Nope. I don't get to write a great blog about terrific new designs -- this one is about the price of silver and what it may mean for my business. Like many other jewelry designers, I'm feeling the pinch.
Winter is my "slow time" -- I'm not doing craft shows and because I don't need to replace my supply as quickly, I haven't been buying silver lately. I bought some silver at the end of January to do a couple weddings and now that I'm preparing for my first craft show (in May), I'm checking my stock and browsing at my favorite sterling supplier. Needless to say, I was SHOCKED to see how the price had risen!! When I last purchased silver, the price per ounce was hovering around $27. Today it's over $45. This is going to necessitate some price increases -- I wonder if my customers are going to understand?
I have an excel spread sheet that I've devised to track the costs of making each jewelry design I offer. There is a list of the supplies I use and in the next column the individual cost of each item. Because most of my designs use multiples of some supplies, I also have columns that multiply the individual cost by certain quantities -- x2, x4, x6, x8 and so on with a few larger quantities to allow for making necklaces which use larger amounts of some components. (This may seem a bit complicated, but when I was setting it up, I couldn't figure out how to multiply a single component within the formulas I was going to use.) In this sheet, there is also a list of the designs I make and in the column next to that, each design has a "cost formula" -- a list of the components needed using the cost of each. For instance, if a pair of earrings uses a 6mm pearl, I'll need 2 (1 for each earring) -- in the formula, I list the box number (column letter and line number) for the cost of 2 pearls. Each component is listed using the cost for the quantity used and all the component costs are added using the "sum" function to give me the actual cost of making each individual design. I hope this is making sense -- it sounds a lot more complicated than it is. This system becomes very effective when I need to change the price of a component. Today, when I changed the cost of a sterling silver headpin, the cost of every piece of jewelry using headpins was appropriately adjusted. I can now determine what price I should charge for each design, with the full knowledge of exactly how much the design will cost me to make.
Unfortunately, today, I had to change a lot of silver prices. From here, there are different thoughts on how and when to change the prices of my jewelry -- and maybe I can get some feedback from you.
1. Even though I haven't purchased silver at the higher price, I should raise prices now to accommodate the new costs. While on the surface, this may not seem quite fair, it should be noted that I like to keep my prices the same throughout the entire craft show season -- if I raise prices now, I probably won't raise them again this year. Because I suspect that silver prices are going to continue to increase (the prices are tied to the value of the dollar and as long our government continues it's current course of printing more money and huge spending, the dollar is going to continue to decline), later I will be absorbing additional increases without raising my prices.
2. I can raise prices as I purchase new silver. The upside is that customers buying from my old supply would be paying my old prices. The downside is that it will also cost me time and money to re-label every time I use more expensive silver. My craft shows all fall into a certain geographical area so it's entirely possible for a customer to see me at more than one show -- if prices rise between shows on an item they were considering, will they really understand? Or will it deter them from making the purchase?
Anyone have any thoughts?
I've been reading some forums .. it sounds like a lot of jewelry makers are going to increase their use of copper. I haven't decided how I feel about making such a change for myself ... and maybe we'll explore that on another day. I also have some concerns about even doing craft shows this summer -- we'll save those thoughts for another day too.