The Real Cost of Handmade Jewelry

The Real Cost of Handmade Jewelry

I recently asked a private Facebook group for an opinion of the style and price of one of my handmade necklaces. This is supposed to be a supportive group for handmade jewelry makers. Here is the piece I have listed for $129.

Well, I pretty much got my ass handed to me. (Yes, I know I asked for it, but come on now.)

I got comments like,

  • "I would never pay that much for this": my thought - Shop at Walmart
  • "You should re-think your business model": my thought - My business model is designed for profit
  • "I hate the colors": my thought - It's the color of flowers; do you hate flowers?
  • "Look at Etsy for similar items and check the prices": my thought - Etsy is full of pieces from China that are passed off as handmade by the seller
  • "It's too symmetrical": my thought - ????
  • "Good luck with that": my thought - Thank you, I guess
  • "Those peridot beads look like glass": my thought - They are high quality peridot
  • "You're charging artisan prices for a beginner piece": my thought - ????
  • "I would only pay that much if the findings were karat gold": my thought - gold is hovering at $2300 an ounce. Should I just give you the necklace?
  • "I would never pay myself more than a kid in a back ally in Mumbai would make": my thought - ????

Oh, really?

I'm not sure I would call that constructive criticism. I know I took these comments personally, and I shouldn't do that. But, really?

So I asked ChatGPT to give me a standard pricing formula for handmade jewelry retail prices. Here is what I got back:

Creating a good pricing formula for handmade jewelry involves considering several factors, including the cost of materials, the time spent on making the jewelry, overhead costs, and the desired profit margin. Here is a comprehensive pricing formula to help you determine the appropriate price for your handmade jewelry:

Step-by-Step Pricing Formula:

  1. Calculate Material Costs:
    Add up the cost of all materials used in the piece of jewelry. This includes beads, wire, clasps, gemstones, metals, and any other components.

    Formula: Cost = The Sum Of Materials Used in The Piece

  2. Calculate Labor Costs:
    Determine your hourly wage. This can vary depending on your experience, skill level, and the complexity of the work. Multiply the time spent making the jewelry by your hourly rate. 

    Formula: Cost: Hourly Rate * Hours Spent = Labor Costs

  3. Include Overhead Costs:
    Overhead costs include utilities, tools, workspace rental, marketing, packaging, and other business expenses. Estimate your monthly overhead and divide by the average number of pieces you produce monthly.

    Formula: Overhead Cost Per Piece = Total Monthly Overhead / Average Number of Pieces Per Month

  4. Add Profit Margin:
    Decide on a profit margin you want to achieve. This can vary, but a common range is 20% to 30%.

    Formula: Profit = (Material + Cost + Overhead Cost) * Desired Profit Margin

  5. Calculate Wholesale Price:
    Add up the material cost, labor cost, overhead cost, and profit.

    Formula: Wholesale Price = Material Cost + Labor Cost + Overhead Cost + Profit

  6. Calculate Retail Price:
    Typically, the retail price is 2 to 2.5 times the wholesale price to account for the retailer’s profit margin.

    Formula: Retail Price = Wholesale Price × 2 to 2.5

    Example Calculation For My Piece:
  • Material Costs:
      • Beads: $24.50 (Peridot and Rose Quartz)
      Wire: $.50  (49 Strand Beading Wire)
      Clasps: $1 (Gold Plated Brass)
Total Material Cost: $26.00
  • Labor Costs:
      • Hourly Rate: $20/hour
      Hours Spent: .5 hours
Total Labor Cost: $20/hour × .5 hours = $10
  • Monthly Overhead $100:
      • Average Pieces per Month: 4
Total Overhead Cost per Piece: $100/4 = $25
  • Profit: Desired Profit Margin: 25%
Profit: ($26 + $10 + $25) × 0.25 = $15.25
  • Wholesale Price: $26 (Materials) + $10 (Labor) + $25 (Overhead) + $15.25 (Profit) 
Wholesale Price $76.25
  • Retail Price:
      • $76.25(Wholesale price) × 2.5 = $190.63
Retail Price = $190.63
My price = $129

What I Learned:

  1. I AM an artisan, therefore it makes sense to charge artisan prices. Artisanship is in the eye of the beholder.
  2. My item is reasonably priced.
  3. I will get negative feedback and I won't die.
  4. I know that many people are not making a living from their craft, rather, they are funding their hobby. That's fine, but by selling their items at cost or wholesale, this undercuts retailers who are trying to make a living in the U.S. and create jobs in the future.
  5. Many people are not willing to pay an American a living wage for products made in America. 

Ok, rant over.

XO,

Tammy

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