You’re launching your new jewelry brand (congratulations!) and one item on your to-do list just keeps nagging at you: how do you set prices for your jewelry? There are a lot of different factors that come into play when it comes to pricing. Just like with any other element of your business, an effective jewelry pricing strategy requires some research, consideration, and occasional reevaluation. In this article, we’ll explore some different approaches to help you build a jewelry pricing strategy that sets you up for success.
Map Out Your Costs
First and foremost, you have to map out all of your business costs. This includes everything that it takes to design, create, and sell your jewelry: production, materials, labor, real estate, overhead, insurance, shipping… all of these costs come together to create your baseline. To make a profit, you need to understand how much you’re spending so that you can make sure you’re bringing in more than that amount. This is also a good time to see if you can cut back anywhere; maybe you have an office space that you can let go, or you realize that the materials you’ve been using are pricier than they need to be. No matter where your budget is going, be sure to have a clear understanding of the spending it takes to run your business efficiently.
Consider Your Positioning
Once you have a good understanding of your business expenses, it’s time to consider where you’d like to position your brand in the market. The jewelry industry is diverse and there are a variety of different target audiences you can tap into. Think about your specific target demographics and what they’re looking for from their jewelry. Are they millennials with disposable income but moderate spending budgets? Are they newly engaged couples looking to make a big investment in an engagement ring? Understanding the incomes, spending habits, and expectations of your target audience will help you price your jewelry in a way that attracts the right customers.
Check Out the Competition
Take a look at your competitors’ prices. You won’t want to set prices that are significantly higher or lower than brands that are making similar products for the same demographic. If you price your pieces too much higher than your competitors, you’ll likely turn shoppers to the more affordable option unless there’s some clear reason behind the gap. Setting your pricing significantly lower can signal low quality; your target audience might wonder if the affordability is too good to be true unless you can show how you accomplished those savings and passed them onto customers.
The message your price signals to customers is another important factor to consider when you’re creating a pricing strategy. The way your products are priced will often determine how shoppers interact with your brand. To give the impression that your brand is a high-end luxury business, you should probably choose pricing on the upper end of the range that’s appropriate for your products. On the other hand, if you want your jewelry to feel accessible for everyone and you can afford to set slightly lower prices without eating into your profits, then a slight decrease in price might be the way to go.
Another simple way to use consumer psychology in your pricing strategy is to use the rounding down technique. Pricing a pendant necklace at $79.99 instead of $80 makes consumers feel like the cost is closer to $70, even though it’s just a matter of a penny. Tips and tricks like this can help you make your prices feel more accessible, no matter what the numbers are.
Don’t Forget About Promotions and Discounts
When you’re building a pricing strategy, don’t forget to factor in future promotions and discounts. Offering discounts and promotions can be a great way to get new customers in the door and manage slower seasons. You can also help move stagnant products off the shelves and attract new customers when you offer select products at a lower rate. Don’t forget to account for how this will impact your revenue; leave room for discount tactics in your budget and price your jewelry accordingly, so you’ll always be able to cover your minimum costs.
Reevaluate Your Strategy
It’s a good idea to revisit your pricing strategy every now and then. Be sure to keep tabs on your competitors’ pricing, reevaluate your minimum costs, and make adjustments when you need to. Sometimes it can be fruitful to offer a premium line that costs a little bit more than your regularly priced products to attract a different market, for example. Your pricing strategy doesn’t have to remain static forever — it can ebb and flow as your business needs and your company focus change over time.
Developing a pricing strategy takes time and consideration, but it’s important to make sure you land on the structure that’s right for your brand in order to achieve success. Another way to succeed in the jewelry industry is to partner with a trusted manufacturer. Our team at MJJ Brilliant has over forty years of experience producing beautiful, high-quality jewelry pieces. Contact us today to make your dream jewelry a reality.