lee McCreadie says:

    This is perfect. Thank you.

  30. Great pricing system – will have to see how it works out for some of my items. Just afraid that some items may come out too high to sell – but won’t know until I try.

  31. I am also in the same situation as Jackin & Nadeen above, what is your suggestion for sterling silver, vermeil, gold fill items that are higher priced from the beginning. I didn’t see your answer to them both, would love to gear your thoughts. Great and very informative post though, I went to sleep thinking about it and woke up thinking bout my pricing!

  32. Your posts are super helpful for beginners like myself who are just trying to start out. Can I ask you where you get wholesale supplies from? Sorry if that’s a dumb question but I have been looking online and have been having trouble finding good options.

  33. Now i understand why my 18k 7.6grams gold ring almost double the supplies cost.

  34. Hi Gabrielle! Yes, I use this basic two-step formula for any jewelry I sell, regardless of the materials.

    Multiplying x 4 in my jewelry pricing formula sets the retail price high enough so that if you sell your pieces at wholesale or on consignment to a shop, you’ll still make a profit.

    And remember, this formula only works when you’re purchasing your supplies at wholesale / bulk prices. :)

  35. Michelle says:

    Thanks for posting! This guideline is similar in how I priced catering events for my coffee shop. It’s actually pretty standard for retail. We all want to stay in business! I too have seen other jewelers buy underpriced designs, and some don’t bother taking them appart, they just mark them up and resell. While most people don’t think of it, the sales industry is very cut throat. Don’t undervalue your time or your talent. You have to keep in mind that when other retailers run sales, even at 50% off, they are still making a profit over & above cost of goods & overhead. Custom pieces are not for Big Box shoppers. So don’t cater to them. Build your brand base. As to Nadeen & Jackie’s question on their base metals….part of my 20 years in retail management was in fine jewelry at chain jewelers. The Mark up for cost of goods is usually 300%. Soft-lines retailers use a 2.5 markup then round UP to next price point. If you’re unsure what your target market will bear, you have to get out there and do your research. Think like a business, not like a hobbiest and you will always do what you love, and love what you do.

  36. Kathy Joyal says:

    This website really helped me re-assess how I approached my selling prices. My time is worth something. Thanks Michelle and Rena too!!!

  37. Thanks Rena for getting back to me! Ok..so lots to think about and adjust in my next collections then! Thank you so much!
    Have a great weekend

  38. Turns out, i’ve kinda been doing this all along, (Just out of guesswork really).
    But it’s good to know i’m not overcharging or undercharging!

  39. Hello everyone,

    Thanks Rena and everyone else for such great advice on pricing! I’m just starting to sell to my friends and family and needed to know how to price my peices. I do have one question though and that is how do you choose an hourly labor rate? Is there a certain way to do it? Any advice would be greatly appreciated I have absolutely no idea how much I should charge for that on my jewelry, which really kind of stalls me. Thanks again and I hope to hear from you guys soon!! :)

    Amanda

  40. I hope one of these days I can use the same sort of formula you have provided. I am starting out on my own handmade jewelry (mostly wire and polymer at the moment.) I try to keep prices not too high or too low but then sometimes I just wonder if I am even making the higher prices not enough or too high. I’d just like for people to start making purchases. It’s hard to break into the scene when your 1 person up against a million. X_X

  41. I think it’s a fair pricing formula. I only started working on chain maile a year or so ago is 10$ an hour to much?

  42. Thank you Rena. I so appreciate your articles, videos, and you sharing your advise and expertise. I really respect it, and I look forward to learning a lot from you! You are my teacher. This was so helpful to me as I start out on my entrepreneurial journey with so many questions. Wishing you the best!!

  43. Hello!
    My friend and I are starting to sell some jewelry; she makes it while I sell it and we split the profits 50-50. Because of this we both take a lower pay, so I was planning on charging a bit more money. For a necklace and earrings the equation ended up having a worth of 96.80 (we both took 10.00 per hour for 4 hours total), and the supplies were 4.00. But will that really sell on a website like etsy? Would it seem unprofessional to start out really high and work our way down? Or to start off on the lower side of pricing and work our way to the more expensive side?

  44. I suggest reading all the above comments…they will be a great help for deciding on how you will price. I use Rena’s formula for all of my “one of a kind beaded necklace and earrings”.
    I personally feel your asking price for $4.00 of supplies is really high…but if you have lots of return customers then you are doing well.

  45. Veronica says:

    Great advice! Yet I read above that this formula only works when buying materials @ wholesale, how should I calculate when I’ve bought retail? Much more expensive, yet I have just recently joined this field and am still working out all the logistics. Any feedback? Thx so much -V

  46. Tyronda says:

    Thanks so much for this information and advice. I’m not sure how I was pricing but I have always been a little hesitant about raising the prices on my product. But not anymore!

  47. Alicia K says:

    Hi there!

    Thank you so much for this. I make really intricate netted bead necklaces with swarovski crystals etc etc and my pieces take 15+ hours to make. So I was surprised by how much I should mark them up. I fully believe my time and the craftsmanship is true to the price . I’m afraid the sticker price will scare my customers away. Anyone’s thoughts?

  48. Tyronda Carr says:

    This pricing formula has helped me so much! I am so thankful for this information!

  49. Hi Alicia! Maybe your intricate netted bead necklaces would become your higher priced line, and you might create an additional related lower priced line of items that take less time / fewer materials. (For example, pendants instead of full necklaces.) If you do make a related lower priced line, it would be a wonderful “gateway” product for people to experience your art and own one of your pieces – leading to sales of your higher priced necklaces later. And if you’re selling your work in the right venues, you might be surprised at how many people wouldn’t hesitate to pay your adjusted higher prices for your necklaces. Also be sure to see my blog post, Profiting from Jewelry That’s Time Consuming to Make.

  50. Jeffrey s. Elliott says:

    I found this to be a very good tool. i was always trying to value my product and felt guilty for over priced items. Without consider there worth, this gives me the ranges i was looking for. As well as offering me the ability to sell an item at a discount without loosing money. It is hard to compete with china prices and this gives me options…. thank you

Share Your Thoughts:

*

Subscribe without commenting