Pricing is a head-scratching activity. Where do you start?
There are numerous formulas out there. In the Artful Success program we cover these in detail with comparison and rational for elements that can skew a formula because it’s based on higher material costs or lower overhead costs.
It is important to know *all* your expenses!
A basic Profit and Loss Statement includes your Gross Sales Income less your Cost of Goods Sold (COGS) = your Gross Profit. Your Gross Profit less your Expenses = Your Net Profit.
You should have a net profit left over at the end of the year. This is your business savings account. It allows you to do more shows, to buy new equipment, to invest in growing your business, to take classes and expand your knowledge, etc.
Your overhead includes things like: rent of your studio space, equipment purchases, a/c, toilet paper, show fees, gas, hotel, payroll taxes, shipping, boxes, etc.
Do you have a budget for your overhead for 2011 or have you been in business long enough that you have a *conclusive* summary from previous years, where you can take an average and use it for this years overhead figure?
This is the first starting point to discovering this portion of any formula for pricing.
Want to know more about forecasting your sales, marketing your art, pricing, and creating clarity in your art practice? Sign up for the Take Flight ezine and watch for details to join the next Artful Success Mentorship Program!
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Thanks for your newsletters. I’m getting inspired to spend a bit more time on the business end of my jewelry making in the hopes of having better sales. It’s been a difficult year what with the price of silver going through the roof. Thanks for your help.
I found an equation from pmcsupply.com (back when it was PMC!) and I think it has worked well. There was also an article in Metal Clay Artist Magazine which considered kiln costs and electricity and shipping, which the quick equation generalized. It is nice to get a reminder with the current market prices. I do metal clay for fun, but it is a hobby that can pay for itself! And that is fun too!
I have just posted this same question.
I am struggling with pricing because if I don’t raise my prices I need to stop making jewelry. I want to keep making it but have guilt making a profit. Why is that? Verizon and Apple certainly make a profit and they don’t feel bad about it why do I? I need to feed my family on what I make so why the guilt?
I am worried that the traditional formulas overhead + labor + materials x 4 = retail might be too steep for what I am making which is stringing, wire wrapping using artist beads and findings. Not sure what to do or the best formula to use.
I am loving your newsletters! Thank you
At our last meeting of metal clay artists – there are actually 5 of us forming a group – I was informed that my prices are way to low. After looking at today’s price of silver, $43.3 per oz, I know they are right!!
Joan
Your letters are so inspiring. I too am having a hard time pricing my work, but now realize that by pricing it at the right price not only reflects on your worth but customers see that you only produce quality one of a kind items. Thanks Tonya for all your great advice.
You are so spot on in your information, Tonya! I eagerly look forward to your newsletters which are full of very pertinent information. I have noticed some very beautiful metal clay jewelry on Etsy, which were so inexpensive I almost considered buying them for the silver content! Wonderful talent needs to be subsidized, so the artist can continue creating and make some profits. Thanks again for your wonderful support to the art community!!
The biggest problem I have as a silversmith with pricing is the changing market – I have over 200 pieces, and repricing takes days! When I had a retail shop ( I now sell thru galleries) this was a constant job. Now I’m getting ready for a home show, and haven’t repriced the pieces not in galleries since last summer – boy, do I have a job ahead of me! I go through a LOT of price tags.
I was taught at college by one tutor, add the costs together then add V.A.T.to the total and times it by three, and another said, times your costs by four then add V.A.T.to the total, and yet another said, work out the time you spend and cost out an hourly rate then add the costs plus VAT to that and you then have the cost of your item which should also cover your overheads talk about confused I certainly am, and if you’re like me and work on more than one piece in a day,take breaks if it’s nice weather, and mix your media,, by using sterling silver, silver and gold fill and plated wires and beads glass and polymerclay and also do silversmithing using both semiprecious and glass beads and cabouchons, not only does the market change you have to remember what each and every tiny bead costs to use any of these formulae, is there anything simpler out there that can be used in the UK ?
Pricing sure is an ongoing issue. And it’s as much art as science, I think, as evidenced by the many different formulas out there! I really learned a lot from your module on pricing, Tonya, and I’m playing with formulas to find what works best for me. Thanks for sharing your expertise!
I’m so please I use software that works it all out for me. When I buy my components, including the clay I enter this into my inventory, When I make a piece I mark off what components I have used, the software also works out my overheads and my hourly rate and then multiplies it all by 2.5 for wholesale and by 5 for retail. . I thought it seemd a lot to charge but the feedback I am getting is that the price is reasonable. We do need to value ourselves…if we don’t who will
Pricing seems to be the biggest frog in the pond. I agree with Sheila – If we don’t value ourselves, who will?? Having said that, I really am struggling with pricing. I consider that the single most difficult piece of the business puzzle. I have learned so much from the Artful Success Program and am busy digesting it all and looking forward to a much more successful business soon. Thanks so much, Tonya and Drew.
Great advice on pricing. Thanks!