HANDMADE JEWELRY PRICING STRATEGY

Pricing your handmade jewelry is about finding the sweet spot between covering your costs, appealing to your target market, staying competitive, and creating a sense of value that customers are willing to pay for. Balancing these elements ensures your business stays profitable and continues to attract the right customers.

When pricing handmade jewelry, many factors come into play, impacting both profitability and customer satisfaction. Here's a more developed explanation of each key factor:

 

1. Cost of Goods Sold (COGS)

• What it includes: This encompasses the direct costs of producing your jewelry, such as materials (e.g., gemstones, beads, metals), labor (your time or employee wages), packaging, and any production tools.
• Overhead costs: Include other expenses such as transportation, storage, shipping fees, and marketing. Even smaller costs like e-commerce platform fees or transaction fees should be considered.
• Why it matters: Without accurately calculating COGS, you risk underpricing your items, which can hurt profitability, or overpricing them, making them less competitive.

2. Target Market

• Demographics and preferences: Your pricing should align with the needs, preferences, and spending power of your ideal customers. Are you targeting high-end buyers seeking luxury pieces or budget-conscious shoppers looking for affordable jewelry?
• Psychographics: Take into account the lifestyle, values, and aesthetics of your customers. For example, eco-conscious consumers may be willing to pay more for sustainable materials, while fashion-forward buyers may prioritize trendy designs.
• Why it matters: Pricing too high or too low for your market segment can alienate potential customers.

We have available a workbook, blog, worksheet and an ebook all to help you define your ideal Customer. You need just the ebook or blog and workbook or worksheet to define your target audiences.

 

 

WORKBOOK:IDEAL CUSTOMER WORKBOOK

BLOG:  IDEAL CUSTOMER

eBOOK: TARGET MARKET

WORKSHEET: IDEAL CUSTOMER

3. Competitors

• Competitive analysis: Research the pricing strategies of similar jewelry brands or businesses within your niche. Look for patterns in pricing for handmade vs. mass-produced jewelry and how competitors position their products.
• Differentiation: If your designs are more unique or offer added value (e.g., customization, premium materials), you can justify higher pricing.
• Why it matters: Understanding the competition helps you strike the right balance between staying competitive and maintaining profitability.

This workbook will help you know your competitors better, it has guided questions.

COMPETITOR'S ANALYSIS WORKBOOK

4. Product Series

• Uniqueness and exclusivity: For limited edition or custom pieces, you can charge a premium. If a piece is handcrafted and one-of-a-kind, it’s worth more than mass-produced items.
• Quality: Higher-quality materials or intricate craftsmanship can justify higher prices.
• Brand awareness: As your brand grows and gains recognition, you can increase prices, particularly if your jewelry has a reputation for quality or exclusivity.
• Why it matters: Not all products in your range should be priced the same. Adjust prices based on the perceived value and uniqueness of the product.

PRICING STRATEGY WORKSHEET

PRICING BUNDLE FOR HANDMADE SMALL BUSINESS

5. Elastic Demand

• Price sensitivity: Understand how your customers react to price changes. Some customers may continue to buy at higher prices due to the perceived value, while others might look for alternatives.
• Testing: Use A/B testing or gradual price increases to gauge customer reactions and adjust accordingly.
• Why it matters: Knowing how much your customers are willing to pay allows you to maximize profitability without losing sales volume.

6. Seasonal Changes

• Demand fluctuations: Certain jewelry types (e.g., beach-themed or holiday jewelry) are in higher demand during specific seasons. For example, bridal jewelry might see a surge during the wedding season, while Christmas-themed pieces may sell better in November and December.
• Adjusting prices: You can raise prices during peak seasons when demand is high and offer discounts during off-seasons to keep sales consistent.
• Why it matters: Pricing must be flexible to account for shifts in demand throughout the year.

7. Desired Profit Margin

• Profit calculation: After covering all your costs, determine the amount of profit you want to earn from each piece. This will vary depending on your overall business goals and operating expenses (rent, salaries, etc.).
• Standard markup: Many jewelry makers aim for a 2-3x markup on their COGS, but this can change based on your market and materials used.
• Why it matters: Setting the right profit margin ensures that your business can grow sustainably while covering both fixed and variable expenses.

8. Psychological Pricing

• Customer perception: Pricing items just below a round number (e.g., $49.99 instead of $50) creates the illusion of a better deal and can drive more sales.
• Charm pricing: Odd-numbered prices, like $29 or $39.99, are perceived as more appealing and may lead to higher conversion rates.
• Why it matters: Small price adjustments can have a big impact on how customers perceive value and affordability.

9. Pricing Flexibility

• Dynamic pricing: Pricing isn’t static—market conditions, customer preferences, and product performance will change over time. Regularly reviewing your pricing strategy allows you to adjust to shifts in demand or costs.
• Discounts and promotions: Offering limited-time discounts or bundle deals can attract more customers without permanently lowering your prices.
• Why it matters: A rigid pricing structure may limit your ability to stay competitive or maximize revenue during certain periods.

10. Evaluate Pricing Effectiveness

• Performance tracking: Regularly review your sales figures, customer feedback, and profit margins to see how well your pricing is performing. Are you selling fewer items than expected, or are certain pieces consistently sold out?
• KPIs: Key performance indicators such as profit margins, customer satisfaction, and repeat purchases can offer insight into whether your pricing is aligned with customer expectations.
• Why it matters: Continual optimization of pricing ensures you're maximizing profit without alienating your target audience.

11. Perceived Value

• Customer perception: The perceived value is the customer's belief in the worth of your jewelry relative to its price. Factors like branding, packaging, exclusivity, and storytelling (e.g., sustainable sourcing) can all elevate perceived value.
• Marketing impact: Strong marketing, influencer collaborations, and visually appealing presentations (e.g., high-quality photos or videos) can justify higher prices.
• Why it matters: Customers are often willing to pay more for items they see as special or luxurious, even if the cost of production isn't significantly higher.

 

 ALSO CHECKOUT: FAST SELLING HANDMADE PRODUCTS

Different Pricing Strategy For Handmade Jewelry

Different crafters have various ways of pricing their products, and jewelry designers are no exception. There are many methods to establish prices, as well as different reasons for each price point, as mentioned above. Read through this article to see which strategies best suit your needs, circumstances, and customer base.

1. Cost-Plus Pricing
• How it works: Add a markup to the cost of materials, labor, and overhead.
• Example: If your costs are $30 (materials, time, and overhead), and you add a 100% markup, you sell the piece for $60.
• Best for: Simple, straightforward pricing based on production costs.
2. Value-Based Pricing
• How it works: Price your jewelry based on the perceived value to the customer rather than just the cost of materials and labor.
• Example: A unique piece costing $50 to make may be sold for $300 due to its artistry or emotional appeal.
• Best for: High-end, artistic pieces viewed as luxury or collectible items.
3. Market-Oriented Pricing (Competitive Pricing)
• How it works: Set your prices based on competitor pricing in the handmade jewelry market.
• Example: Research similar products and position your pricing slightly higher or lower to suit your brand.
• Best for: Staying competitive while maintaining industry alignment.
4. Premium Pricing
• How it works: Price higher to convey luxury, exclusivity, or superior craftsmanship.
• Example: A brand using rare gemstones may charge significantly more to highlight the exclusivity.
• Best for: Unique, high-quality designs for customers seeking luxury items.
5. Psychological Pricing
• How it works: Use price points that appeal to customer psychology, such as pricing items at $49.99 instead of $50.
• Example: A necklace priced at $39.99 appears more affordable than $40.
• Best for: Enhancing appeal in mass-market or online sales.
6. Bundle Pricing
• How it works: Offer a group of items at a slight discount when purchased together.
• Example: Sell a matching set (necklace, earrings, bracelet) for $100 instead of the combined individual price of $120.
• Best for: Encouraging multiple-item purchases.
7. Discount Pricing
• How it works: Offer temporary or seasonal discounts to attract buyers.
• Example: Offer a 20% discount during holidays or for first-time customers.
• Best for: Boosting sales during slower periods or promotional events.
8. Tiered Pricing
• How it works: Provide different price levels for various product versions, such as basic, standard, and premium.
• Example: Basic earrings might cost $25, while a premium version with gemstones costs $100.
• Best for: Catering to different budgets while encouraging upselling.
9. Time-Based Pricing (Hourly Rate)
• How it works: Charge based on the time invested in making each piece.
• Example: If you charge $20/hour and spend 5 hours making a piece, the price is $100 plus material costs.
• Best for: Custom or made-to-order items where time varies significantly.
10. Penetration Pricing

• How it works: Set low prices initially to attract customers, then increase prices gradually as demand grows.
• Example: Launch a new collection at a 30% discount, then raise prices as popularity increases.
• Best for: New businesses looking to build a customer base quickly.

1. Keystone Pricing

• How it works: Set the retail price at double the cost of production (a 100% markup).
• Example: If the cost is $50, the retail price is set at $100.
• Best for: Traditional retail pricing strategy, often used in brick-and-mortar stores.

1. Freemium Model (For Online Sales)

• How it works: Offer basic jewelry for free or at a low cost, with the option to upgrade to premium versions.
• Example: Offer a simple bracelet for free, but charge for customization or a more elaborate version.
• Best for: Attracting new customers to your brand, particularly in online sales.

1. Auction or Pay-What-You-Want Pricing

• How it works: Allow customers to bid or choose what they want to pay within a certain range.
• Example: List a one-of-a-kind necklace for auction or let customers choose their price for a limited collection.
• Best for: Special, high-demand pieces or limited editions.

1. Dynamic Pricing

• How it works: Adjust prices based on demand, market conditions, or customer behavior.
• Example: Raise prices on bridal or holiday-themed jewelry during peak seasons, and lower them during off-seasons.
• Best for: Flexibility to adapt to market trends and maximize profit.

1. Skim Pricing

• How it works: Set high initial prices for new, exclusive items, then gradually reduce them as demand falls or competition increases.
• Example: A limited-edition collection could launch at a high price to attract early adopters, then lower prices to attract a broader audience later.
• Best for: Maximizing early revenue from exclusive or novelty products.

1. Loss-Leader Pricing

• How it works: Sell select products below cost to attract customers, with the expectation they will purchase more profitable items.
• Example: Offer a discounted bracelet to draw customers to your store, hoping they buy higher-margin pieces like necklaces.
• Best for: Driving traffic to your shop and creating interest in your brand.

1. Anchor Pricing

• How it works: Display a higher "original" price alongside a lower, discounted price to make the deal more attractive.
• Example: List a necklace originally priced at $150 but sold for $99, highlighting the perceived savings.
• Best for: Playing on customer psychology to enhance the perceived value of the deal.

1. Channel-Based Pricing

• How it works: Set different prices depending on the sales channel (e.g., website, physical store, third-party platforms).
• Example: Price jewelry higher on your own site, where you control the branding, and offer discounts on third-party sites like Etsy.
• Best for: Adapting to the unique demands of various platforms and maximizing profitability.

 

When To Use Each Strategy

Each pricing strategy should be tailored to your business goals, target market, and product type. By leveraging the right strategy at the right time, you can maximize revenue and build customer loyalty.

1. Cost-Plus Pricing
• When to use: When your costs are stable, predictable, and you want a straightforward way to ensure profitability. Ideal for small-scale operations where material and labor costs are clear.
2. Value-Based Pricing
• When to use: When your jewelry is highly unique, artistic, or has emotional or cultural significance. Great for luxury or custom items where the perceived value is much higher than production costs.
3. Market-Oriented Pricing (Competitive Pricing)
• When to use: When entering a market with many competitors or selling products similar to what others offer. This strategy helps ensure your pricing stays competitive without undervaluing your work.
4. Premium Pricing
• When to use: For high-end, exclusive, or limited-edition pieces that convey luxury and craftsmanship. This works well when targeting affluent customers who value exclusivity and are willing to pay more.
5. Psychological Pricing
• When to use: In online sales or retail environments where small price differences can have a significant impact on buyer decisions. Ideal for driving impulse purchases or making products appear more affordable.
6. Bundle Pricing
• When to use: To increase average order value and encourage customers to buy multiple items. This is effective for gift sets or when selling collections like matching necklaces, earrings, and bracelets.
7. Discount Pricing
• When to use: During slow sales periods, seasonal promotions, or special events (like holidays). It’s effective for attracting price-sensitive customers and clearing out old inventory.
8. Tiered Pricing
• When to use: When offering multiple versions of a product (e.g., basic, standard, premium). It allows you to cater to different customer budgets while incentivizing upsells to higher-tiered versions.
9. Time-Based Pricing (Hourly Rate)

• When to use: For custom or bespoke pieces where the time and effort vary significantly between orders. This approach ensures you're compensated fairly for the time spent creating each unique item

10. Penetration Pricing

• When to use: If you’re launching a new collection or entering a new market and want to attract attention quickly. Once you’ve gained traction and built a customer base, you can raise prices gradually.

11. Keystone Pricing

• When to use: As a simple, traditional retail pricing model that ensures a healthy margin. It's a good starting point if you’re unsure how to price your products and want to follow common retail practices.

12. Freemium Model (For Online Sales)

• When to use: For building an audience or driving traffic to your online store, especially if you offer customization. It’s a way to introduce customers to your brand and convert them to paying clients.

13. Auction or Pay-What-You-Want Pricing

• When to use: For limited-edition or one-of-a-kind items where demand is uncertain, or when you want to experiment with customer willingness to pay. Best for unique, high-demand pieces.

14. Dynamic Pricing

• When to use: In situations where demand fluctuates based on season, trends, or market conditions. This is useful for adjusting prices during peak seasons (e.g., weddings, holidays) or clearing stock in slow periods.

15. Skim Pricing

• When to use: When launching new, innovative, or exclusive collections. This strategy allows you to capitalize on early demand from customers willing to pay a premium before reducing prices to attract a broader audience.

16. Loss-Leader Pricing

• When to use: To drive traffic to your store or website, especially during events or promotions. Use this carefully to attract new customers while ensuring higher-margin products offset the initial loss.

17. Anchor Pricing

• When to use: In promotional campaigns or sales, particularly online, where customers are sensitive to deals. Showing a higher original price alongside a discount creates the perception of a great deal, boosting conversions.

18. Channel-Based Pricing

• When to use: When selling across different platforms, such as your own website, Etsy, or physical markets. This helps you adjust for platform fees, customer demographics, or specific marketing goals for each channel.