Costing is something many designers get so, so infuriatingly wrong. It can be incredibly frustrating if you are a professional maker who relies upon their business to pay their way in life – mortgages, rising bills, childcare etc, when there are other sellers out there barely charging the cost price of the materials because it is their hobby and not something they rely upon. It devalues the industry as a whole and it doesn’t make them popular with those trying to forge a genuine business.
There will always be competition from the mass-produced market versus handmade industries, however as a maker this is where you can compete by straying away from that product area as a whole and start to discover your very own USP (Unique Selling Point).
Put some focus into developing more advanced skills which will then drive you away from being confused with mass produced / cheaper markets and beginner/hobby level areas where stacking rings and bangles are king and aim towards more advanced projects with gemstones set, more demanding designs and designs which aren’t so readily available. Consumers will not be able to find any price comparison if you are unique.
How can you find YOUR unique spin? Well, this is something that takes time to develop, test and discover. It certainly isn’t easy!
How far you decide to develop your skills is your choice. The higher band would be around the mark where you are a designer Goldsmith working with diamonds and Sapphires where you might find your projects take longer to make and the skillset required will take many, many years to achieve and develop, however the financial returns and mark ups on your designs is more significant than more basic silver designs. This being said, finding a unique technique and spin, marketing it well and gaining steady orders even though your product might be much cheaper to produce is also a successful pathway.
There are many jewellers enjoying a good living as they have found their USP, they have mastered that area of the craft and they have worked hard on all aspects of business such as marketing, photography, and distribution. It is often the case that a strong set of business skills is just as valuable as your jewellery making skill set in itself. You may have an excellent product, but if you don’t have the business skills and confidence put it out there, and the determination to problem solve your way to success, how will anyone discover your brand?
Everyone has an area where they feel comfortable working and certain techniques they prefer utilising in their work. You will notice many professional jewellers hone in on a particular technique or style and that is their area of expertise. There is so much to learn within jewellery making, it is impossible to be a master of them all. On top of that you must develop a shrewd business head. Don’t be tough on yourself, follow a direction you like and to put it frankly, be good at it, and own it.
Self-Employment and Part Time Work
Many designers start off by maintaining some form of employment on a part time level so they have a secure income while they build their business. Some choose to continue with this arrangement even as they become established. It can be quite tricky to predict the peaks and troughs of your income when self-employed, so some stable employment does bring many peace of mind.
If you are self-employed, it is quite terrifying not relying upon a guaranteed monthly wage from a company – no sick pay and no holiday pay. However, this shouldn’t put you off. You simply need to budget and be organised. The Best part of being self-employed is that you can control your income and take on more work if your income needs a boost, but also reward yourself with down time when your order book isn’t as full at certain times of the year. It is something you learn to manage and once you get the hang of cash flow and build a reserve for rainy days, you will have a secure business. It is hard work being self-employed, daunting at times, but also hugely rewarding when you see what you can achieve.
Keep developing, be prepared to move with the times, and think outside the box when something completely unexpected comes along – Covid was one that tested all businesses. Sink or swim! How can you take a bad business threat and make it work?
Let’s get into costing your designs:
There are multiple methods designers use, some will work out their required income for the whole year and break it down from here, including how many pieces they need to make and sell to reach their target. Others price each piece individually. The truth is this isn’t clear and as a new starter, it can leave you scratching your head.
Research the market:
Before jumping into business, get to know it so when you cost up your designs, you know whether they match the expected industry value, or if you need to consider working with different materials or methods to bring things into alignment.
- Who are your competitors/peers within the industry?
- What do others charge?
- What quality of work / design is expected at different levels within the industry?
- What can you expect a certain level of jewellery to be priced at?
- What makes something higher end?
- What materials are expected from higher end products?
Key points to remember:
- Your work needs to be set at a price that the market is willing to purchase it for – your designs might be fantastic, creative and distinctive, but if they come out in your costings as being too high, they simply won’t sell, and your business isn’t a viable model.
- There is a difference between wholesale and retail prices (this is discussed below) make sure you are still seeing a profit if supplying a gallery who will take a 50% commission, if not more.
- Watch out for price fluctuations particularly bullion prices as they change daily, so if you provide a quote allow for some changes here or instruct your customer that prices are subject to metal price fluctuations. Keep checking your product pricing against the bullion price – you might price it against bullion price X and then find in a few months’ time, the bullion price has risen significantly which will affect profit levels for that product.
- Cost Price – This is the cost the piece takes to make – materials, and labour. Expenses and profit are not included here. Never ever sell your design below this price, you will be making a loss.
- Wholesale – This is where you sell your work directly to shops / boutiques / online stores etc. Your wholesale price is usually marked up 2 times or 2.5 times to reach the retail price. They take on the responsibility for selling and promoting your designs. You must be earning a profit and covering all costs within your wholesale price.
- Retail – Your retail prices must match from retailer to. If you are selling through a gallery, it must match the retail price on your website or your RRP (recommended retail price) you charge at shows. It maintains a stable playing field for all involved in selling your work. The gallery will charge 50% or more commission rate which covers their marketing, staff, gallery space and other overheads. If you were to sell it yourself, you will face these same costs in either show fees, marketing, website fees, your time etc more or less equalling that 50% margin. If you start undercutting galleries that stock your work as a maker, it is not professional. The gallery may have taken time to market you and promote your work and then customers may come directly to you seeking a special deal, if you agree you are then operating unfairly towards the gallery. In business often the idea that you need to be self-serving and stand your ground to be successful is often pushed. Actually, honesty, being polite but clear with what your expect and how you operate and being understanding and respectful towards your business peers means you build solid relationships in business and people will want to work with you, promote you and come to you with more business opportunities.
What is Your Hourly Rate?
I see people often pluck hourly rates out of nowhere. However, when starting out, you can’t march in charging a high hourly rate when your skill set doesn’t match. It might take you 6 hours to make something which will take a skilled professional would take 2 to make. You can’t pass on the fee of your lack of experience to the customer. Traditionally, as you develop your skill set and gain more skills and become faster, your hourly rate will increase.
Remember there is a standard minimum wage set from area to area across the country. As a jeweller, you have a particular set of skills, this propels you above minimum wage. Not everybody can do what you are doing, so there is an initial value there.
As a new jeweller I would expect (at 2023 rates) a £12-15 an hour rate. Then as you find yourself gaining more experience and being more confident with a variety of jobs and gaining general industry experience move up to £20 an hour and continue to follow this model. Remember as you develop you will be investing in short courses or regular term time classes to further yourself; this can come directly back into your hourly wage as over time you will steadily improve.
You will find you continually increase your pricing £40, £50, £60 an hour etc as the years/decades pass. You can also become pickier about the jobs you’re willing to do, you will find a certain client base willing to pay for your expertise and skill which sets you aside. When people recognise you to be skilled, they will be willing to pay for your reputation and place within the industry.
Commissions are a different ball game. Designs often take longer to make as you must work through the design process with your customer and work through any design problem and solutions if it is something you haven’t made before.
Make sure you really outline the costs to your customer and state what is included within their quote – how many designs options will your offer, how much will you charge for additional design work? Is there follow up service included? How much time will you spend making the design – is there scope should your production time take longer?
Different designers will follow different equations to work out the price of their jewellery. All that matters in the end, is that you can account for everything in your costings, and you are not out of pocket for your time and production costs. You must also match the industry price points. Feel free to tweak your formula for your business so it works effectively.
This is the most common formula we see:
Materials + time/labour + 10% to cover overheads x 2 = wholesale price x 2.5 = RRP
Remember, if your overheads are sky high, consider how you can cut back. Everything must be covered. You can tweak your percentage to cover your overheads, but if you have been a bit too heavy on your spending, that’s not something you can load onto your customer, YOU need to manage your cash flow and hold back on your expenses!
Here are some of the other working models we see, there are even some apps that have been developed to help:
- Materials + time + packaging x 2 (I don’t see wholesale and RRP categories stated here, so personally don’t find this model useful)
- Materials x 2 + time + packaging + 10% for overheads (again wholesale / RRP not acknowledged here)
- Materials + overheads + time + packaging x 1.5 = wholesale x 2.5 RRP
For me personally, pricing can be as individual as the business itself. Everyone seems to have a different method; my biggest problem is that many undercharge and forget to apply all their expenses. If this is your sole income, it’s a different playing field, this HAS to work. If it is a hobby, the fear of earning a living from it doesn’t strike home, but please don’t ruin the industry expectations and undercut those operating at a professional level.
The price of my products is working out to be too high:
- Firstly, remember you need to make an actual living. You have many costs and you have taken time to learn your craft, you are worth it. Don’t undervalue what you do.
- If pricing is still a problem taking into account all your expenses, can you make your designs more viable price wise? For example, if you are spending hours working on an intricate stone setting within silver and setting a low price Topaz, but the labour costs mean the design costs a fortune to produce, meaning it is off putting to potential customers as they are able to purchase something similar at a much lower price point – perhaps switch to more precious materials – gold, diamonds etc (make sure you have honed in your skill set here to confidently produce a high standard of work before heading in this direction) as the mark-up will be higher, your labour time will be the same, however you can price your products higher due to the materials used.
- Can you find unique suppliers to help make your product a higher commodity? For example – are there unique gemstone suppliers that offer rare gemstones where you can bring value to your work? Martin Prinsloo cuts some fantastic and completely unique stones, choosing his gemstones over a standard supplier would bring something a little different to your design. His stones may cost more to cover the labour he pours into his design; however, you can then pass on and increase this value in your own pricing for the overall design.
- Can you outsource some aspects of your work to help bring down labour costs?
- Would CAD / casting / 3D printing some elements make your production cheaper and save you time rather than hand fabricating everything?
- Some designers will turn to overseas production to help with costing, however let’s be clear here, if you are marketing your business as a UK designer handmade jewellery business, designs made by you, you can’t then outsource overseas it and make the same claims. Be true to yourself and what it is your and your business are. The model of creating designs, having them made overseas at a lower price point then shipped back here to sell is VERY different from a sole trader handmade designer / maker.
- Can you tweak your hourly rate?
As you can see, it’s all a careful balance. Remember you can tweak your pricing and as you get started, experience brings everything into alignment. You may start to do shows, and actually although it’s nice to be there to gain sales, the experience you gain from being there as a professional seller versus visitor is invaluable – you find yourself sharing tips and ideas with fellow jewellers, you gain fantastic feedback about your work, you can compare your pricing against your fellow jewellers work, find out about new suppliers others use, learn sales techniques etc.
My parting top tips….
Be adaptable. Your business will fail if you aren’t able to move with demand, customer feedback and changing economic times. Always observe the market and never sit comfortably, things can change in an instant, and you must be ready. It’s part of the fear of running a business, it will keep you up at night sometimes, but it’s also exciting.
Keep a little note of everything you make, the time it took, how much bullion you used and what gauges of bullion you used etc, any other materials used? Was it costly to make in terms of workshop consumables? That way you can come back to it when you are trying to assess your initial pricing and it will be easy to create again and quote for any reproductions as all the ingredients are there.
Your jewellery business is a professional business, although many will refer to it as a quaint ‘little crafty business’, it is a business like any other, don’t let ANYONE belittle what you do, just because it is a creative business. Remember, they don’t mean to offend, they just have no idea whatsoever what it is like to work in a creative industry. You are a businessperson, an entrepreneur and there is success and financial reward to be found… go get it, roll with the punches, and be determined, don’t let anyone stand in the way of what you manifest for your business future. If you want it badly enough, you just won’t be able to give up and stop going after what you seek.