2) Setting an Hourly Rate
When setting an hourly rate you must set a business rate. This rate is not as though you are working for a company, it is a rate to cover all aspects of running your business and all expenses incurred in operating your business.
When you are working for a company your hours are defined and you are not charged for the materials you use at work.
When you are in business for yourself you are your company and selling your jewelry will be the only compensation for show fees, packaging, business insurance, travel expenses, daycare, equipment, tools, display, electrical, petty theft, damage, office supplies, printing, and on and on. Therefore, you must include all your expenditures in your hourly rate.
When pricing jewelry it is difficult to forecast all the business expenses, especially those incurred in the first year. In order to incorporate those expenses into your pricing structure you should always keep your business overhead as well the many hours you will spend running your business in mind when putting a value on your work.
First, calculate how long it takes to complete an item from start to finish. This should be your actual work time and not hands off time such as drying or curing times for your pieces. Make sure to include all steps involved in the manufacturing process.
Take the number of minutes it takes to complete a piece and multiply that figure by $1.00 to $2.00 dollars. Then, add this figure to your material cost.
So...if it takes you ten minutes to make a pair of earrings and the total material cost is $3.00 the earrings could be priced at $23.00.
As I touched on earlier, this hourly rate ranging between $60.00 to $120.00 is by no means what you earn per hour. It is simply a per piece price that will encompass all aspects, expenses and labour involved in running your business.
Somewhere within that range you will find your comfort zone and establish what is the right price for your individual work. Be honest with yourself and search within to make sure that, when pricing jewelry, your comfort zone does not mean selling yourself short.
More often than not artists tend to under value their work and price themselves too low. Pricing your work too low only diminishes the perceived value of your designs.
When artists start competing for lower prices within the same marketplace it draws in more bargain hunters and less art enthusiasts, thereby lowering the overall quality of the show or venue in which the work is sold.
By the same token you do not want to price yourself right out of the market. It is, however, always better to start higher when pricing jewelry and then adjust your prices down if they are too high.
If you start too low it can be difficult to suddenly increase your prices. I have over the years increased my prices by a couple of dollars here and there, slowly and only on a few items at a time.
When I first started my business I was afraid to ask for too much for my work. Over time I began to understand the value of my talents and hard work and slowly I started to raise my prices. A funny thing happened...as I became more confident around pricing jewelry and raised my price points I started to sell more.
Once you establish the price that is right for you and your product you can divide that figure in half to arrive at the wholesale price that you will charge to stores. After you set the retail price if you find that half is really too little for wholesale then you are setting your retail prices too low on the scale.