Those of you who haven’t been with me since I began this blog in 2007 might not know that I initially went into the jewelry business with a partner. She was a diamond wholesaler for 26 years. Our joint business was something fun on the side for her. A side salad, as gorgeous food-blogger Tina would say.
My partner, who died in 2006, was a great saleswoman. When she was making a sale, she would say, “I’m going to give you a little education” and explain to people why a particular stone or piece of finished jewelry cost what it did. I enjoyed her lectures. They really were helpful. Now I’m going to give you an education.
Click to sing along with Van Halen’s classic “Hot for Teacher”: “I don’t FEEL tardy!”
I’ve done this before. Feel free to read or re-read the post about the costs of producing fine jewelry I wrote earlier this year. I also did a post on the rising price of gold, comparing the cost of the same gold chain purchased at different times. But that information about fine jewelry leaves people with several burning questions.* The first burning question is:
“Why don’t you make cheap stuff?”
First of all, bitches, we are elegant people on this blog, so we don’t say “cheap.” We say “inexpensive” or our super-secret code: “Jimmy Choo for H&M.” And, as I’ve said, I would love to do inexpensive jewelry for the likes of H&M. But it costs money to manufacture cheap inexpensive products because even if you use inexpensive materials, you still have to pay for labor. In other words, the retail price isn’t based on the cost of materials alone. Think about it! Canvas and paint cost very little compared to gold and diamonds, but we don’t price a Picasso by doubling the cost of the canvas and paint. I don’t normally compare myself to Picasso — just because I don’t have as many girlfriends as he did — but like his paintings, my jewelry is worth more than a simple multiple of the cost of materials I use.
Picasso’s painting of his lover Dora Maar.
U.S. labor is expensive. Labor, for me, includes the wax carvers, mold makers, metal casters, goldsmiths and stone setters whom I employ, all of whom expect to get paid.** If I waste expensive labor on inexpensive material, I wind up with a customer who wrinkles her nose and bitches: “You’re charging THIS? For SILVER/PLATED BRASS/PLASTIC/RHINESTONES?!” (Have you said that? Be honest. I bet you have: “This handbag is CANVAS?”) I don’t like that experience, which leads to burning question #2:
Why is U.S. labor expensive?
U.S. labor is expensive because the U.S. has a high standard of living. People in ANY job — including you, unless you’ve taken a vow of poverty — want wages that allow them to maintain that high standard of living. Luckily for you bargain hunters, other countries don’t have such a high standard of living. People will work for very little. To be blunt and use the bad word: Cheap goods are made by cheap non-U.S. labor.***
Vietnam apparel factory. Click for photo source.
Here’s a good example of the difference in labor costs. I designed and manufactured a silver ring in the U.S. for $40.**** The price of silver is the same everywhere. As I’m writing this post, it’s about $17 an ounce. I sampled that silver ring at a factory in Asia and it cost $4, which leads to burning question #3:
So why don’t you just make all your jewelry in Asia?
Lower quality calls for higher quantity. A factory would go out of business fast if it let me order one or even 10 inexpensive rings for $4 each, so the minimum order is 100 of one style. If I want to do ten inexpensive ring styles, I’ve suddenly got 1,000 pieces in my inventory and I’ve spent $4,000. What am I going to do with all those rings? I need a big store to sell them. I can’t spend $4,000 on spec and hope for the best! What if I try to get H&M or Target interested, but they don’t want these particular styles? What if they want white skull rings and I’m stuck with 100 black skull rings? Trust me, the minute one of those retailers gives me a big order, I’ll spend the $4,000 and more to meet the demand and all of you will be able to run to the store and buy a lesser version of my signature look for under $50. Until that order comes in, I will be making most of my pieces one or two at a time, here in New York, using high-quality U.S. labor on raw material that is worth the investment.*****
It’s not worth the labor to do this piece in silver right now. Click for more info on the design.
Speaking of quality, another cost of manufacturing overseas is travel. As I just pointed out, my U.S. manufacturers are top quality. Also, it’s easy for me to drop by their places and see how my jewelry is shaping up. If I there’s anything I don’t like, I don’t take the piece and tell them to keep working on it. To do quality control overseas, I’d need to be on site, even if the overseas factory is excellent. If I stay in the U.S. and the overseas factory sends the product after eight weeks of work and transportation and THEN I find out it wasn’t done the way I wanted it to be done, sending it back is a big deal. I might not get the product back for another eight weeks. The following is a rhetorical question, not a burning question: Do I want to spend the money to travel to Asia and live there for months in order to supervise the production of thousands of pieces of jewelry for which I have no retail outlet? NO THANKS!
The situation I’m in is a classic small-business conundrum. I could sell more if I charged less, but I can’t charge less till I sell more. This applies to most small businesses, whether the product is software or apparel. There are some exceptions, such as jewelers who sit on their floor or at their kitchen tables, stringing their own beads, twisting their own wires, setting their own stones. That cuts down on the labor that needs to be hired, but sometimes the designer undercharges for her own labor. If she’s not doing anything else to earn money during those hours spent doing the work herself, she ought to be compensated properly. In addition to the cost of materials, she has to pay for rent, packaging and any marketing of the product she has to do. Also, if her pieces do well and she has to ramp up production to meet demand, how is she going to do it with her bare hands? That way of manufacturing is putting off the inevitable if growth is what you want. I have manufacturing connections and am ready to expand. I think it’s a lot harder to deliver a large order in a few months time if you’ve been sitting at your kitchen table and have no manufacturing contacts. People go out of business in that scenario.
There’s more to be said on this topic but I’ll stop here for now. The asterisks sprinkled throughout this post are explained below.
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FOOTNOTES
*I can help you with burning QUESTIONS but if you have a burning SENSATION, go to the free clinic.
**Everyone has to get paid. No one can — or should — work for free. Please note that I would never suggest that any of you work for free. “Free” includes working for experience, portfolio-building or product. In my experience, whether I was doing the work or having someone do the work for me, the situation turns out poorly. Cash or, for interns, college credit are the only payment options I will ever recommend.
***Consumer demand for inexpensive apparel has pushed clothing production out of the U.S. There are exceptions to the rule, such as American Apparel, but the U.S.-made clothing product is so rare now that the company made that its whole selling point. Nearly all clothing production is overseas; New York’s Garment Center has shrunk drastically.
****That’s what it cost ME. Obviously, my wholesale price would be higher and a retailer’s price would be significantly higher than that.
*****One exception is the swear rings. Because they use a lot of metal and come in sets of four, the factory reduced its minimum and made 50 sets instead of 100. You can tell from the price. These rings are solid sterling silver. If I made them in the U.S., they’d have to retail for about $1,000. I know this because I made the samples here for the overseas factory to copy. My only other pieces made overseas are the $125 silver squirrel necklace and $50 silver Teeny Genie and Little Woolf necklaces. I made the first dozen here (those U.S.-made pieces are recently sold out in all three styles), then I made 100 of each overseas. I figured they were small enough, inexpensive enough and popular enough that I could take the chance. I was selling the original U.S.-made ones at a loss.
UPDATED AUGUST 2010 TO ADD: I’m trying to add new swear rings to my line: OMG, LOLZ and NYC. I need to make them overseas for the reasons cited above. Through September 12, 2010, I’m raising money on Kickstarter by accepting pre-orders on the rings. I originally planned to do just OMG and LOLZ, and I raised $7,000, covering the factory minimum run. Due to popular demand, I added the NYC style, but now I need an additional $3,000 for a total of $10,000. I spoke to the factory owners and they were inflexible when it came to the minimum. So please go to Kickstarter, pre-order and make these designs possible! They won’t be delivered till close to the December holidays, most likely, so consider getting them as a holiday gift.
UPDATED AGAIN TO ADD: The Kickstarter campaign above was successful! Thank you. To learn more about the real costs of doing business, read my other “Get Smart” posts, with topics including quality, quantity, custom work and metal prices. Everything except the metal applies to a wide range of small businesses, not just jewelry! To read more about the agony and ecstasy of having a small business, read my Huffington Post article, which grew out of my “Get Smart” series.
Oh love! First off I am so sorry for the loss of your partner regardless if it was back in ’06 <3
This is such a GREAT article! I have known some of this already, but it definitely is great to see and hopefully people will take something from this!
absolutely fantastic well done! xo
Can't wait to see you lady! xox 2 more weeks!!!
this is such a great post. I’m dealing with a similar situation domestic manufacturing vs Asia. U.S. quality is top notch and more expensive then a regular “inexpensive”/cheap Asia manufacturing. Good Asian factories charge a lot more for quality. As they say: You get what you paid for. I’m glad you brought up an issues.
Best,
Sabina
This is a fantastic post. So many of us are unaware of just what goes into making the things we buy. Thanks for breaking it down for us.
Bravo! Very well put…and I’m all for a Wendy B Target line (their jewelry is better than H&M), but in the meantime I’ll keep saving my pennies (and $100 bills) for the real thing.
So edifying – while being interesting!! Love this post Wendy.
This is an excellent post- I am going to re-tweet this in fact!
We need to get H+M buyers to peep your designs and get on this deal already!
wow; so educational!
this sounds like quite the complicated/arduous/frustrating/drink-inducing process. lol.
happy new year!
also, one question:
do you know a good tailor/seamstress? i’m afraid to take my clothes anywhere for fear they’ll be ruined beyond repair OR i’ll be robbed blind for shoddy work.
Wendy,
THANK YOU for posting this explanation and thank you for using AMERICAN LABOR and not outsourcing to an Asian factory for your manufacturing.
Sometimes my clients ask my why a particular estate piece costs so much and I have to carefully explain that I’m actually selling it for less than what it would cost to manufacture in today’s economy. The price of gold, platinum, gemstones and labor have all gone up since 2007.
Very important lessons about the challenges for folks looking to reinvent themselves in 2010. It isn’t easy to operate a small business here, but as my friend likes to say: Do what you love and the money will follow.
Thanks teacher! All well said xx
Also, sending your designs to a different country can result in their unauthorized duplication.
Great post WendyB, I think if someone complains about your price, you should add 20% for having to put up with them.
Pennerod, I sent you an email with the name of the tailor but for everyone else, it’s here: http://wendybrandes.com/blog/2009/04/ive-seen-ghost-tailor/
Belle, I have pieces that I made in 2007 that are not priced high enough to make me a profit and cover the cost of replacement. But it’s been hard to raise prices enough to keep up with costs in this economy.
Jen, I hate to be a downer but I will be anyway. One needs to have enough money to fund the business until more money comes in. Increasingly, that’s not the case for many small business owners. People often ask me how to start a fine jewelry business and I tell them to forget about their dreams and be realistic. First they have to decide if they can afford to lose money for years. It can be very expensive to do what you love.
Eric, believe me, I’ve often thought about adding a premium for annoyance! I have set a minimum amount for one customer who liked to ask me to price custom orders (which means a design must be drawn, meaning valuable time is being spent) and not follow through. From now on, I won’t do anything for her related to custom work unless she can (a) meet the minimum and (b) pay for the estimate. I have a problem with being too generous.
“First of all, bitches, we are elegant people on this blog, so we don’t say “cheap.” We say “inexpensive” or our super-secret code: “Jimmy Choo for H&M.”
Diet Red Bull out my nose. I love you girl. I would defend your pirces now anyday and I’d be FIRST in line at Target or H&M for the reduced cost stuff as well. I am so excited to be one of the people who can say they own a piece of your art.
Let me tell you that I am very disappointed with this post. No, I love how you explained about manufacturing, etc. You don’t go to a car wash to get your skateboard cleaned – so, well, that just speaks for itself 🙂 No, I’m disappointed that cake wasn’t mentioned once. AND it’s the New Year. Tsk…tsk…Wendyb.
Ah, the catch-22 of economies of scale!
I think that these lessons apply to a lot of businesses – and not just those in manufacturing. We’re in photography in the U.K. and find that a lot of customers don’t get why prints cost so much. I think everyone tends to discount the value of labour.
Super cheap manufacturing comes at a high human rights and environmental cost. Somebody is paying for it.
now THAT is what i call an education! i knew a lot of this…but you explained it so well…thank you! i see it in the clothing that i sell…people want the good quality…craftmanship…but for less…can’t have the two!
on a side note…and most importantly…i am so sorry for the loss of your business partner…even if it was back in 06…that is always tough…
Now THAT’S an education! (That movie is really good too, by the way.) Thanks for filling us in on all of the nitty gritty behind your amazing pieces!
That was awesome. I’m very interested in the whole process and you are most enlightening.
And I know from experience that as I’ve been selling my paintings, you are correct. A gallery sells them for a certain price they deem fair which includes the size of the painting, experience, labour time, materials, etc, etc. I sell them for substantially less because I wanted to sell some to friends and acquaintances and thought they wouldn’t want to pay X-hundred dollars for a painting therefore, I dropped the price right down to something I thought they would pay. It covered materials and shipping and I made some profit on those, but it didn’t take into account the maybe 30+ hours I spent painting it, so I had to ask myself “Is it worth working my ass off painting to sell more paintings at a low price or should I paint and wait to see if a gallery can sell them at a fair rate that pays me for my time?” I still struggle with it. But you are right. No one wants to work for free. Including me. 🙂
thanks for sharing this info, wendy. it’s very interesting to see the cost comparisons. i used to sell a clothing like, worthwear, and learned through that process how expensive it is to manufacture apparel in the u.s. my clients would often say, “how come this costs so much if it’s made in china?” and i’d have to educate them on how much it would REALLY cost if it were made here. it’s an unfortunate reality, really. as much as i love target’s old “design for all” philosophy, it’s made us a society that’s addicted to cheap goods.
I thought this was a great post and probably gives a little think-about for some persons out there! I’m looking forward to the day I will buy a piece of jewelry from you. Just have to be able to choose which one first!
(My anti spam word was ‘cherries’! Yeah! The internet knew I was coming and placed it there I’m sure.)
this is an awesome post. reminds me a lot of what i studied in the labor section of my gender studies class. i dont think consumers think about these things on a daily basis.
Wendy, I’m always so thankful when you write these posts. I think transparency in small business is really a tool that many don’t take advantage of– because the more educated your buyers, the more educated the whole shopping system becomes. It breaks us of this vicious consumptive shopping habit that the American nation has, and makes us more thoughtful as buyers. I know that I become more so each time that a small business opens up to me regarding their business practices.
“Wendy Brandes: More Transparent than a Diamond.”
Interesting post here- informative! There is always so much more behind the scenes we don’t know. Happy and successful 2010 to you!
PS: Love that cute lil genie necklace hehe 🙂
Next time I’m tempted to buy a necklace at Target, I’m going to come back and re-read this post.
great post wendy. a lot of people don’t get it but i am sure they do now, thanks to you. : )
although i wish that some of your more intricate designs were at a price point that i could afford, it will make it that much sweeter when i get one:)
Hi there-a really interesting and good post, it is a real eye opener of how a small business works and runs, you are a true inspiration!!
Well, of course its an excellent and informative post… Miss J is always dismayed when she hears people grouse about the cost of high-quality, hand-crafted items. Thus she has a suggestion. Admittedly its not very “politically correct”. Some might find it “shocking”… So f’ing what? In this economy, bitches need to think outside the box.
Just stop with all this “paying” people. WendyB could “sponsor” a few gals from another country… and teach them the awesome craft of jewelry-making. In a few years (20), after they’ve paid off what they owe WendyB ($100,000), they have their American freedom AND a job skill.
That’s legal, right? And, you know, it has its precedence…
WORK!!! I could not have said it better myself. We all need to support the work force in the USA. If that means spending more on a gorgeous piece of artfully made jewelry so be it.
There is a story to everything we buy. That piece has its own journey. Thank you for opening the eyes of many. We should all be looking for the made in america stamp.
I really do appreciate this post. I know it can be expensive buying a one of a kind piece of jewelry, but as you’ve explained, a lot goes into the production and making these pieces. And you are right–folks don’t work for free.
Loved this! At the end of the day you always get what you pay for.
Oh,my gosh, I think you are my soul mate! I got my own company,and design my own range of collection, never had the guts to say to people about ‘Asia manufacturing’. Because frankly, everyone do think we use sweatshop label!
Which we don’t! And I swear by ‘everyone needs to get paid’!
Heads up!
sisimae
wonderful post! we all need a reality check once in a while. I’ve done that with the canvas bag, and it’s true that people only look at the product in hand, not everything and everyone that went into it! great post!
xoxo
j
Least boring lecture ever. I like these sort of posts.
Oh, and in French, they don’t have a translation for the word ‘cheap’. The closest approximation is ‘bon marché’ – good value. I love that! So cheap labour is translated as ‘exploitation of labour at good value’ x
I love this lecture particularly as I’ve had it in person! Not that I was asking!
I’ve still got the Marie Clare edition too. Gosh how time flies.
I know the quality of your goods is preferable to the Jimmy Choo for H&M stuff
I love this post–it felt like Economics 101 again. Economies of scale!
You also are not going to have a product made in Asia that has tolerances of thousandths. Precise products for Medical and Aerospace we do not send out of the country. But along with that skill you must pay skilled workers. And skilled workers need benefits. For the last 3 years health insurance for our employees has gone up 30% EACH year. So to stay in business we diversify. It’s good that you are trying Asia for the less demanding items.
But take my/your silver Swan ring. To mass produce that in Asia, first of all they would cut the thickness of the ring (reducing quality). Then there would not be the depth to the engravings. (reducing the look overall) And last of all, they would not continue those engravings completely around the ring. They would only carve (maybe I should say stamp) the face of the ring. In essence you get what you pay for ;D
Fantastic post. And, I would absolutely compare you to Picasso. That said, your jewelry is more gorgeous than his jewelry making daughter’s.
This is a fantastic and realistic look into how small businesses operate. Thanks for all the detail — very educational. -Natalie from Shop It To Me
Thanks for this thought provoking and eye opening post.
As a former small business owner, I am only too familiar with the struggles to make a fair profit in a society that has been WalMartized. There were no smiley faces at my shop when customers would regularly ask me to “roll back” my prices!
When my lease was up, I quietly shut down, after ten years in a business that was often a love/hate relationship. I loved the creative aspects, and hated the crap that I had to put up with on a regular basis!
Working for someone else isn’t always that great, but at least the small business owner headaches are no longer mine.
The surprise inside egg necklace… divine!
Happy new year bella!
a contest to tis the season, Jimmy Choo tote:
http://torontotextstyles.blogspot.com/2010/01/win-limited-edition-jimmy-choo-tote.html
*bisous*
I understand about being a small business owner, economies of scale and all that… but also, it also feels more exclusive buying an expensive piece of jewelry!
This was a great read. 🙂
Wendy, If I could I would buy it all. Really, I would. I would even give up sniffin Christian in the process.
Having worked in the jewelry industry for nearly six years, I was really happy to read this; most shoppers have no idea how involved jewelry design and manufacturing is. I’m so glad you did this post (even though it’s not the first of it’s nature that you’ve done) so that people will know.
Jewelry is art. It’s worth the costs.
EXCELLENT post! Thank you for taking the time to write this and to educate people. The general population has no concept of what is involved in a creative business. Money, time, blood, sweat & tears. You do it because you love what you do and you are proud of your designs. Nothing is more annoying than a customer asking why it costs so much!
Kind of appropriate that my anti-spam word is DAGGER!
Not that I would ever really stab anybody…
Thank you!! This was a very informative, enjoyable post! And now I want one of your little woolf necklaces more than ever . . .
All this is why I only pay full price for art, jewelry, etc from friends who are creative and in creative jobs. Being a photographer know all about the whining mases who demand “Walmart prices” for everything. You get what you pay for. They don’t realize this.
I try to stick to my guns on my prices for photos and you know I am the first person to tell you to stick to your prices when you have those ‘waver in should you’ times.
I have told myself I will NEVER buy a piece of jewelry from you until I can pay full price in advance. Why I haven’t done so yet…I am still struggling in my craft/job and just haven’t the cash for it now but will some day.
Thanks for the lovely post with the great explanation for the pricing you do. It will definitely open some eyes to some people who have wondered.
My anti-spam word cracked me up: whynot?
Brie, you always do your best to prevent me from doing something stupid! 🙂
great post! a lot of people forget (or just don’t know) how much work and the amount of hands go into creating something.