Pricing is one of the most difficult parts of running a successful business, especially if you are making the items yourself. Jewelry makers use a variety of pricing models, including cost-based pricing to decide how much to charge for a particular piece, or customer-based pricing or competition-based pricing.
Pricing is one of the most difficult parts of running a successful business, especially if you are making the items yourself. Jewelry makers use a variety of pricing models, including cost-based pricing to decide how much to charge for a particular piece, or customer-based pricing or competition-based pricing. Each of these strategies can be effective depending on factors such as how many customers you have and the price you pay for materials. There is not a single pricing strategy that is effective for all businesses. But employing jewelry pricing software is one great way to determine the right price for your products.
To determine a price for each piece using cost-based pricing, you must first determine how much the materials cost to create the piece. You should also factor in labor, rent, transportation, marketing and other costs of doing business. Craft business management software is a great resource to use when you are figuring out how much to charge customers using cost-based pricing. It is also important to add in profit. Some business owners add a certain percentage as profit, while others choose to mark each product up a certain dollar amount.
Competition-based pricing is one of the simplest ways to determine how much to charge for your products. It starts with paying close attention to the products being sold by your competitors and how much they are charging for those products. You may choose to price your products slightly higher than the competition if they are higher-quality or offer other advantages over the competition’s products.
Competition-based pricing requires hours of research because you can’t just search your competitor’s websites once. It is an ongoing process to make sure that you are staying competitive in your market while charging enough to make a profit on every piece you sell. Inventory software programs track the number of items you have sold in the past as well as the price you sold each item for. This information is often useful when you are determining current prices for your pieces.
Customer-based pricing is based on customers feeling like they have gotten a good value when they buy your jewelry. Every good business owner should survey their customers periodically to find out if they think your prices are too high or too low, but pricing purely based on the feelings of your customers can be a tricky endeavor, as the subjective customer opinion is likely to vary greatly and change often. Many businesses use social media to survey their customers and get an idea of how they feel about the pieces they are selling as well as ideas they have for new pieces.
Regardless of which pricing model you choose, it’s important to be comfortable with your pricing and confident that your model is helping you secure the largest market for your product.