If you’re selling in just one venue you might be able to add your cost to market into overhead. However, if you are like most jewelry makers you’re selling in several venues, with each venue charging a different amount and often that being determined by the final selling cost. For example, if you are selling your jewelry in a gift or consignment shop most have a 60/40 split with your share being 60%. You’ll need to add this cost to your break even point and consider it when determining the price for your jewelry.

I’ll illustrate with a few examples:

Let’s use the break even point of $3.22 from our earring example used earlier. Let’s also assume that you are still assembling all your jewelry yourself, and you’d like to make $18.00 an hour. You’ve already added $8.00 so you need to add an additional hourly rate of $10.00. If you recall from our example it took us 15 minutes (0.25 hours) to make the earrings so we’d add an additional $2.50 ($10.00*0.25) to our break even of $3.22 making the amount we’d like to walk away with, after paying selling fees, of $5.72 ($3.22 + $2.50).

Example 1:

Selling in a gift ship with a 60/40 split:

To determine what your selling price needs to be in order for you to walk away with $5.72 after fees you need to divide $5.72 by 60 and then multiply by 100 to get your selling price of $9.53.

$5.72/60=$0.0953
$0.0953*100=$9.53 Selling Price

For those of you that aren’t math savvy it may not be immediately apparent to you how I came up with that figure, so I’ll try to explain. The total selling price is 100% and your split is 60% which is why you divided what you want to walk away with by 60. If the split was 70/30 with 70 being your portion you would have divided the $5.72 by 70 instead. However you still would have multiplied by 100 to come up with the total selling price. Hopefully it’s making a bit more sense to you now. Percentages are a difficult concept for a lot of people so if it still isn’t making sense don’t fret too much. As long as you plug the right numbers in, the formula will work for you even if you don’t completely understand how. You can always check your work with a calculator to see if the number you came up with gives you the amount you need. i.e. 60% of $9.53 = $5.72.

Example 2:

Selling on eBay:

Fees are given as an example only and may not reflect actual fees being charged by eBay at this time.

Listing Fee:                              $0.35
Gallery Fee:                             $0.35
Desired Amount after Fees:       $5.72

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Total:                                       $6.42

__________________________________

Final Value Fee: 5.25%
($6.42/94.75)*100= $6.78 Selling Price

Notice that any fixed fees (fees that don’t depend on the final selling price) are added to your desired amount before calculating the selling price. Also, some of you may be questioning where we got the 94.75. Think about the example from the gift shop earlier. If you recall our portion of the split was 60%. With eBay our portion is 94.75% the other 5.25% goes to eBay as a final value fee.

This example assumes that there are no additional expenses involved in collecting the funds. However, if you were paid using PayPal (or a merchant account) you would also have to add those additional fees into the mix.

Let’s expand on our earlier example.

Selling on eBay, PayPal as Payment method:

EBay Listing Fee:                     $0.35
EBay Gallery Fee:                    $0.35
PayPal Transaction Fee:           $0.30
Desired Amount after Fees:       $5.72

-------------------------------------------------------

Total:                                       $6.72

________________________________

EBay Final Value Fee:             5.25%
PayPal Fee:                            2.90%

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Total Percentage Fees:            8.15%

_______________________________

(6.72/91.85)*100=$7.32 Selling Price

Example 3:

Selling directly to the consumer:

In this case there may not be any additional cost involved. For example, if you sold the earrings to a member of your church and they handed you cash then your selling price would be the same as your desired amount after fees of $5.72. However, if you are selling at a craft show there may be booth fees. If you are also accepting credit card payments there will be merchant fees. In the case of booth fees, those can’t be attributed to any one transaction. You’ll have to spread the fee out over the number of items you expect to sell using a method similar to what we used to attribute overhead cost. If this is your first season you may not have a clue how many pieces you are likely to sell. In that case, you may want to lump this into your annual operational cost and spread it among all your pieces for the year. However, once you have a few shows under your belt you will have a better grasp for what you can expect. Let’s say that the booth fee for the show is $25.00 and you expect to sell 100 pieces during the show. Let’s also assume that your merchant fees for accepting credit cards are $0.20 cents per transaction and 2.2% of the charged amount. Let’s stick with our earrings from our prior examples.

Booth Fee ($25/100):                         $0.25
Credit Card Transaction Fee:              $0.20
Desired Amount after Fees:                $5.72
-----------------------------------------------------------------
Total                                                  $6.17
______________________________________

Credit Card Fee: 2.2%
(6.17/97.8)*100=$6.31 Selling Price

Hopefully the above examples gave you a base for determining how to precisely price your jewelry based on your desired profit model. Be reasonable when determining your desired profit model. We’d all like to make $100, $1000 even $100,000 an hour but that doesn’t mean we’ll get it. Once you’ve determined a selling price for each selling venue, go back and determine how likely you are to sell at that price? Does the price seem too high? Too Low? You may have to make adjustments. Let’s say that we’ve determined that our earrings are very likely to sell at $5.00-$7.00 in all our venues. Our gift shop selling price and our eBay selling price fall outside that range. Are you willing to adjust your profit model for those venues? Perhaps a profit model with an hourly rate of $15 an hour would be more appropriate for those venues. If that rate is just not acceptable for you, then you may need to eliminate that venue or determine if there is a way to reduce your fees. Perhaps you could negotiate a 65/35 split with the gift shop owner instead of the traditional 60/40 split.

In conclusion, you can precisely price your jewelry based on a profit model of your choosing. To determine the selling price of your handmade jewelry you must first determine your cost of good sold (COGS). Then determine your annual operational cost and distribute it to your product. You must then calculate your cost of labor (if it wasn’t already added to the COGS) to come up with your break even point. Once you have a break even point you can then assign a profit model and add cost to market fees to determine your final selling price. Once you’ve calculated your selling price based on the desired profit model you can make adjustments up or down depending on the venue and the likelihood of achieving that price.

We hope you enjoyed our guide on pricing your handmade jewelry for resell.

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