Where do your expenses fit in with your jewelry pricing strategy?

Sometimes I hear myself say something out loud as a business coach (I’m an external processor in case you couldn’t tell) and I have to remember to share it with others.

Such was the case when chatting with Liz and Larissa on the Success with Jewelry podcast about pricing strategy. One question that comes up consistently whether I’m talking to a group of jewelers, or business owners in general about pricing, has to do with expenses – where does your overhead fit into your pricing strategy?

Let’s talk about what the expenses in your jewelry business can do for you

Setting a price is about determining your labor costs and your materials costs, and then setting your mark ups. That’s the floor.

You’ll notice that your overhead – rent, utilities, software, staffing, etc. – aren’t anywhere to be found.

Your expenses serve a different purpose in your business, separate from pricing, though nothing is ever truly separate. Your expenses are there to support your selling and your marketing. Your pricing strategy helps you determine where and how to show up to sell and market your work.

Truly, your expenses should have a measurable effect on your sales, and they need to work for you.

Check out my YouTube Video all about this.

What is the ROI for your expenses in your jewelry business?

Let’s take your monthly or annual website fee for example. Maybe you are thinking that $100 a month on Shopify (or more!) is “too much”, but maybe there is a different way to think about it.

If your website is working for you, if it brings in even $2000/month in sales, then is $100 “too much”?

No. It’s not too much at all. That sounds like a great ratio of money spent to money earned, in fact.

But if you are paying $80 a month for your website and making no sales? 

OK, well that sounds like some changes need to be made, but it might not be a change to your platform or a change to your budget. It might be a change to your focus and to your sales strategy. In this case, it’s not a matter of your expenses being a drag on your budget, it’s about changing your approach so that your expenses start generating sales for you.

Productivity is vitally important in your systems and software – all of your digital systems should be operating in a way that has a clear return on investment. If you pay for an email platform, you can use it to generate sales and continue your client relationships.

If you pay for a regular networking group, are you following through on the actions that they encourage?

What about employees, how does payroll factor into productivity and pricing?

Your payroll will have a big impact to your bottom line, and that’s why thinking through a profitable pricing strategy is so important. They also can help make your business to succeed.

Viewing your employees in the productivity framework is trickier, and I don’t encourage it. Why? Because their productivity and performance are very much your responsibility. A lot of the discussion about your payroll expenses will ultimately come back to what you are doing with your payroll expenses to have them work out for you.

Instead, I turn it around and ask, are you encouraging your staff to take ownership of their tasks? Are you empowering them to bring suggestions and new ideas to your business? When they have new ideas, complaints, suggestions, and feedback, are you listening?

Encouraging your employees to do more and helping them to increase their skills is one way of adding value to your business and adding a LOT more to your bottom line.

Thinking about making your jewelry business expenses work for you

When you think again about how your expenses inform your pricing, try switching it up to thinking about how all of your expenses can SUPPORT your pricing and your sales, see if it doesn’t change your relationship with how you measure what you spend.

Give Success With Jewelry a listen and let’s keep talking about pricing!

Ready to dive into your own personalized pricing strategy? See what’s involved and let’s talk!