28 September 2010

Putting Together a Price Tag


I've been debating for awhile about whether or not to blog about this topic.
I keep feeling like customers have a certain right to know where their money is going
(or at least have the assurance that they are paying a fair price for artists' work.)

Also I see a lot of work online that seems to be so severely underpriced,
it's a bit debilitating not only to the artist who has made it,
but also to other sellers,
who may suddenly appear greedy, selfish, or downright ridiculous for how high their prices seem.

It's a tough subject.
And I'll say right off that I certainly don't have all the answers.
I came into this whole selling thing without a financial,
mathematical, or business bone in my body.

What I've seen since being in college is that a lot of students and artists alike
who went before me didn't successfully make it out on their own,
not because their talents and abilities lacked in any way,
but because they just didn't understand or put into practice the business side of things.

I didn't want my dream to come unbuttoned because I wasn't willing to suck it up
and learn a few things that maybe don't hold the greatest interest for me.

SO!

Fortunately, a lot of Etsy sellers create incredibly detailed spreadsheets and
mini-accounting files that both explain and organize this whole mess of administrative tasks.
I've bought a few different versions from several sellers,
and combined them into a custom excel workbook that I feel provides the best formula for pricing my work.
(Please note that this is how I factor my pricing; it will not apply to everyone!)

While I won't be giving you my exact formula here,
the following are things that I keep in mind when getting down to my final numbers,
and many of them are things I never would have thought of on my own.
Thankfully, there are some great business people out there who are willing
to share with the rest of us.
{I recommend scouring Etsy or other resources for sample pricing plans and other accounting templates.}


RAW MATERIALS:
Pretty basic. But then again . . . not.

The market value of raw silver is not what I pay when I buy sheet, wire, or stock.
The silver most metalsmiths purchase has been processed into just those things,
therefore labor charges and middle-man mark-ups are present.
So if silver is $20 an ounce, you can bet that artists
(and therefore consumers) are paying quite a bit more.
In addition, the cost of silver is going up all the time.

Stone. Art from the earth. And also from a lapidary artist.
Essentially, when you buy a piece of jewelry that contains an amazing stone,
you are buying two pieces of art:
that of the stone-cutter and that of the jewelry designer.
I know that I personally have expensive taste in stones,
but I feel that no matter how hard I work at my own skills and concepts,
they will never be to their best advantage if executed around a second-rate,
imitation, dyed, or otherwise altered stone.

Stone and silver.
As a consumer, that may be all that is visibly evident in the construction of a piece of jewelry.
However much more goes into the piece than those two materials.
Ghost Supplies, as I call them, may not be visible in the final work,
but without them, the final piece would not look as it does nor be structurally sound.
Ghost Supplies include but are not limited to:
Solder
flux
gas(es)/fuel
acid/pickle
saw-blades
wax/lubricant
sandpaper/abrasives
blackening agents
polishing agents

All or some combination of the above are necessary for making my work.
And they all have to be replenished regularly.
You cannot ignore the cost of your Ghost Supplies and expect to make
the money you need to be making in order to keep your business healthy and growing.

One thing I've learned, being married to a photographer,
is just how much of what I use and sell has to be replaced.
Keith buys camera equipment, software, filters and accessories.
And he has them then, forever, or at least until technology makes them obsolete.

But metalsmiths, painters, etc.,
we are constantly in a state of moving things out and bringing things in.
It seems there is always something that needs to be restocked.
Something bought.
Metal. Paint. Chemicals. Whatever.
Artists generally do not get endless use from their material purchases;
we are constantly needing and paying for MORE.


TOOLS:
Making metal jewelry can require so many tools.
And the bigger your skill set, the bigger your tool list.
But they don't last forever either.
Many wear down over the years and will have to eventually be serviced or replaced.


LABOR:
It takes a lot of time to do what we do.
We design it,
we build it,
we refine and perfect it,
we photograph and market it,
we write a description for it,
we blog about it,
we price it, package it, and ship it.
This is not fast food fare.

It's up to you what you want to pay yourself for your time and energy.
All I can really say on this subject is to make sure it's a worthwhile earning.
If you're going to only pay yourself $8 an hour,
are you going to be able to cover all the costs of running your own business?


OVERHEAD:
Making jewelry requires a lot of electricity and water.
We use a lot of power tools.
Some of us have studio rent to pay, utilities such as phone and trash,
gas to the post office or the studio,
bank charges and accountant fees.
Even artists working out of their homes should consider what part of
their monthly bills are directly related to the process of making art.


MARKETING COSTS:
It costs money to list an item on Etsy,
. . . and to renew an item on Etsy.
(Not much, but it adds up if you renew items often to build up exposure.)
Showcase spots cost a significant amount.
Those artists who have their own websites pay for web hosts and domain names,
and of course business cards and other promotional materials are crucial.
Especially to those who do shows and sell outside of the online realm.


PACKAGING COSTS:
A lot of artists put great thought and time into their packaging.
It sets the stage for the work inside,
and plays a vital part in the overall image the artist is trying to convey.
Things that go into packaging may include:
Tissue
gift bags
wrapping
boxes
ribbons
tags/stickers
business cards/postcards
thank you notes

These all have to be purchased by the artist.
Little things add up!


SHIPPING COSTS:
There are two aspects of shipping that I try to keep in mind:
1.) All the shipping costs that I pay when I order raw materials,
packaging supplies, or marketing items (like business cards.)
2.) The amount it will cost to ship out the items I've made,
including mailing envelopes, shipping labels and postage, Endicia fees, etc.
It's important to also take into account special services,
such as delivery confirmation, insurance, etc.



FEES:
A basic reminder:
Etsy charges the artist fees for selling through their site.
PayPal charges fees as well.
Remember that when pricing your work.

* * *

WHEW!!!!
The point is that all of this comes out of the artist's pocket,
and it adds up fast.

We love what we do and we MUST love it;
otherwise it would be too great a leap of faith to take,
making things at such an expense and then putting them out into the world,
hoping and trusting that someone else will love them enough to buy them,
and validate our chosen path.

Please understand that everything mentioned above is my personal perspective on things.
I am NOT an expert nor am I a teacher.
I'm trying to do the best I can, be smart about my business, but fair to my customers.
Some of what I take into account when pricing my work may not be necessary factors for others.
Or I may have left things out!
I'm still learning as I go,
as I think a lot of creative individuals are . . .
The hope is that by opening up a dialogue about pricing and cost,
we can help educate one another as well as our customers.

* * *

You can check out these other blogs on pricing:

Alice Istanbul Designs (that post coming soon)
Sissy & Jack's (post coming soon)

I'll add to this list if I hear others are posting.






31 comments:

  1. Thank you so much for taking the time to put this together. I've had a formula for some time, but it's subject to change and has on more than one occasion! Just when I think I've got everything covered, another element of pricing is brought to my attention. Anyway, very helpful post!

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  2. Fabulous. And you certainly did cover it all. Underpricing hurts all of us, as you mentioned, not just the ones who *are* underpricing. I am going to post about this post on my own blog and direct any interested readers your way. Well done, Jess.

    Oh, and managing to leave out the emotions that often bubble up in pricing discussions was an art in itself. :)

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  3. Jessi- thank you! Mine has been revised a hundred times as well. :)))

    BP- HA! You must know me and my emotions! I've been working on this post all day and had to get up and walk away a few times. :) Thank you for spreading it around.

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  4. Amazing post! Looks perfect to me... thoughtfully written and well explained. Great to see this!

    Thank you, thank you!

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  5. Thank you Jess for posting this. I am so frightened of pricing my work that I often underprice it. I will be printing out this post and hanging it in my studio to remind me. Thank you for being an inspiration....... again

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  6. All the pricing thoughts floating around in my head have come out so clearly in this post!

    I really must take the time to do this....thank you for sharing :)

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  7. Jess, I love this post! This is one of the most difficult subjects I have dealt with myself. I love making jewelry but the business part has very much been learning through trial and error for me. Their are SO many things to put into account with what we do, considering pricing, that it can be a bit overwhelming at times. I feel that I have came up with a bit of a better formula but this has opened my eyes to some things that I never even considered. With so many purchases of the items you mentioned above and even more, it is so easy to rip yourself off or underpirce without even meaning too. I agree with Louise, I'll be printing this off if you don't mind and hanging it up in my studio. I need to set some time aside to really work on a formula that works and feels fair to me and everyone else :) Your brilliant Jess! Awesome post!!!!!

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  8. Ha. Well put. I just posted about this same issue a few weeks ago: http://www.amykenny.ca/?p=750

    It's so tough to get a handle on this kind of thing, but let it not be said that artists can't learn to be businesspeople as well!

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  9. I'm with you Louise and Heather - definitely printing this off to keep as a reminder! It's so hard to not question myself and NOT underprice. It's something I struggle with off and on. Some days I feel like I couldn't possibly charge more, others I can't believe I priced something so low!

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  10. I agree Jessi. Lately from reading blogs I kept reading about undercutting. I never even thought of things that way. I did realize that my pieces were priced lower than some, but in all honesty....I have been over here with a big ol' headache trying to figure out a system that works for me, the customer, is fair to other sellers, and where I feel that I am not getting ripped off myself. We purchase so much supplies, tools, etc., that figuring out a sytem can almost feel impossible. It is SO nice to read posts like these that are informative as well as polite :)

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  11. This is great info Jess!
    I am about to embark on opening my own Etsy shop (not jewelry) with hubby so you have given me much food for thought.
    love and light!

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  12. Yay! I'm so happy this helped some you at least in a small way. Print whatever you like. Use what you can/want and discard the rest. :) Check in with the others too; they may have info and ideas that I didn't think of.

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  13. Thank you so much for having the courage to blog about this delicate subject. Just WHY it's so delicate, has long since escaped me. I agree wholeheartedly with every point you've made, and it's wonderful that you had the tact and the time to explain what really goes into the pricing of a piece for the customers. Just like some of those mentioned above, I constantly struggle with the proper pricing of my work, currently it's mostly because I don't know how to decide what my level of technique and skill is, to appropiately determine what my earnings per hour should be!

    As I know, pricing is an ever evolving beast that as artists we much tackle on a monthly basis.

    Thank you for the tip of Etsy sellers that provide working spreadsheets! I've made my own rudimentary ones that can hardly be passed as functional...I will check them out asap ;o)

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  14. I never have questioned you or any of my other "favorite" artist and their prices.. I beleive that what I purchase is one of a kind..heirloom...built to last...but most of all... a piece of your soul.. and that is PRICELESS!!!!

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  15. EEM- Thank you for reading . . . you are so right, in my opinion, that pricing is an "ever-evolving beast" and maybe even an art form in itself! I think you'll find some great spreadsheets on Etsy. I actually want to go through and look them over again myself; it has been awhile. :)

    Delia- xo. XO.

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  16. Very well put. I'm going to spread the word as well. :)

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  17. Well said, well said. It's a tricky beast, and one that I think as ARTISTS first we'll forever be relearning, but the ONLY way to make a business out of our passion.

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  18. so many great thoughts here, and I am happy my post seemed to be in decent parallel to yours, since I always want to make sure I am on the same page as other artists, or at least in the same chapter lol.

    I think my formula has evolved with me, as I have evolved, and that is important. What works when you first start out won't work as you improve your skills and hone your trade :-)

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  19. Thank you for bringing this up Jess. It's so easy to forget about the business aspect of what we do. I just love to create and that part comes easy to me while the business lady is still very much a work in progress :o)

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  20. Great post, Jess. I'm working on mine right now, as I eat dinner. (Always the multi-tasker, I am :)

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  21. Excellent post, Jess--as usual! You've laid everything out so well here. I also use a spreadsheet that I purchased from a fellow Etsy seller, and it really has been a lifesaver! It's great for tracking my zillions of beads and findings, as well as figuring out my cost of supplies, labor, overhead, etc. for each design--it's amazing how quickly it can add up!
    xo,
    Ivy

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  22. Great post, well gathered together.

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  23. Thank you for the great post, Jess! To the discussion I would like to add a very interesting angle that is rarely addressed: skills levels are a pricing factor too.
    Check out this terrific post by Megan Auman:
    http://www.craftmba.com/2010/06/24/skill-price-and-etsy-as-business-incubator/

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  24. Here's my contribution. Feel free to at it to the list. BTW: lot's of good info everybody!
    http://devinedesignsjewelry.blogspot.com/2010/09/educating-consumer.html

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  26. Excellent, just wonderfully written post. THANK YOU.

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  27. Thanks for the wonderful post. been working on this myself:) it never an easy subject for me.
    Its alway changing.

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  28. Thank you M.P. for the excellent post by Megan Auman.

    Wondering if different jewelry techniques requires different breakdown of labour cost per hour???

    Thanks!

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  29. MP- Thank you so much linking to that- what a great read, and very inspiring as well.

    Cindy- Thank you for joining the blog list on this topic. :)

    Elaine and Meghan- thank you for reading; I hope it helps in some way!

    bonbon- I think that is a great question and totally relevant to the topic. The truth is, I don't know! This may be a great post for an Etsy forum? Anyone with ideas on this, by all means, share if you like: Should someone who weaves beads or makes glass beads or does high-end wire work, etc., charge the same hourly labor amount as a metalsmith? Why or why not?

    I sound like a high-school test question . . .

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  30. A REALLY good post and timely for me.

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  31. I can only imagine the frustration of creating and selling your work. Its all very beautiful! Keep it up!

    ---

    Estate Jewelry

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