I Am Too Overwhelmed With Inventory To Price My Work Correctly
(Delanco, New Jersey, USA)
I’ve just decided to start selling my work but I have so much inventory I don’t know where to start pricing.
I’ve purchased inventory/pricing software but it requires me to enter all of the items I have which at this point is impossible.
All recent purchases have been put into the system but I don’t know how to price the items I already have finished.
Is there a generic formula that I can use to price my pieces so I can get my business off the ground?
Any help would be appreciated!
Try replacement value for the parts.
This works for me
by: Jodi Dickerson
parts x 2 + labor + 10% + = price
that formula works for me
If you are going to consign your pieces
parts x 4 + labor + 10% = price
I think I got it from Rena’s book or blog.
Components and Labor and Overhead… Oh Boy!
by: Patricia C Vener
You don’t say what kind of work you are creating so I will be as general as possible. First, my advice is to not worry about getting everything into your inventory database. Start with supplies you buy from now on then add what you use from your pre-existing stash in small stages. If you are making production pieces, you can time the next piece you make and use that as a generality. If you are creating one of a kind work, you will have to time each piece individually.
As for materials, don’t base your prices on what they cost you when you bought them but on what it would cost to replace them. This is important for items that can be singly priced, for example gold filled earring findings or stone cabochons and so forth.
My work is bead weaving which is highly labor intensive art form, so for me, the main cost is my time. Decide now what your time is worth. After you determine your price, double it because what you determined was your wholesale price.
After a while, you will have a much better feel for pricing your work and you will probably be able to design your own calculation to fit your particular media.
Also worthwhile to check about adding in sales tax, if it applies to your area. You may also be subject to state and federal sales taxes.
One other idea
Just food for thought…I also tried those software programs that help price jewelry, but it was just too intensive for the amount of time I wanted to give. I have a have a pretty good idea for what findings, beads, and materials cost for each piece. I don’t split hairs on calculating the cost of each piece. Some might be a bit high, some a bit low, and some right on. I figure it all averages out over time. Same with the pricing. I give it my best shot, keeping in mind that over all, my work is averaging out to a fair price.
Best of luck to you!
The Art of Guesstimating
When I was first starting out, I calculated the precise cost of materials for each piece. After doing those calculations with a variety of pieces, I began guess-estimating materials cost and comparing it to the calculated cost, and became fairly accurate in my estimates. Now I estimate costs for nearly everything, with an occasional spot check calculation to make sure I’m still in line.
The pricing formula I use is:
parts cost X markup + labour = price
I use a markup of 4.1, and I may adjust the final price up if a piece turns out especially well, or if similar items sold really fast which may indicate they were underpriced.
I love the idea of using inventory/price software, but it wasn’t for me – I personally found it too time and labour intensive. Instead, every time I receive new inventory (e.g. beads), as I put them away I immediately calculate the cost per bead and multiply it by “markup” to get a per bead selling price which I write directly on the product tag. I keep the product tag with each style of bead to make reordering easy (or make a sticker if there was no tag). For example: $4 wholesale for a string of beads, 32 beads in the string, is a cost of $0.125 per bead; multiply the per bead cost by “markup” (let’s use 4.1) gives a price of $0.51 per bead. For chain, cord and wire, I calculate price per inch. Pre-calculating price becomes helpful for pricing product, doing estimates, de-stashing, and for custom orders where a customer chooses their beads.
Renee, in my opinion, to get going I would look up replacement cost for a variety of your beads & findings, and in the process you’ll likely be able to guesstimate the cost of most of it. Use stickers on each style to write the cost per each (or the price – whatever works for you). To price jewelry already made, calculate the price of a few pieces to start, and guesstimate the rest.
I’ve looked into the software that is out there, and found it never met my needs. So I created my own database system where I can input my materials in one area and create a BOM (Bill of Materials) for items I make. From this I have it set up to automatically price my items based on the two pricing schemes I use. One is my base costing method:
base cost (materials + labor) +10% = distribution price
Distribution price + 70% = Wholesale price
Distribution price x 2 = Retail price
My other method is a tiered system:
Tier 1 = materials x 2 + labor
Tier 2 = materials x 3 + labor
Tier 3 = materials x 4 + labor
The main thing to determine is if you want to make money or just sell your work. If you want to make money, you need to at minimum double or triple your base cost. What I have found, working with the store I consign with, is that the prices I come up with are lower than what the economy will take, meaning I am pricing my work too low. We have steadily increased my prices over time and I am selling more now at the higher prices than I did at the lower ones.
Remember people buy jewelry not only on look, but how much it costs. They tend to think the higher the price, the higher the quality of the jewelry, and the more likely they will buy it. Lower, the less quality it is…and the less likely they will buy it.
As far as inventory goes, I think the best thing to do is create a spreadsheet that has the items on it, how much you paid for it, including tax, shipping, etc, and then how much it is per unit that you use (for example, a string of beads has 20 beads on it and it cost $1.00 total, it would break down to $.05/bead. Wire you can break down to per foot or per inch). This is essentially what my database program is, with a few personal tweaks in it.
Oh, another source for price is www.wirejewerlybootcamp.com. Look for the Pricing Genie. It will ask for your email address, but it can give you a good idea of the range that you can price your jewelry. It uses labor and materials, but also your experience level, which is also good as the more experienced you are, the more you should get paid.
Finding the method that works best for you
Just wanted to thank everyone for taking the time to share their own unique ways of working with this issue!
It’s so helpful to see that there isn’t just one “right” method – and that whether your brain works better with software, guesstimating, or other methods, you can settle into a way that’s do-able for you!
same feeling – different problem
I am so overwhelmed with tracking inventory parts that I don’t have the time & inclination to make jewelry out of them! This is something that has got to change in 2012!
by: Ann Nolen
Although I am good at paperwork, I really didn’t want to spend all the time keeping things on the computer. Rather, I wanted to be working on my projects. So, early on I decided to keep it easy. I ended up putting a small piece of paper in the container when I purchased that indicated who I bought the beads from and the price I paid total. When I got around to using them, I could count them and figure the price per item and add that to the note.
When I went to bead shows, I would take ziplock sandwich bags and a permanent marker. I would drop my purchase in the bag and mark notes on the bag with the permanent market. This saved me not only time, but help to make sure I didn’t forget important things like what type of bead or stone it was.
Also, if I already had something in my stash without the price and details, I used the replacement cost. The IRS allows either “cost or market value” so that is always a very legitimate option.
I suspect it doesn’t matter what you do, as long as you are consistent and so something…
Food for thought
by: Dianne Culbertson
I prefer to use the inventory software Jewelry Designer Manager Pro for a couple of reasons, mainly the fact that at the end of the year it is all right there for me, no beads to count. I have been working in this field for a little over 6 years now and have dreaded tax time. Now between the printouts from Paypal and my inventory being done for me tax time is a breeze. It also keeps track of my sales, vendors, customers and I can print out catalogs, invoices and so much more. Estimating all that is great until audit time!
It seems worth the 3 minutes it takes to enter it when I get an order in. Remember when you price your goods you want to include allowances for packaging materials, website fees, Paypal fees and shipping costs if you sell online.
Like all business there is a fair amount of time not doing the part of it that you love…it goes with following your dream. For me, it is well worth it!
I wish you much happiness and success in your new venture!
Spreadsheet Heaven 🙂
Yes I too felt the same thing so I just made up two excel spreadsheets instead and copied the formular from the inventory spreadsheet. The downside to this is that I don’t keep track of how many findings I actually have – but I don’t normally have so many I can’t quickly count them.
The first spreadsheet lists each finding in alphabetical order with the shop, code and any other info I need to buy it again. Then I have the price of the pack – and the price of one bead. I also add a date for the last time I checked the price.
Then for a new piece of jewellery – I will add all the new findings to the list quickly.
The second spreadsheet is for the jewellery piece itself. And includes a list of findings and i copy across the prices from the first spreadsheet. Then at the bottom I type in the formular used in my beading inventory software. Making sure time and postage costs are included.
It would be a big job to start a new findings list – if I were you I would just do a couple pieces to begin with and go from there. I just find it a lot quicker than having to type in all the beads I have bought. I and I can do it at my desk during my lunchbreak at work as well as at home.
I am happy to email you a copy of my spreadsheets if you need some help – they are more simple than they sound 🙂
Keeping track of actual material costs
I find the best time to price materials is as soon as I get them. I first adjust the cost price to include any shipping, taxes, duty, fess and exchange rates by dividing the cost price by the following factor: (Actual cost of good received/total amount paid). Then, as for a string of beads or a package of crimp covers, I divide this adjusted cost by the number ot items in the package to give me a cost per item. I write this price on the bag label as well as the date and the item catalogue number. If there is no label, I use my own. The reason for the date is to keep track of how long I have had the item. If the item has been around for several months, less for precious metals, I check the current cost. I always use replacement cost for the materials I use. I then use this final materials cost as the basis for calculating my selling price which is usually in the range of 3 to 4 times the final materials cost price.
This method seves me well and I always get into trouble when I don’t follow it.
The Best Pricing Method…
by: Joanne Stow Boyington
I read on an email, years ago, from a jewelry artisan, what I believe is the best pricing method. I have ever heard!
WHAT WOULD I (If I could afford to buy jewelry-lol) PAY FOR THIS PIECE?
You cannot sell something, that is not priced at what you believe, it’s value really is…