PHASE 1: Starting Your Jewelry Business

PHASE 1: STARTING YOUR JEWELRY BUSINESS:

As I sat down to revisit what it takes to start a jewelry business, I had a moment of looking back at my own journey. I had to stop and remember how I began. It’s an interesting exercise, because you can really see how little you knew at the time, but that there was also a level of intuition present that knew what needed to be done. I have also realized over the past few years, that the thing I am probably most passionate about is entrepreneurship. I love jewelry and I love being in this form of business and expression, but it is entrepreneurship and small business that I love the most. So, I come to you with a deep love of entrepreneurship, and I hope that this series of articles will help you on your way to fulfilling your dreams.

The first place to start is with the product itself. I am going to assume that the person I am writing to has been dabbling in jewelry for some time now. You make it, you love it, you give your jewelry to friends and family on special occasions. And this whole time that you have been dabbling with this hobby, you have been asking yourself, could I do this for a living or a side hustle? And the answer is yes, you can.

PRODUCT:

One of my favorite sayings in entrepreneurship is “Business leaves clues” and that applies to your jewelry creations as well. When you are at the beginning of forming a jewelry business, you must decide what products you will be selling. I think there are probably different thoughts on how to start, but personally, I think you can start out slow and small. You don’t need to have a full jewelry line to begin. That is a good goal to have over time. But as you are learning and growing, you can start out small and build from there.

When you look at your potential products, think about how they have been received by family and friends. Are there pieces you have gifted that are always being worn by the recipient? Pieces that people request more of from you to have or gift? Are there jewelry pieces you wear that people comment on when you are in town, running errands? These are the jewelry pieces you want to start with.  These are the “business clues”. Your product line needs to be about quality and not quantity. Start with your most popular pieces. Put together a nice collection of what you believe will be your bestsellers. This will be your beginning line.

PRICING:

Next, you need to figure out pricing. This is the area that I see almost all new entrepreneurs make mistakes in. The tendency is to price too low. You are new, there is an element of imposter syndrome, an element of fear and the initial reaction is to give away your product without any thought of cost analysis or worth.

When pricing your product, you need to factor in various components:

• Price of Materials
• Cost of Time/Labor
• Business/Operating Expenses
• Wholesale Opportunities

PRICE OF MATERIALS: You need to know how much the cost of materials is in a jewelry piece. For example, if you make a turquoise beaded bracelet, you need to know the cost of the turquoise beads in the bracelet, the wire the beads are on, the crimp beads, the crimp bead covers and the clasp. That is the cost of your materials.

COST OF TIME (Labor Costs): How long does it take to make this bracelet? You need to calculate the time it takes to make a bracelet and what your payment per hour is. For example, if you decide you want to be paid $40/hour and a bracelet takes 45 minutes to make, the cost of time or labor costs for this bracelet is $30.

BUSINESS/OPERATING EXPENSES: This is difficult to factor in when you are first getting started, but as you grow your business, you will accrue several business expenses that fall under the umbrella of “cost of doing business”. These include, but are not limited to:

Transaction Processing Fees

Shipping Materials

Shipping Costs

Marketing Expenses

Bookkeeping

Advertising

Social Media Content

Tools

Taxes

Business Fees

Accounting Fees

Office Expenses – Supplies & Space

Subscriptions

Employees

Outsourcing fees

The cost of creating jewelry and running a business is larger than just the cost of making the product, so you must think about those things now as you price your jewelry. 

WHOLESALE: You want to price your product where you can sell wholesale, meaning sell to retailers that will sell your product to the public. Most beginner designers do not think they will be selling wholesale. But trust me, if your designs and product are good enough, retailers will be reaching out to buy and sell your jewelry. You will need to price your product in a way that you can absorb the discounted pricing of wholesale.

Every business is different and their costs and set up are different. You really need to look at your numbers to get an idea of your actual costs before pricing. But at minimum, I suggest taking the cost to make a piece of jewelry (materials and labor costs) and multiplying by 6 for retail and 3 for wholesale. For examples, if you have a bracelet with the following costs:

Materials: $15

Labor Costs: $20

Total Cost: $35

Retail Price ($35 x 6) = $210

Wholesale Price (Retail Cost/2) = $105

And with any business, you need to know your numbers. You don’t have to be a finance guru, but you do need to know a few basic formulas. If you are going to start with any, start with the following.

Gross Revenue: The sum of all sales over a given period.

Net Revenue: Gross Revenue minus expenses tied to revenue (cost of material, labor costs, etc.)

Net Profit: The income remaining after all operating and other expenses are subtracted from Net Revenue.

Profit Margin: The amount by which revenue from sales exceeds cost in a business.

(Net Profit/Revenue) x 100 = Profit Margin

I know this seems like a lot of numbers, but numbers matter. If you are not a numbers person, you need to become one if you want to run a successful and profitable business. For a lot of people, the numbers game can be scary but there is really nothing more empowering in your business than knowing your numbers and seeing where you need to improve, where you are excelling and the overall health of your creative endeavor.

I just went over my Profit Margin for 2022 and the number was lower than it needs to be. This was extremely helpful to look at. I took a deeper dive and realized some of my operating expenses were way too high. I was able to identify where I needed to lower the costs to bring my Profit Margin up to a more profitable and sustainable number. If I hadn’t run the numbers, I would have never seen the issue. This is especially crucial if you are selling on platforms like Etsy, which is a wonderful platform, but where the fees can be massive. So, you need to know them and price accordingly.

And just another note on pricing…remember, your jewelry has value. You are creating a beautiful piece of jewelry that is going to bring joy in the world. How you price it dictates the kind of customer you will attract. Pricing too low means you are amongst the bottom feeders, and to be honest, that is not where you want to be. You need to value your product and price your jewelry accordingly. You will attract customers that will see you and your jewelry for what it is worth, feel value at the same time and create a business that is profitable and sustainable.

In conclusion: Step 1 of starting your own jewelry business:

• Decide on your jewelry line – the best sellers, the ones that left “business clues”.
• Figure out cost and pricing for each item.

Your next step is where and how to sell.

Until next time…