Wholesale prices?

Setting wholesale prices for the first time can quite a shock. Reality hits you right in the face if you've been flying by the seat of your pants on pricing up to this point. When a storeowner approaches you at a retail show inquiring about buying your work for resale they usually (but not always) assume that the price tag at the show is a "keystone" price. That is twice what the wholesale price is. You, as the maker, are quickly thinking I can't sell this for 50% of what I retail it for, it's way too low a price and you can't make money.

The general formula for wholesale pricing is cost of goods to make the piece (all the raw material you paid) + a percentage of your overhead costs (utilities, studio rent, booth fees, travel expenses, etc.) + the cost of labor (time it took to make the piece) to reach a GROSS price. You then add profit to that to reach a wholesale price to you. NOTE: You must add a labor cost even if you don't pay someone else to work for you. Someday you might have people work for you, even if they do non-art type work e.g., bookkeeping, shipping, cleaning, etc., labor has value, including your own, labor is NOT profit. The "profit" is actually what you get to keep free and clear. Now is a good time to figure out what your "administrative" costs are since you should have your current IRS forms for last year at hand which would give you a clear picture of all your non-cost of good sold expenses.

I figured this out annually and adjusted my prices accordingly if needed. Once I did the hard work of pricing things one time I figured out it was just as easy to cost things at price of materials plus an hourly figure. As the years went along this hourly figure steadily increased until I was got to $100.00 an hour. My materials fee was actually quite small but my time was quite high. If it was a one-of-a-kind piece then I also added an additional "design" fee because that piece was never going to be duplicated and the patron was guaranteed they would never see that piece of jewelry on anyone else. This may seem like a high hourly rate to you but it is not. The first time I priced an object over $1,000 I gulped and thought I was crazy. But the first (and second and third) time I actually sold those peices I knew I wasn't. It took a leap of faith on my part but it was worth it. As someone told me, "if they aren't selling at $750.00, they might as well not be selling at $1,000 so when you do sell them you feel so much better". They were right. It also encouraged me to create more one-of-a-kind work.

I think there are fine jewelers who have been making work for many years who are very worthy of setting a very high hourly rate which reflects their talent and skills. Alway remember that Lawyers can bill over $500.00 an hour, more for courtroom time. We're just as worth it.

Good luck - martha

Replies

Morgan Madison April 19, 2010 at 4:42pm

Thank you guys for the input, it is certainly helpful.
Martha Giberson April 14, 2010 at 7:57pm

Setting wholesale prices for the first time can quite a shock. Reality hits you right in the face if you've been flying by the seat of your pants on pricing up to this point. When a storeowner approaches you at a retail show inquiring about buying your work for resale they usually (but not always) assume that the price tag at the show is a "keystone" price. That is twice what the wholesale price is. You, as the maker, are quickly thinking I can't sell this for 50% of what I retail it for, it's way too low a price and you can't make money.

The general formula for wholesale pricing is cost of goods to make the piece (all the raw material you paid) + a percentage of your overhead costs (utilities, studio rent, booth fees, travel expenses, etc.) + the cost of labor (time it took to make the piece) to reach a GROSS price. You then add profit to that to reach a wholesale price to you. NOTE: You must add a labor cost even if you don't pay someone else to work for you. Someday you might have people work for you, even if they do non-art type work e.g., bookkeeping, shipping, cleaning, etc., labor has value, including your own, labor is NOT profit. The "profit" is actually what you get to keep free and clear. Now is a good time to figure out what your "administrative" costs are since you should have your current IRS forms for last year at hand which would give you a clear picture of all your non-cost of good sold expenses.

I figured this out annually and adjusted my prices accordingly if needed. Once I did the hard work of pricing things one time I figured out it was just as easy to cost things at price of materials plus an hourly figure. As the years went along this hourly figure steadily increased until I was got to $100.00 an hour. My materials fee was actually quite small but my time was quite high. If it was a one-of-a-kind piece then I also added an additional "design" fee because that piece was never going to be duplicated and the patron was guaranteed they would never see that piece of jewelry on anyone else. This may seem like a high hourly rate to you but it is not. The first time I priced an object over $1,000 I gulped and thought I was crazy. But the first (and second and third) time I actually sold those peices I knew I wasn't. It took a leap of faith on my part but it was worth it. As someone told me, "if they aren't selling at $750.00, they might as well not be selling at $1,000 so when you do sell them you feel so much better". They were right. It also encouraged me to create more one-of-a-kind work.

I think there are fine jewelers who have been making work for many years who are very worthy of setting a very high hourly rate which reflects their talent and skills. Alway remember that Lawyers can bill over $500.00 an hour, more for courtroom time. We're just as worth it.

Good luck - martha
Larry Berman April 14, 2010 at 12:23pm

You set the price you can live with and payment terms. Selling wholesale can bankrupt you if not done properly.

Larry Berman
Digital Jury Services
http://BermanGraphics.com
412-401-8100

This reply was deleted.