Taking the mystery out of wholesale pricing

For artists who have been selling their handmade products to individuals at fairs or online, no topic is more concerning than wholesale pricing. While they would love to see their products in shops and galleries, their one major fear is whether they can afford to “cut their prices” for the wholesale buyer.

This is when I wish all handmade sellers sold wholesale first! So, for just a minute, let’s pretend you are starting your business from scratch and you are only going to sell to stores. How would you begin to figure out your wholesale pricing?

Now clearly there is labor involved in making jewelry and you would like to pay yourself and whoever else might be making the earrings $20 per hour. In just an hour you can make four pairs of earrings, so one pair has $5 worth of labor added to the materials cost. You are up to $20.

But you cannot stop there, because you pay a modest rent for your space and have heat and electricity. In addition, there are expenses like jewelry cards, bags, and stickers. You also realize you have expenses like your phone, website, and you your accountant. Good! He can help you determine your overhead costs for your earrings, and he says it comes to just about $1.50 per pair. 

Now the cost of your earrings, per pair, is $21.50. However, that is the real cost of each pair without any profit for you. You will never grow your business without some profit, so you add another $1.50 to the cost of each pair. Your analysis says the lowest price for one pair of your earrings is $23.00.

Perfect! You make an appointment with the owner of a local shop and show her your earrings. You tell her about the excellent materials you use including sterling silver and semi-precious stones. The store owner asks you if you sell them retail yourself, and you say no, your business is strictly wholesale. She is impressed with your work and thinks her customers will love your jewelry, so she places an order for 24 pairs at $23 each.