How to Price a Rhinestone Product or Job in 3 Easy Steps

Posted by Rhinestone Guy on 4/30/2020 to Rhinestone Guy's Thought on the Rhinestone Business
How to Price a Rhinestone Product or Job in 3 Easy Steps

Let’s face it… you are in business to make money.  Pricing your product or job properly is key.  It is finding the right balance where the customer will buy and you will make money.   We get many calls from people who are starting various businesses or expanding existing businesses that want to incorporate rhinestones, jewels, nailheads and trim.  Of course, Swarovski or Preciosa rhinestones are first on their mind... but does it make business sense?  Well, it depends on the answer to the question: can you make money using a particular stone?

If you are in one-of-a-kind, custom, made-to-order business, use whatever rhinestones and jewels you or your customer want.  Work with your customer’s budget.  Look at the price you need to charge them so you can make money and work from there.  If they want Swarovski crystals, but their budget does not allow for you make money on-the-job, you need to find ways to reduce the price.  You can do it by either less elaborate work and or fewer stones or explain to them that you can create a fantastic sparkle with less expensive stones and achieve great results. 

If you are in a general “mass” production business your pricing is a bit trickier.  Regardless, you need to price your product (s) correctly so you can make money. 

So here we go…

Reba Shirt with Crystal RhinestonesA REBA™ rhinestone loaded shirt at a department store costs somewhere around $60 - $80.  The shirts' design has hundreds of small rhinestones or nailheads.  The design is created with hotfix stones or hotfix nailheads that are inexpensive.  To have the same design with a Swarovski or Preciosa crystals will bring price of the shirts to the high hundreds and not many would buy them.  But the shirts are selling and selling well.

Why are they selling?  They are selling because the design is attractive and the shirts sparkle.  The company created an elaborate design at a price that leaves them with profits.  You can do the same by using, for example, RG Premium crystals.  These rhinestones' grade is way above the department store ones.  Using them will elevate your design giving it a high-end look and will allow you to make money.  If you glue, our Bright Choice rhinestones will get you super sparkly.

When you mass-produce, you need to answer the question:  Are they buying my product because it sparkles or because it is Swarovski?  Most people buy everyday items because they sparkle.  Many WANT Swarovski because they know the name, BUT, they are NOT willing to pay the price. 

You need to consider the buyer, the venue, purpose or use of the item.  An Example:  A jeans jacket will be kept for a longtime.  So the jacket would tolerate a higher price and higher priced stones.  A person will keep the jacket longer than an everyday T-shirt. 

Research is your key to success.  You need to evaluate:

·         At what prices will your product sell well? 

·         What people are willing to spend on that particular item? If you have a shop on Rodeo Drive, California, the customers will expect to pay a whole lot more than the folks at your local fair, or on Etsy. 

·         What are your competitors charging for similar items?

·         And, if at this magic price, will your business make any money.

How to arrive at a price

This is not an estimate it needs to be as precise as possible.  You need to know what does it costs you to make the item and how long it would take you to make it.  We will explain through an example.  Please note:  This is an illustration only and none of the costs / prices are real.  

Our Business:  Embellished Bandannas.

Step 1: Price of Materials

·         How much the fabric for each bandana costs?  If you make them yourself, silk screen them or tie-dye them yourself - what does that cost to make one?  If you buy them already made, how much is your landed cost?  For our example, we assume you buy the pre-made kind and decorate them.

o   Landed cost is the price you pay for the goods plus the shipping.  If you bought 100 bandannas for $80 and paid $20 for shipping.  The landed cost is $100 divided by 100, or $1.00 each.

·         How many stones will you put on one bandanna, and what it the landed cost? 

o   If you are going to put 50 stones on each, and each stone landed cost is $0.10 your cost for those crystals is $5.00. ($0.10 x 50 stones)

·         Packaging cost of the finished item, as an example, a cellophane bag with a business card.  We will assume the packaging is $.50.

Step 2: Labor Cost

Even if you are the only person making the bandannas, you need to consider if you had to pay someone to do this, what would it be for each bandanna?  You, or your employee, need a paycheck.  You are not working for free.  You need to consider the time it takes to make the bandanna and your pay rate.  Simplified:  If you make 5 bandannas an hour and your hourly rate is $20/hour, each bandanna will have a $4.00 labor cost.

So far we have the cost to make our bandana:

·     Materials: $6.00 in materials (bandanna and stones) ;

·     Labor:  $4.00 in labor ;

·     Packaging $0.50;

·  Overhead and marketing expense (web fees, advertising …) need to be calculated and added on a per item basis.  For discussion purposes let say those are $1.00 a piece.  

Add all these up and you are at $11.50 per Bandanna.  

Step 3: Add Profit
This is where you start making money.  To make 25% profit, you will need to sell the bandannas around $14.00 a piece; at 50% profit, they should sell for $23.00.  

Now, if your competition sells a similar item for $10.00 each and you have to match the price, you will lose money  

The lower you keep your cost of making the bandanna, the better will be your profits and marketplace competitiveness.

Managing Product or Job Cost

For discussion purposes, let look at this situation where your costs plus profit are "too much".   We will continue with the bandannas example.  The ideas is to get the cost of the item lower (step 1 and 2) and get higher profit (step 3).  Here are some ideas:

Change the material:

We started this project with 50 stones costing $5.00 a bandanna.  If you change the stones to rhinestones that cost only $0.50 per 50 stones, you just saved $4.50 and now the bandanna's cost is:  $1.50 in materials, $4.00 in labor, packaging $0.50 plus overhead $1.00.  Your bandanna costs:  $7.00, you can now compete better.  A $10.00 sales price gives you around 40% profit.

Example:  100 Hot Fix stones, SS16 crystal, current cost:

·         Swarovski $4.30;

·         Preciosa $2.50; &

·         RG Premium $1.70.  

Buy Smart:

You can reduce cost of materials by investing in inventory.  Buy in bulk so the cost for each piece will go down.  Buying 10 bandannas may cost $2.50 each; where buying 50 bandannas may cost $1.20 each. 

The same would apply to crystals.  You can reduce the cost per stone by stocking.  The price difference between buying rhinestones in small quantities instead in volume (bulk) starts at 15 to 20%.  It is more substantial when you buy in large quantities. 

Added benefit, besides the better price for each item, you have stock to meet immediate demands.

Final Thought…

You are in business to make money.  The key to doing so is to know how much your product costs to create.  And that cost along with your profit is how your creation should be priced.  Build yourself a “pricing” template or model so you can price your items accurately.  It holds true whether you custom make an item or mass produce it.  Do your research and price it right.

Remember to have fun, and Sparkle Up with Style