The price is right: Do you charge too little?

by charlene_voisin | July 1, 2014 9:00 am

By John Dyer

[1]
Over the years, I’ve written several articles for trade publications, including this one. Many have been related to some aspect of gemstone quality or gemstone cutting, but this time, my subject matter is of a different nature.

When a Facebook friend was seeking advice regarding pricing his work, I obliged with a few lessons I’ve learned over the years, and while I didn’t at that time intend to share my note with a wider audience, I soon realized many of my colleagues in the jewellery industry might also benefit from its message.

My friend’s query specifically related to the question of how to determine what his time is worth when making a custom piece for a client. My response began by asking whether he was charging a per-hour rate. It turns out he was, and that he felt he was basing what he charged on what he considered would be a fair wage if he had a ‘normal’ job.

His reply and rationale is of great importance to our discussion, since there are many who think like this in their attempt to establish a fair pricing structure for their work. However, if you want to make a real living at jewellery—or any other independent endeavour—you need to consider the numerous other time-related matters that go into your craft besides materials and labour. Let’s look at a few.

Smart money

[2]

We all know that time is money, but these days, there doesn’t seem to be enough of it to do all the things business gurus suggest to be profitable, such as having a social media presence. That said, if you are promoting your brand by posting images to Facebook, for instance, are you billing for this time? Probably not.

Do you charge for working on your books? (We all know the importance of bookkeeping—knowing whether we’re actually making a profit is just the tip of the iceberg of running a business.) What about billing for time spent consulting with a client and designing a piece of jewellery, all of which is a genuine part of actually making it? On this particular point, consider this: are you charging for the time it takes to talk to all the people who don’t buy anything? Or for answering all those e-mails that may not necessarily result in a sale? Don’t forget about the hours spent receiving packages, packing up merchandise, filling out paperwork, and going to the post office with a shipment.

Of course, I’m not suggesting you charge directly for most of these things. However, the reality is that when you factor in all these time-consuming jobs, you need to charge at least three times the minimum you need to be making per hour for the things that are actually billable, such as labour.

We’ve heard the saying, survival of the fittest. In our industry, being fit equates to being profitable. The fact is, you should probably charge anywhere from four to five times a ‘fair wage’ because at most, one-third of your time would fall under the category of traditionally billable. And in most cases, it will be far less than that.

If you did have a ‘normal’ job, your employer would have to pay you for every hour spent at work, no matter what you were doing. Since your customers can be considered your ’employers,’ what you charge them needs to reflect all that you do, not just the actual time spent working on their piece of jewellery, which when compared to everything else that takes up your time, is only a small portion of running your business.

A number of years ago, I heard an independent contractor (in any trade) needed to charge a minimum of $35 per hour to survive due to all the costs and non-billable hours they spend on work-related activities. This was so long ago that inflation has likely brought that figure closer to $60 per hour today.

You’re worth it

I equate the service bench and custom jewellers provide to taking my car to a dealership for repair. I know I will pay a flat rate for labour to have my car serviced. Shouldn’t we charge a fair wage that covers all our costs for the high-quality work we provide?

Sure, your overhead might be low, but you have to make a living or you aren’t doing anyone any good in the long run. Quite simply, if you’re not charging (at least indirectly) for all the things you do to keep your business running and provide your clients with the jewellery they want, your chances of being able to keep doing what you love are not very good.

There will always be people looking for a deal. Yet, there are those who will appreciate the service and expertise you provide in designing or repairing their jewellery, which in many cases, is laden with memories and emotion. Charging a price that is fair to both you and them is not unreasonable. Shouldn’t everyone win in the end?

John Dyer is a gemstone artist who has been cutting gems since the age of 17. He travels widely to procure rough gems, selling his unique creations to jewellers and designers worldwide. Dyer loves the challenge of extracting the maximum beauty from each and every gem and is the winner of 41 cutting awards. He can be reached via www.johndyergems.com[3].

Source URL: https://www.jewellerybusiness.com/features/the-price-is-right-do-you-charge-too-little/

---