This past Friday, I did my seminar, The 5 Keys to Selling Handcrafted Jewelry at Bead Fest.
We ALWAYS have some great discussions at these live seminars. And one of the liveliest discussions was about the use of formulas to price your jewelry.
Most people who know me know that I am against formulas. I’m talking about formulas that suggest that you come up with an “hourly rate” for the time it took you to produce your jewelry, and try to capture that somehow in the price you charge.
I’ll address a variety of pricing issues in the next few posts, including the problem of the “hourly rate,” but for now, here are the 2 traps of formula pricing.
The first trap is that using a formula can result in a price above what a willing buyer might pay for the piece. In other words, you pack everything into the price formula, and it spits out $50, but people are only willing to pay $30 for it.
The second trap is producing a final price that is too low. That happens when the formula comes out to $75, but someone would willingly pay $350 for it.
The reality is that the “value” of a piece of jewelry is what any wiling buyer will pay for it. So, if you believe it’s worth $50 but the folks in your true market won’t pay it, you might be better off scrapping it.
Alternatively, if your jewelry is selling quickly to your target audience, they may be willing to pay more for it.
Most jewelry makers, though, are uncomfortable with the idea that “trial and error” may be needed to arrive at the right price.
I am not against ensuring that you are well-compensated for what you’re doing! In fact, I’m almost always in favor of jewelry artists RAISING their prices. What I’m against is the idea that a formula delivers an accurate price. It certainly makes sure you cover your expenses, but you don’t need a formula for that, do you?
Many jewelry artists UNDERPRICE their work. Afraid of rejection, they set a price so low almost anyone would pay it.
Don’t underprice your work. You’re depriving people of the opportunity to pay for what they enjoy!
Pick the right audience and incrementally raise prices to the “sweet spot” where they will pay for what you’re offering. And what you’re offering is a lot. So charge for it.