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How to Price your Chainmail Masterpieces
Article © MAIL User: Cynna
When setting the price for an item, there are 5 elements to consider:
materials
labor
overhead
profit
the market
The way these add together determine the minimum price to charge in order to make it profitable. Thebasic formula is: m+l+o+p= wholesale price.
Suppose you made a necklace out of aluminum. It takes 200 rings, and took 1 hour to make. What is a good price for it?
Here is the formula as it is developed. | The first consideration is the material cost. Figure out how much wire went into the product, and figure out how much you paid for that much wire. If you buy a set number of rings or buy them by the pound, this is very simple. If you buy bulk wire, it will take a bit of experimenting to get a total. When doing calculations, be sure to add in extra for unusable rings, wire 'tails', etc. |
$.20+l+o+p=price | Example: One spool (1/4 mile) of aluminum costs $17.00. 1' of wire makes 12 rings, so each ring take 1". Since there are 1320' in the 1/4 mile, there are 15840 rings available in one spool. So, the material cost for each ring is: $0.001. Multiply this amount by the total number of rings, and you get $.20 for the ring cost. Add in the cost for any clasp or beads. This total is the material cost for the piece. |
$.20+$10.00+o+p=price | Next is the labor cost. Determine how many hours you spent working on the piece. Now here is the hard part. How much is your time worth? If you are doing this as a hobby, your rate isn't that important. If this is your sole source of income, you need to make a living wage, or you will be asking 'Do you want fries with that?' before too long. Again, if you make your own rings, you have to count the time it took to roll the coils and cut the rings as well. If you only count the 'putting together time', you won't be making enough to support yourself. Example: Your wage is $10.00/ hour, and the piece took 1 hour to make from start to finish, so your labor cost is $10.00. |
$.20+$10.00+$2.00+p=price | Now you have to figure your overhead. This may not be much at all, if you do this as a hobby. For businesses, rent, utilities, tools, etc. all add up, and have to be accounted for. Fees for websites, auctions, or booths are overhead costs. One way is to figure a per hour rate on overhead and add it in like the labor cost. This can be very cumbersome, so you may just want to add in a base rate to cover overhead. Example: Your base rate for jewelry pieces is $2.00, which covers your tools and other supplies. This is your overhead, which is added to each piece. |
$.20+$10.00+$2.00+$2.44=price | The last element is the profit. Now, you may be asking "But I have my wage built in, isn't that my profit?" The answer is NO. Labor is the cost that you would have to pay someone else to do the work. The profit is what is left over after everything else is paid. If this is a hobby, that may not be important, but for a business, it is what covers expansion costs and rainy day costs. Profit can be figured several ways. If you add up the materials, labor, and overhead, you could figure a percentage that would be profit. Or you may set a per piece rate. Profit is the area where prices can be adjusted the most, and what the market will bear is an important consideration. Example: If you want 20% profit, add up everything and multiply it by 20%, which equals $2.44. |
$.20+$10.00+$2.00+$2.44=$14.64 | The total is $14.64 for the necklace |
Now, a word of warning - $14.64 is the WHOLESALE PRICE! This is the bare minimum you would need to charge to make a living selling necklaces (if you've figured your costs correctly, of course.). This is the price that stores would pay you to put your piece on their shelves, NOT what they would charge for the piece. Retail stores usually 'keystone' or double the price they pay for an item. This helps them cover their costs and overhead. If you want to wholesale your work, you have to keep the keystone in mind, because the higher your item is priced, the more the store has to charge for it. You may very well price yourself out of the market! If you are retailing your work, you may want to keystone your wholesale price as well. You may feel no need to raise your wholesale price when selling to the public, but having unnaturally low prices may drive away customers, and will certainly piss off other vendors who priced their merchandise correctly. Venues may see your low prices as a sign of low quality, and may not invite you to shows and faires where your prices severely undercut the other merchants. This is especially true where they take a percentage of the profits.
If your retail price is lower than the others in the market, great! You can raise your price and increase profits, or keep your price low and build market share. If your retail price is much higher than what the market will bear, you need to figure out how to cut costs. Cutting profit is the easiest, but a better solution is to streamline your process so it takes fewer materials, less overhead, and/or less time to complete. Also, if you are working as a business, learn the value of volume work - work on several projects at a time when it would be more advantageous to do so. Cut all the rings for several projects at once, then put the cutters away.
Once you have one piece priced correctly, you can use it as a basis to set a 'per ring' price that will work for any item made of that type and size wire. Simply take the finished price of the item and divide it by the number of rings. This price per ring can be used to figure out larger or smaller pieces easier than going through the whole formula each time.
Example: $14.64 is the price for the necklace which has 200 rings. The 'per ring' price established is $.073. A bracelet with 157 rings in it should be priced at $11.49. A headpiece with 1000 rings in it should be priced at $73.00
Your 'per ring' price should be periodically evaluated to account for changes in the original formula. If your wire price goes up, your price should reflect that. Also, if a piece is more complex than normal, the price might be higher than normal. Again, the market will influence how high the price can go.
You may also consider figuring out a rings per hour rate to figure out how long a certain piece took you to make. To do this, figure out how many rings per hour you can put together, and how many rings per hour you can cut. The combined total will give you a rings per hour rate. This is helpful if you are working on several projects at once.
Example: Your rate of cutting is 600 rings per hour. Your rate of putting rings together is 300 rings per hour. This means that it takes one hour to cut 600 rings, and 2 hours to put them together. So it takes 3 hours total to work 600 rings (cutting and putting together). This works out to 200 rings per hour combined. If the piece has 300 rings in it, it probably took you 1.5 hours to make (cutting and putting together). This rate may change with different patterns.
For more information, read Barbara Brabec's books on home based business and pricing insights. Her website is located at: http://www.barbarabrabec.com/.
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