I now have a new page on my blog about
wholesale purchasing. There you will find my brand new catalog!!! It features some of my most popular designs. I am so excited to be venturing down this path. Please note the prices listed in the catalog are for wholesale purchase by brick and mortar shops for resale to their customers.
My retail customers will notice prices in the wholesale catalog are lower than what they may have purchased an item for. Why is retail more? One of the biggest reasons is the time involved. Wholesale is quick with little time investment for me. Retail requires a huge investment of my time and resources sitting in my booth at various events around the area.
I use a pretty standard formula to determine my prices that uses 3 things: time, overhead and materials. Add these together for the cost of an item. Double this number for wholesale. Double the wholesale figure for retail.
Time: I pay myself a modest hourly wage. I use a timer to see how long it takes me to make an item. This can range from 10 minutes to several hours.
Overhead: This is 33% of my time. Overhead includes a myriad of things. The creating of tags and ear cards, cost of office supplies, studio expenses, marketing, vendor fees, booth equipment, and many, many more costs that I incur in the operation of my business.
Materials: This is the actual cost of the materials used in the making of an item. I try very hard to buy things on sale and in large quantities to keep my prices reasonable. When I bring home a purchase of supplies I figure out the cost per piece.
Here is a simple example: Let's say it took me 1/2 hour to make something and my rate of pay is $10. That is $5. Plus overhead of 33% is $1.65. Cost of materials is $5. So the cost of this item is $5+$1.65+ $5 = $11.65. The wholesale price is then $23.30 and the retail price is $46.60. That means a "profit" of $34.95 on this item. I put profit in quotes lest you think I am getting rich on all of my profit - not going to happen! I am just happy to cover all my expenses.
In the retail world many businesses will charge much more than double of wholesale for the retail price. Often in a shop they may take the wholesale price they purchased the item for and as much as triple it for the retail price. I have seen this on some of my own pieces.
I may also add into the wholesale price the cost of working with a sales rep (usually 15% of the price). I will also look at the retail price and consider how it relates to similar items I have in stock and what I think someone would pay for it and adjust (up or down) accordingly.
Does your head hurt yet from all this math?! Luckily you can leave all this to me and just enjoy shopping and wearing my beautiful jewelry instead!
