One of the most common issues I tackle with the jewellers I work with is the sticky wicket of how to price things. Of course, getting your prices right is crucial to the success of your business, and a lot of preparation needs to go into it.

Money makes the world go round
Whether you agree with the above sentiment or not, as a business owner, you need to understand how to make money.
One of the most common issues I tackle with the jewellers I work with is the sticky wicket of how to price things.
Of course, getting your prices right is crucial to the success of your business, and a lot of preparation needs to go into it. So, what do you need to consider?
WHAT GOES INTO PRICING YOUR WORK?
In simple terms, you need to charge enough for your products to cover all the costs of running your business from the profits generated by the sale of these products, while making sure you are not pricing yourself out of your target market. Sounds easy? While, in theory, it is that simple, there are nuances specific to your brand to consider that affect how much you can charge for your product, such as your market position and target customers’ spending habits. These require market and consumer research, and I would recommend working with someone to help you determine where your brand fits in the retail landscape.
Aside from these nuances, there are some standard practices that need consideration: your costs need to cover any materials, outsourced services and/or labour and the time required to make your product. This is known as the cost of goods (CoG) – in other words, the basic costs of reproducing a piece. This should not include mould making, or any other sampling costs, as these should be covered in the profits of the sales of the item. Next step is to markup CoG to wholesale, which is the amount you would sell your product for to a retailer or gallery. While the ideal situation is to double your cost of goods to get your retail price, the costs of UK manufacturing often means this markup amount would be closer to half the CoG.
Now you have your wholesale price, it is important to factor in the wholesale to retail markups generally used by retailers in the UK. There will always be exceptions to the rule, but the standard markups are as follows:

These retail markups are pretty common across the UK and are the means of the retailer covering their operational costs: staff wages, shop rents, advertising, etc. Understanding this model means you can also take advantage of these markups when you are selling D2C (direct to consumer), thereby enabling you to have enough profit in your business, to develop new ranges, market your business effectively and make a decent income from your work.
DO YOU NEED TO HAVE A WHOLESALE TO RETAIL PRICING MODEL?
Ideally, yes. Without working to this system and only focussing on D2C sales, you run the risk of having to turn down wholesale offers from key retailers that could greatly enhance your business. If Selfridges placed an order tomorrow and your pricing model doesn’t account for wholesale to retail, you could end up losing money to sell to them, which is less than ideal. Even if you are only adding 10 per cent onto the CoG price, it means you can have your products in a store to secure your market position and expand the reach of your business. You might not ever make a living solely from wholesale (and I would argue that would not be the wisest business model), but you also do not want to limit the chances of reaching new customer bases.
WHAT IF A RETAILER HAS A DIFFERENT MARKUP?
Sometimes the retailer markups are slightly different to those outlined in this article. As the business owner, it is your responsibility to make sure your products are selling at the same price wherever a customer can purchase them. If this means altering your wholesale price to keep your RRPs the same, then do that.
SHOULD MY MARKUP BE THE SAME THROUGHOUT MY COLLECTION?
There are always exceptions to every rule, and this includes pricing. Some of your pieces will have really efficient production methods, which means you can increase your CoG to wholesale markup, while others will be more time consuming, which can impact your profit margins. The key is to ensure your prices make sense to the customer, when compared with different pieces in your collection and competitors.
WHAT ABOUT BESPOKE?
That’s a whole other journal post! :P

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