My easy to use jewelry wholesale pricing formula is explained here, including all the steps you need to take in figuring out the most profitable wholesale prices.
The wholesale jewelry price is the amount you charge a store for one of your handmade jewelry creations. The retailer then applies their own markup formula to establish a retail price in their store.
My basic wholesale jewelry pricing formula goes as follows:
1.15 X (Materials + Build Time + EDF + GP) + Profit = Jewelry Wholesale Pricing
Materials: This is the total cost of everything used to make your jewelry, plus 10% for shipping fees and the inevitable breakage or unusable beads in every lot. The materials fee should also take into account the cost of all marketing and merchandising materials, such as packaging, business cards, and hang tags, if you use them.
Build Time: The amount of billable time in minutes used to make your jewelry piece. I measure this in minutes and charge a minimum of $1 per minute for wholesale work.
Minimum! In my years of working I have found that I spend about 1/3 of my time actually making jewelry. The other two thirds of my time is spent running around searching and gathering materials, brainstorming, designing, marketing, cleaning, organizing, packing orders, finding new clients and gathering feedback from existing ones. These activities need to be factored in your costs as well or you will starve. So the minimum $60 per hour that I charge for build time, in reality, is a minimum base wage of $20 per hour.
Remember in the Time Management section of this website when I had you start keeping track of your time? Keeping track of all the hours that you worked can be used to make a chart similiar to the one above!
As you gain more experience, your time allotment may change and you can fine tune your per minute fee accordingly in the jewelry wholesale pricing formula. When you are first starting out, you may find that you spend less time building jewelry pieces, so you may make less money for a few months.
One of the big keys to profiting in your home jewelry business is charging for ALL the time you spend working.
Think about it: in the corporate world, if you were in charge of putting together the first quarter financial report, you wouldn’t get paid for just the time it took you to type out and print the report. You would get paid for researching and compiling the information, writing drafts, typing up and putting together the report, getting the appropriate sign offs and then distributing the content.
No employee would ever put up with a company that only paid them for just the time they spent typing up that report!
EDF: Emotional Distress Fee is a surcharge for particularly hard techniques or being forced to work in ways that cause you to have to eat brownies or consume half a bottle of wine at the end of the work day.
GP: Genius Pay. Is this a particularly ingenious creation of yours that stands out in the marketplace? Or did you come up with a technical innovation hitherto unknown to mankind? If so, give yourself a little bonus!
PROFIT: Well you have to make some money off of your work! So far, we've just covered your basic costs to run your business and to pay you a base wage, but in order for you to grow your business, you have to make a little bit more on top of covering your bases.
Suppose you were the jewelry designer selling that piece to the store. Here is how you would come up with the wholesale price using my jewelry wholesale pricing formula:
Materials: $10 for materials + 10% for breakage = $11
Build time: 15 minutes @ $1 per minute = $15
EDF: You aren’t particularly fond of wire wrapping, but are a good sport and do it anyway because the store owner loves it. You figure that you’ll spend 5 minutes bellyaching about this trauma to your therapist this week, so your Emotional Distress Fee = $5
GP: Not much genius in this so in all fairness you decide not to charge this fee = $0
You also decide that you will make $10 of profit on this necklace (in this case using the cost of materials as reference, though you are free to set your profit at whatever level you wish).
JEWELRY WHOLESALE PRICE = 1.15 X ($11 + $15 + $5 + $0) + $10 = $46
So now that you understand all about jewelry wholesale pricing, we can start working on pricing handmade jewelry for retail sales.