Pricing your Work
When students ask me about pricing their work, most of them want a simple formula that involves multiplying the cost of their materials by some magic number. Unfortuantely, this just doesn't work.
The problem with using some multiplier of material costs for your pricing formula is that it does not take labor into account at all. How do you differentiate between a quick pair of earrings that took you 5 mintues to make and an intricate hinged box that took hours or days? When I work in copper, it actually takes me significantly longer to make the piece, but the material costs are a fraction of the costs when I use Silver. How do you compensate for that?
Remember, if you are going to make money at this, you have to cover things like material waste, inventory, electricity, advertising, travel costs and a whole host of other costs that do not factor directly into your pricing formula.
Here is an alternate formula that might help. This is just one variation of a complicated exercise. I know others who do it differently. Either way, it will at least give you some ideas to think about.
(Materials x 1.1) + (Labor x Hours) = Cost
Cost x 2 = Wholesale
Wholesale x 2 = Retail
The "1.1" in the above formula increases your material cost by 10% in order to cover waste.
There are a number of areas in this formula that can be adjusted to account for things like experience and reputation.
The first line is where you would look at your own experience level. You can not charge the customer for learning curve. So if it takes an experienced artisan 10 minutes to make something and it takes a beginner 2 hours to make the same thing, that does not mean the beginner can charge more. You have to set the hours to what it should reasonably take once you're practiced at it. Also, you should not be charging as much per hour as an experienced person.
The second line of the forumla is where reputation comes into play. Someone who is known and respected can increase the multiplier accordingly. "Cost x 2" might increase to "x 2.5" or "x 3" to increase the wholesale price. How much is charged per hour might also be a factor of name recognition.
Other factors that come into play are things like location. Where you are selling your jewelry is going to affect how much you can charge for it. You simply can not command as high a price in rural Georgia as you can in New York City. This can be adjusted in the hourly rate and in the multiplier in the second line of the formula. Although, Wholesale should never drop any lower than "Cost x 2" or you'll go broke.
So let's say you go through this exercise and you feel all your numbers are accurate and appropriate. Your end Retail price on a piece comes out to $50. Take a look around. If $50 is lower than the going price based on your selling venue, reputation and/or experience, then by all means, adjust the formula to raise your price to something more appropriate. On the other hand, if $50 is way too high you have a different problem. If you're applied the formula honestly and fairly, you should NEVER lower your price to match others. If you do you will lose money and go broke. You have identified a product you can not make for sale. Usually labor is the biggest culprit. Look for alternate designs that can be made faster and/or more efficiently. Find pieces that, when you plug in the formula, come out to something you can sell, and then you'll actually make money at your work.
Here is something else to think about. Your work should never, ever, be sold to the end consumer for less than Retail. This is true if you are selling it through a gallery or if your selling it directly to the consumer at a craft show or on etsy. I know some people think they can offer better prices by selling direct to consumer and eliminating the last line of the formula, but in the long run you're shooting yourself in the foot.
Let's say you're at a craft show and you're selling your work for your wholesale price instead of your retail price. A customer comes up, falls in love with your work, and says "I want to carry your work in my gallery! What's your wholesale price?" If you're already selling at wholesale, you have no place to go. If you discount any further you won't be covering all your expenses. The gallery owner isn't going to want to buy at your craft show price and then mark it up from there. Why should their customers buy from them if they can get the same thing from you for a lower price?
Also, don't forget that you have to cover your hidden expenses as well as the obvious materials and labor costs. If you're selling at a craft show you also have booth fees, travel costs, the cost of having to spend time sitting in a booth selling things instead of sitting in your studio making things, as well as a host of other expenses incurred when selling directly to the consumer. These are the costs that are covered by the difference between wholesale and retail.
There are, of course, whole books and courses on the topic of pricing. This article provides only a simplified over-view, but hopefully it will give you a place to start.