Pricing your items

Dawn Allen necklaceThis is one of the most important aspects of running a successful business, whether it's a gallery or retail shop. And, as Dawn points out, "Pricing your own work is one of the hardest things to do.  It is hard to detach and be truly objective."

The key considerations are knowing what your local market will pay, what they should pay, and finding a balance so you can make a profit.

Dawn advises to start with the base cost.  That is, the sum of all materials used to produce the work. 

She says, "I use a notepad as I'm working and note down each bead, stone, clasp, component and what that item cost me."  

"I add 10% to cover for 'home business' type expenses like freight of goods to me, registration of business name, business cards, cost of stationery, tools etc.  I also add a component for my time.  I started 9 years ago with a value on my time at $20/hr.  This has increased as my skill has increased and is now the same as the hourly rate I receive working as a freelance jewellery designer.  Bearing in mind that some of my items only take me 15mins to make.  In which case I would apportion 1/4 of my hourly rate.

"So... Materials + 10% + apportioned time = Base cost.

Most of us realise that we need to cover our costs.  That is what the base cost does.  It allows for all the costs of creating something.  Now we need to make a profit on top of the base cost.  My profit margin is the flexible part.

"Honeydew Gallery has it's costs to cover.  The margin we apply to stock reflects running costs such as, insurance, rent, utilities, fees, marketing, staff, refurbishments, banking etc.  We also need to make a profit or we don't stay in business very long!"