Projections for the jewelry industry are very positive. The experts expect it to be worth $266.53 by the end of 2027. This translates to a CAGR of 3.7%. Some of the reasons for this optimism are the increasing use of technology. There is also an emergence of digital media that is contributing to the surge of luxury jewelry demand.
As a jewelry designer, it makes sense that you want a piece of the pie. And that means putting out products that customers will want to buy. And it all comes down to determining the value of your designs.
So how do you go about putting a price tag on each?
Consider the Cost of Materials
The material you use in your jewelry will significantly affect how much they are worth. You can’t, for example, compare a 14k gold jewelry to an 18k one. Without a doubt, the latter will be more expensive.
The same applies to diamond accessories. Lab grown diamonds are cheaper than mined diamonds. This is because the production process occurs in a lab setting. The stones do not have to go through mined diamonds’ complex supply chain.
Furthermore, in a lab setting, the manufacturing steps are not as tedious, time-consuming, and expensive. You can imagine how many people are involved in a typical mining process. It is a resource-heavy undertaking that is not comparable to technicians in a lab.
Finally, finding diamonds in the earth’s crust is often a matter of luck. That means the stones can be scarce, further adding to their price. Lab grown diamonds have become a fantastic solution by making the stones more available.
But, please note that lab grown diamonds do not compromise on the 4Cs standard of diamonds. You still get the same quality in terms of cut, color, carat, and clarity. In fact, the lab created diamonds go through the same grading or certification process as the mined ones.
In determining the value of your jewelry creation, you must first take the cost of materials into consideration.
Use a Pricing Formula
A pricing formula can help you arrive at a good value for your jewelry designs. You need to look at three factors to help with the calculation. These are the supplies, overhead expenses, and the time that goes into the designs.
To realize ROI, always purchase your supplies at the lowest price possible. In that case, avoid retail and go for bulk or wholesale. Shopping retail means you must factor in markups on each piece you buy. Let’s look at a practical example.
- Supplies – $10
- Packaging (box, tags, etc.) – $2
- Time – 1 hour. (Determine your hourly rate depending on your skill level. So, say $30 per hour.
Let’s now go into the calculations.
Calculate the base price.
Base Price = total cost of material x 4 + time. Calculating with a markup of 4 allows you wiggle room if you decide to sell wholesale. You can reduce the pricing by up to 50% and still make some money.
Overheads will be 10% of the base price.
- Total cost of material = $12 X4 = $48+ Time ($30) = 78
- Calculate overheads at 10% of 78 = $7.80
- Add $78 + 7.8 – $85.8
So, your jewelry accessory will be worth $85.8
Please note that depending on the accessory’s uniqueness, you can adjust the pricing. The willingness of customers to buy the jewelry at that price will also determine whether you can have that as the final price.
Resale Value of the Jewelry
Resale value takes into account intrinsic value, workmanship, and style. We can summarize it as follows:-
Intrinsic value = Gem value + Metal value. A diamond on a high-value metal like platinum will have a high intrinsic value. For diamonds, factors like the 4Cs come into play as well. The higher the clarity, for instance, the more expensive the diamond. So a flawless rock on a platinum setting will cost more than an included rock on the same metal.
Once you determine the intrinsic value, calculate the resale, retail or wholesale price. The formula is
Resale value= intrinsic value + Style + workmanship.
But, this formula can change depending on some factors. The brand name is one example. If you buy a diamond engagement ring from a popular luxury brand name, it will cost more than from a less-known retailer. The market desirability also matters. If many people are after a particular design, you can put a more premium price on your product.
If you want to take insurance cover for your jewelry accessories, the underwriters will carry out an appraisal. They will attach a monetary value to how much it costs to determine cover and premium payments. This is a replacement cost and not the actual worth of the stones.
Suppose you are selling high-value pieces. You may need an appraisal by a jeweler to determine the actual value. They have the expertise to check metal purity, gemstone value, and authenticity. The appraisers can even give you an actual dollar value due to their market knowledge.
Other Factors to Consider When Valuing Your Jewelry
Many other factors will determine the value of your jewelry designs. These include:-
- The evolving trends. It is not uncommon to hear that a specific style is coming back. Let’s say the current rage is vintage style. Your jewelry designs will have more value if you come up with creative pieces echoing the specific eras.
- The role of influencers: If you can get a few influencers to wear your pieces, it will drive up the value of your designs.
- Provenance: Let’s say you have some pieces whose original owners were celebrities or influential people. You can use this historical information to command higher pricing for your designs.
- State of the jewelry designs: New jewelry accessories will cost more than used ones. For the former, you must factor in the intrinsic and resale value as we shared. Other costs may include importation, marketing, transportation, and more.
From our article above, it is pretty clear that many factors determine the value of your jewelry designs. We have highlighted some of the most critical.
The material is one deciding factor. Lab grown diamonds, for instance, are not as expensive as mined diamonds. The metal you choose for the setting also matters.
Also, calculate supplies, overheads, time, and markups. But a good understanding of the market is critical. Many other factors can impact how you value each accessory. Trends, demand, and even provenance are some of them.