|There are a lot of articles on the ubiquitous Word Wide Web about pricing your handcrafted jewelry. As a jewelry artist myself, I decided to bring together a few ideas related to understanding your costs, staying competitive, and offering discounts.
Understanding Your Costs
Trying to figure out the price of your handcrafted items can feel like the most challenging thing. “Am I charging too much for my items? Am I selling them too cheap and people think I make cheap jewelry when I actually don’t but I am just trying to be fair?” These are normal questions that an artist is challenged with all the time. But don’t worry. Just think that business schools devote entire semesters to this subject. What you really find out is that there is no exact formula to calculate the price. It is all subjective. If you are running your jewelry shop as a business and not just as a hobby, the first thing you need to do is understand your costs and then, of course, cover them. There are three types of costs that I will explain in more detail: direct costs, indirect costs, and your time.
• Direct costs include packaging, materials used, any online fees that apply if you have an online jewelry store, or any fees the local shop you’re selling through is charging.
• Indirect costs might include a machinery that you had to buy, or the rental fee for accessing a dark room
• Your time is what you should consider next – calculate how much time you need to design and make a piece of jewelry. Decide how much you want to pay yourself hourly (it should be more than the minimum wage in your state) and multiply that by the time required to make the item
After you understand your costs the next step is to stay competitive in the marketplace. Considering the fact that there are a multitude of artists designing jewelry, this task might seem to you a little daunting. It is very important to spend time analyzing the competition. If you are selling online, search for similar products and see what other people priced them at. If the next shop has a very similar item priced at half your price you might definitely lose customers that do a lot of research. If you are offering the item at a much lower price than the competition, consider revising your price accordingly. It is important to think about who you are competing with. Your competitors may not be someone who is making something very similar but someone who is targeting the same customer. This way you can compare your pricing more broadly. Ask yourself the following questions to help you create your product positioning and give your customer a reason to buy your product.
• Why should a customer buy my product instead of the other products out there?
• How much does my customer think my product is worth?
• Is my product made of better materials?
• Does my product have more intricate work or design elements?
• What is my reputation in comparison to the other artists making similar items?
Demand pricing is another aspect to consider in your efforts to stay competitive. Sometimes this is described as the price “the market will bear” — which means exercising your ability to charge more for a product that is seen as valuable or unique. This can be challenging and may take some experimentation on your part. Test an increase in price on one of your products and track the progress.
Many people believe that discounting is a pricing concept, but it really is a marketing concept. When you think about discounting, you need to think how this discount compares to other marketing opportunities like promoting your products on your blog, offering free gifts, or purchasing ads in online and printed media pieces. A discount is just another way to entice a customer to buy. In theory, a discount or sale promotion is intended to be all about action or an immediate sale.
Discounts are mostly used in four situations. One of them is to induce trial. If you are introducing a new product or you are entering a new marketplace, one way to entice customers to try your product is to have an introductory price or a limited time discount. Another situation is when you want to encourage additional sales. This type of discount is when you lower the price for an additional item like, “ buy one get the second one half off.” Discounts also work in supporting volume sales. You can encourage other resellers to stock your products. Last but not least, you can use discounts to reward your top customers.
Here are a few ways you can implement your discounting strategy:
• Direct price discounting
• Free shipping
• Offer Coupons
• Gift with Purchase
Now that you understand your costs, you learned how to stay competitive, and you are ready to offer discounts, your business is up to speed and prepared for the holiday shopping spree. Remember to always be truthful about your products and keep your customers happy.