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Success With Jewelry
132 - Laryssa and Liz Interview Sharon Zimmerman About Pricing Strategy For Jewelry
00:42:04
Welcome to the Success With Jewelry podcast, hosted by Laryssa Wirstiuk and Liz Kantner, two experts passionate about helping independent jewelry artists thrive. Welcome to Success with Jewelry Episode #132! In this episode, we’re joined by jeweler...
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- [00:00]
Larissa
Welcome to the Success with Jewelry podcast where we invite you inside our conversations about business success and marketing for jewelry designers and entrepreneurs, where Larissa and Liz.
- [00:10]
Liz
Jewelry marketing experts with a combined 18 years of experience in jewelry marketing and proven track records and helping jewelry brands meet their goals. When you listen to this podcast, you get an intimate and exclusive peek behind the curtain of all the things you wish you could know about earning success in this industry.
- [00:28]
Larissa
Welcome to episode 132. In this episode, we're continuing the conversation about pricing your work with confidence. We're joined by jeweler and pricing expert Sharon Zimmerman to dive into what makes a sustainable pricing strategy. We'll cover how different categories require different approaches and when and how to raise your prices. We'll also talk about communicating value beyond the number on the tag and navigating rising material costs. And for insiders, we're digging deeper into how to raise your prices with confidence, including tips, timing, and help to raise your prices with ease. Hey, Larissa and Sharon, let's get into it. We're excited to have Sharon here today. Can you introduce yourself for everyone?
- [01:13]
Sharon Zimmerman
Yeah, absolutely. As you mentioned, my name is Sharon Zimmerman. My business is Sharon Z Consulting, and I do pricing strategy and general financial projection consulting for members of the jewelry industry. So jewelry designers, casters, stone setters and more, and also some folks outside of the crafting industry. And I have been also a jewelry designer and a Metalsmith since about 2003.
- [01:40]
Larissa
I think that's what's going to be really exciting about chatting with you because we had a great pricing conversation with Hilary Halstead Scott and we're kind of doing like a little pricing series here because it's a hot topic. We were just talking about before we started recording how everyone has pricing on their mind right now.
- [01:56]
Sharon Zimmerman
A hundred percent. Yeah. So maybe even a hundred percent price increase. You don't know yet?
- [02:02]
Larissa
We don't know yet. I did look at price increases recently for a designer who did have to raise them 60%, which is a big jump. But what we were saying before we started recording is like, if you don't look at your pricing regularly, you are going to be in a situation where that might have to happen.
- [02:18]
Sharon Zimmerman
Oh, yeah, yeah. And it's. And it is like. And let's acknowledge too, like, this is a re. Like some of this is a very recent big shift. I think when I looked at gold prices about a year ago, they were roughly. Because they fluctuate day to day, hour to hour, they were roughly about a thousand dollars less than what they are today. And that's, that is a huge, huge jump. And so the, the pace at which gold prices have gone up was actually just faster than what we were used to in the past because there's always been fluctuations to deal with. But let's acknowledge, like, this is different. This is very different. I think in the past I would have told most of my clients and my business students to definitely do a pricing audit once a year if gold prices hadn't shifted significantly. I might advise them to just spot check with their 10 to 20 best sellers and make sure that those were all still in a good place. Right now I'm encouraging that process to happen more than twice a year. Definitely quarterly, definitely. Before you go to do any big show.
- [03:29]
Larissa
Can we talk about a little bit? Because you as a maker understand how emotional it can be to raise your pricing. Can you talk about that a little bit?
- [03:38]
Sharon Zimmerman
Yeah, well, I think a lot of it, at least for me in the beginning, a lot of it was tied to my assumption, I'm going to stress the word assumption, that customers wouldn't follow me, that I had not built enough trust with them for them to feel like they could follow me if I had to raise the price of a ring, like $30, $40, $100. And I think some of that was definitely, some of it was definitely internal, right? It was my own internal, like, oh well, would I pay for that? Would I pay more for that? And I really had to learn to step outside of myself to understand that first of all, consumers are, some consumers are price conscious and that some of those price conscious consumers might not be my consumers. That I couldn't just rely on friends and family for pricing feedback. Right? Because depending on who your circle is, depending on who's in your, your immediate like close network, they might not be the same people who are your customers. And so I really had to take this big step outside of myself and to observe people's behavior in person. And I used to do like a ton of in person shows. In fact, it was like my, it could be my bread and butter sometimes. And it was my main lead in to my website actually was like going and doing like a renegade or we used to have a show here in San Francisco, the SF Made Holiday Fair. And it's a great opportunity to observe up close, like how people respond to pricing. And it happened, it started happening so often that people weren't having price resistance. And I was like, well if they aren't, then why do I like if they're not going to have a problem dropping that Money, then why would I have a problem raising my prices when I need to? And, you know, I was trying to grow a business, and I'm like, you kind of hit a point where it's like, you have to raise your prices if you want it to grow.
- [05:29]
Larissa
I think that the toughest thing I've seen designers have to do is when they price to a point or they're creating things that they could never buy or they've never been able to buy or would never spend their money on. And then it's like this mental leap of, like, are there people out there? But the biggest, you know, something that rings in my head all the time is like, get your head out of other people's wallets because you don't know what they can afford or what they're willing to spend on.
- [05:55]
Sharon Zimmerman
It's true. And sometimes somebody will say, oh, that's too expensive, when what they really mean is, that is outside of my budget. And that was actually terminology that I had to learn for myself to. To teach myself to say. Because there are so many times that I would look at something and say, well, I can't afford that. Like, I don't have the money for that. But did that mean that the item was too expensive, or did it just mean that I. There was just no room in my budget to spend, like, a thousand dollars on something. Right. Be it like first class plane tickets or like special events. Like, maybe it's outside of my budget, but it's not outside of everyone's. Mm. And that's okay for me to say, but I think a lot of times, like, if you hear from somebody like, oh, that's too expensive, it's easy to internalize it. And I found it most helpful for me to start to reframe it and say, like, they might not be saying that. Oh, wow, no, way too expensive. They might be saying, like, well, I'm not gonna pay for that, and that's fine. That's not your customer.
- [06:55]
Larissa
That's such a good point. I wonder, and I'm guessing you've seen this a lot, like, what a difference it makes for a business when they switch from, like, pricing their work, like, really price conscious, versus moving to a very sustainable pricing model where they're able to pay themselves.
- [07:12]
Sharon Zimmerman
Yeah. I mean, I. I can share with you that for me, and I've also seen this happen with some of my clients, is that some of that had to do with understanding the difference between, say, a direct consumer client versus a wholesale store that you're selling to, and that Those were. Those aspects of it were actually very helpful for me to get over my own internal price resistance. Because stores were like, oh, we don't have a problem selling that at that price. Like, that's not a problem. And understanding that they were seeing something else on the ground that I was not. And that actually helped me shift because at the end of the day, like, I still needed. I. Like, I had rent to cover, I had expenses to cover. I had software, I had overhead, I had cost of goods sold. I had all of these materials. Like, why sh. And then I had my time and my story and my effort, and why shouldn't that get paid too? And I think it. It kind of, like, for me also went back to, like, how, like, our society can sometimes, like, devalue the work of artists. But this is actual skill that we're putting out into the world. Like, this isn't just, like, an idea that we had and, like, whoops, magic. It happened. Like, we had to learn a skill in order to do this. This is skill, skilled labor. And I mean, internally, I was. I'll just share with you, and I think your audience will appreciate this. Like, internally, I would always think, like, if somebody said, like, oh, that's too expensive. Like, internally, I never said this out loud because I do have a background in retail and customer service. But internal, internally, I would think, well, you can't make this. You can't. Like, if you think it's too expensive, then you go make your own and see how that turns out. Right? Like, people complain about things being too expensive. I'm like, but you want it, and it's here in the world, and it would actually be more expensive for you to go through the process of making it, so why not just pay for the skill? And while of course, I didn't say this out loud to customers because that would be rude, internally, it also helped me reframe myself as the professional in this conversation and to really, deeply understand. Like, I have this professional skill bolstered by many other professional skills as I reference, like, retail, customer service, sales. I've worked in marketing. I've worked in bookkeeping. Like, I've have all of this, like, network of skills that also bolster the jewelry. I'm the professional in this conversation, and it really helped me reframe that, that idea of, like, what was my role? And this is why I can price the way that I price. Because you're paying for professional service.
- [09:46]
Liz
Sharon, I'm curious. How did you get into this aspect of the industry and the consulting aspect Great question.
- [09:54]
Sharon Zimmerman
So way back in 2013, I was a couple of years into running my jewelry design business and I took some classes at a local entrepreneurship center, a women's business center. And a few years later, they kept tapping me to come back in and volunteer to talk to their students and to coach some students through it. And eventually it turned into a paid position where I was teaching their business planning classes and teaching the financial projection portion, which is often the most fraught for a variety of entrepreneurs. Like, it's often most fraught because it's asking you to peer into the future and set numbers to that future that you feel are very unknown and unknowable. And so I spent about six years doing that, teaching business planning classes. I had also turned my studio space into a workshop space back in 2019. Obviously, 2020 happened and I was longer able to teach classes in person. I moved a lot of stuff online and just really found that there was this deep seated need for people to still get business advice and especially around pricing. And it was something that I'd always talked to my peers about casually. We were always talking about pricing and like, oh, look at this person's pricing, look at that person's pricing. Why are they priced like that? What is this person doing? Why is this person priced so low? Like, we were always trying to figure out, like, what are people doing? And it just kind of led me to understand that there was a need that needed to be filled, especially on the pricing strategy front, that people needed to understand the whole. The totality of it, the holistic approach to it. Because, yes, it's a formula. I almost always start people off with the formula because you have to know your floor. But there were so many other aspects to it. There's research, there's branding, there's where you show up, how you sell. There were so many other aspects to it. And I just saw that there was a need and so I decided to develop programming and consulting around that specifically.
- [11:52]
Larissa
Cool. Yeah, it's so needed. Okay. With pricing. And I agree, like, we totally need this in the industry. I think designers have a really hard time with pricing. They often think. I find designers often think that there is a magic right number, like a right price, and there isn't.
- [12:08]
Sharon Zimmerman
Right. It has to do with your personal.
- [12:10]
Larissa
Business and your margins. And I feel like they're always searching. And I get line sheets sometimes. And with a question of like, are these prices correct? And there is no answer for that.
- [12:22]
Sharon Zimmerman
No, because I. And I get that question a lot too. And I will say, because of the work that I do, I can definitely go on to certain websites and say, like, oh, I feel like this pricing is about, right? And other websites where I think while the pricing is a little off and I don't know what's going on and I start digging, that's when I start like digging through about pages and other pages to figure out, like, why is their pricing so low or what made this pricing this high, like outside of like, like industry norms. But yeah, I, I think, I, I think that the search for the right answer really does come back to a lot of the work that I've done with both students and clients on their financial projections. Because a lot of times we'll start plugging in numbers and you can start seeing pretty quickly if your profit margin's not in the right place, you're going to have a profit and loss projection that looks like it's in the red for months on end. If your pricing isn't in the right place, like, you're going to start having some cash flow problems. And I actually see that all the time, especially when it comes to say, like big wholesale orders, right? If you haven't priced correctly for a big wholesale order. I, and, and I actually did have that happen to me early on in my business. I hadn't factored in credit card fees into wholesale. It hadn't occurred to me that wholesalers were going to want to pay by credit card. Like, of course they do. They want the points too, for their own travel. Right? But it hadn't occurred to me. And I'd come back from a show, it actually was a show that went pretty well. But I started watching like, you know, 50, $130 going out. I was like, oh, wait, I didn't do this right. This is like taking a few hundred dollars out of my cash flow that I needed to buy more materials to make more work. And it was such a direct connection for me between what my pricing strategy had been and what it should be. Because I needed to factor in these other things because I was planning on, and I'm a big planner and I was planning on having X amount of dollars coming in the door. And suddenly it was running $200 shy of that. And it doesn't sound like a lot in the context of like the year of your business, but in one month to be $200 shy, you have to start making some choices, right? Is this thing going to go on a credit card? Do I put off buying this other thing? Like, what, what am I going to do about it? And it was a really clear one to one ratio of like, why I needed to factor in more information into my pricing strategy.
- [14:55]
Larissa
That is a mistake. I see a lot, yeah, the not accounting for credit card fees, but so with pricing, like, because there's a lot of different designers listening with different categories. Fine jewelry, art jewelry, production lines. Do you think about these different categories differently?
- [15:12]
Sharon Zimmerman
I do. So if I were working with the client, I'm always going to walk it back to what is your goal? Because I've definitely had clients who, they're in the art jewelry category. They're going to the big craft shows or even some of the smaller craft shows. And they have zero interest in expanding into galleries. They have zero interest in expanding into stores. They might do it on occasion, like as a one off, but they're not structuring their business to be able to do that. And I actually think that that's fine. Not everybody wants that, though. I often have shared with them that it's always a good idea to have a pricing structure that still leaves the door open to those relationships in a way that makes you feel good about your pricing and in a way that facilitates sales through the gallery. Because that's also exposure. It's paid exposure. But like, where, where am I going with this? I think that any pricing strategy that you come up with has to consider, like, where you, where are you going to be in five years? Right? Like, where do you want to go with this? How much do you want to increase your sales? How much do you personally want to be on hand to facilitate those sales? And that's always a big question in figuring out somebody's pricing model. Because somebody who thinks, you know what, I don't ever want to do custom again. I don't want to have to be on hand for that. I want to be able to make the work, maybe have an assistant who makes the work and ship it out into the world. That's going to be a different pricing model than somebody who wants to sell a couple of $10,000 engagement rings each month. It's a very different pricing structure. It's a very different model. So I'm usually walking them back to consider their goals and to consider where they want to show up. Because a pricing strategy for production lines where you might be going to a trade show, you're going to, you're going to need a pricing structure that can fund those trade shows and you're going to need a pricing structure that can work with the, the accounts that you want to work with. And that was also one of the bigger lessons I got from doing trade shows at all is that first of all, not every, not every retailer is right about your pricing and not every retailer who's right about your pricing is necessarily going to pick up your line. So you might have to have some varieties within your line to be able to attract enough business. But you're also going to have to have a formula that accounts for profit at wholesale. And that's the big difference I see between production lines. And say like art jewelry is that in the art jewelry world you will have some profit at the wholesale level, but if it's not going to be the core part of your business, then maybe you're okay just doing 5 times markup of your cost of goods sold. I've absolutely seen that as formula. It still floats around out there. I don't dismiss it because for some jewelers this is still working for them, right? But again, they're not expanding into galleries. If you're looking to expand into stores, you have to have a pricing structure that supports your business to do that. And then lastly with fine jewelry, it's much, much different. Fine jewelry, I referenced custom work before, like the pricing structure on high end sapphires and diamonds is very different than standard markups for production jewelry. And in fact, one conversation that I've had with a lot of designers is I can't figure out how to sell actual engagement rings like with an over one carat diamond at the wholesale level because I can't structure their diamond pricing for that. And I think that's, that's something to consider. Like as you expand, like which direction are you going to go? Are you going to have a branch of your business that's just direct to consumer and other branches that are just into wholesale? And I've actually found that a lot of designers have found some success doing that. You know, they have a line on their website that they don't wholesale at all and they have other work that goes to wholesale that they maybe don't sell on their website. And it's, it's become a smarter way of diversifying your income streams, I think. But each of these is going to have like a slightly different structure. But again, I would turn it back to the designer and ask, what do you want to do in two years, five years, 10 years, where do you want to be?
- [19:24]
Larissa
Let's talk about the formula for a minute because I think people understand the general formula. But you were saying that a question that you get a lot is how do you deal with those fixed, fixed budgetary items?
- [19:37]
Sharon Zimmerman
Right, yeah, yeah. Because they don't. In a straight pricing formula, they don't necessarily show up. Because your pricing formula is really just about your materials costs. So your cost of goods sold, your materials costs, same thing. And your labor. So the amount of time it takes you to make something, or potentially the amount of time it takes an assistant to make something. And like, what is that labor cost involved? Those are the direct costs associated with making your product. So that's what goes into pricing. But then, of course, yeah, there's rent. Depending on what your rent structure is, there might be utilities. There's your phone, there's your WI fi, There's your software as a service. There's your Canva Pro. There's your. For me, it's Mailer Light. Like, for somebody, it might be their shopify expenses. Like, what. How do we cover these through our pricing? And, and the, the. The straight truth is that it's not totally recognized in your pricing structure at some major manufacturing levels. And I'm talking like major multimillion manufacturing levels outside of the jewelry industry. Some of these are factored into the way that pricing works. But for you as a solo designer, it's not. However, one thing that your expenses should be doing is creating an ROI or should have a direct connection to your sales, or it should be. The way I've been thinking about it lately is that your expenses should be productive for you. And the way that I'm seeing this play out is, let's say I'm going through somebody's expenses and we're looking at. I'm like, okay, why are you paying for lately? And Planoly and Canva Pro, those all do the same three things, right? So why not just condense it into one? Because we know that those are necessary. Right? You want to post on social media, you want to appear in a lot of places. Like, those platforms will help get you seen in a lot of places, because you can post from to Instagram to Facebook to Pinterest, like to all of these places. But why are you paying for three of them? One of them is going to have some productivity for you, but you don't need three.
- [21:39]
Larissa
Or.
- [21:40]
Sharon Zimmerman
I think about this in terms of rent. A lot of people have studio rent outside of their homes, and it's a necessary part of being a jeweler for a lot of people. Not all of us can have a bench in our homes. It's not always safe. It's not all. We don't always have the space, so we often have to pay for it. And it's a, you can't make your jewelry without that rent, right? So you have to have it. So what are some ways that you can start making the rent work for you? The answer for me back in 2019 is that's why I was going to start teaching classes out of my space. Because now I could have a jewelry production space and I could teach classes, my rent could do double duty. Something A trend I've been noticing for the last like six or seven years is indie designers also opening up a store space with their production space in the back. Well, now you have a space that is doing double duty for your business, right? You've got a space where you are actively selling out of and a space where you are actively producing out of or thinking about ways that you could take your studio space and like, could you rent out a bench, right? So starting to view your expenses as producing value for your business is how I've been encouraging people to think about it. So how often is like one place where I see this also show up is like, oh, you know, Shopify or Squarespace or Wix, like they're so expensive. It's this monthly fee. Why not just sell on Etsy? It's like, well, you need to make your website work for you, right? Like, you need to make sure that that eighty or a hundred dollars a month you're spending on Shopify is doing something for you. So you might have to look at that expense and say, how can I make this sell more? Right? So it's not going, it's never going to be a direct connection to your pricing, but it should be very productive for you. And I think honestly that also goes to payroll. And I know that that can be a really challenging discussion for especially an independent designer or a small business to start thinking about their employees in those ways. But if you're, if you do have a store, if you're thinking about having a store and you know you need somebody to work there, how does that change your relationship with who you hire to work in your store? Are you going to hire like a go getter salesperson that you can put on commission? Are you going to hire somebody who sits right? And I, I mean, look, I've worked retail for years. Like I know what the expectations are. So how does this also change your relationship with how you set expectations for your staff? So I think that there's a discussion to be had about expenses and pricing, but I think it has a lot more to do with your sales than anything else. So how often are your expenses really Bolstering your brand. Right. Like helping you be seen in certain places, advertising in certain places. But that's where I see expenses coming into the pricing discussion.
- [24:18]
Larissa
It is so hard to be a solopreneur. Like just all the questions you're bringing up and all the ideas you're talking about, I just thinking about everyone in their studios listening to this. You need someone to talk to.
- [24:32]
Sharon Zimmerman
You do, I mean, and like, and I do want to acknowledge, like, it is hard. I mean I've been coaching small business owners since 2017, 2018 from all kinds of business backgrounds, not just jewelry. And it is, I mean there's that old adage of like a Solopreneur will work 80 hours a week for themselves. They don't have to work 40 hours a week for somebody else. And I think about, about that a lot because I think a lot of us got into this thinking that we could be more independent. And it is true. I actually do think of, I think of my own self employment as somewhat liberatory. Right. I can go online and speak my mind. And I do. Anyone who follows me knows that. So I can go out and do that and I don't have to worry about getting fired by a boss because I said something they didn't agree with on Instagram or Blue Sky. Right. I can just do that. And I actually really love that. Like there's nobody I report to on that front. So like the trade off for me has always been that, that level of freedom to speak my mind and to say what I think should happen in the industry without having somebody else to, to hold me back or filter me. And at the same time, yeah, it's a lot of work. A lot of work.
- [25:50]
Larissa
I like that I can work when I want to work. Like I don't have to be at a desk at a certain time. I can do the things I need.
- [25:56]
Sharon Zimmerman
To do when I want to do them. Yeah, I'm going out for coffee at 10 o' clock tomorrow for. Because, yeah, why not?
- [26:06]
Larissa
It's actually. That's a great thing to do.
- [26:08]
Sharon Zimmerman
Yeah.
- [26:09]
Larissa
Okay. Yeah, I liked, I liked what you.
- [26:11]
Liz
Said, Sharon, about the ROI of the efforts rather than like building that into your pricing. But I know Liz would agree with me. That's what makes reporting so important. So the you important because roi, like you specifically mentioned, like subscription costs for tools, but it's also the time you're spending on the marketing activities and the other activities. And I think a lot of designers think they have to be in all the places and do all the Things and take like a spray and pray kind of approach to marketing, but knowing where you're having the most impact and where the ROI is coming from, that's going to help you in the long term.
- [26:51]
Sharon Zimmerman
Absolutely. And I actually look at my stats. I use a platform called Plausible for my website stats because it's got just a really simple interface. It's not quite a Google Analytics level, but it gives me what I need to see. And it was actually how I tracked that putting some effort into Both Pinterest and YouTube was having far more of an impact than Instagram was. And it really helped me shift my energy because I was like, well, if Instagram isn't going to lead to like clicks to my website and therefore bookings on my discovery calls, then is it worth me spending time there? Whereas with YouTube, like there's a potential for monetization in the future and with Pinterest it was leading people to purchase my E courses and I'm like, well this is a more direct ROI for me. Is it banana pants Amazing. No, but it is a better use of my time and energy to focus on those two platforms where I can show up and be effective than on the meta platforms where I'm frankly not. I, I don't think I even show up for some people. And everybody and you know to our earlier points about pricing, everybody will also have a different answer to this about where they show up. But that is why like looking at your stats and understanding your stats is so important.
- [28:06]
Larissa
Yep, I'm gonna move back to metal pricing. But do you have pushback from like or not pushback. But you know, I think that for a lot of artists and designers it's like, like hearing this like ROI and thinking about things in such like a business minded sense when they're like, I just want to create this thing and I want someone to find joy wearing it. Like people have a hard time making that leap of like, oh, I have to think like a business person.
- [28:32]
Sharon Zimmerman
Definitely. They definitely do. And it's not, it's definitely like an internal conversation that they will need to have with themselves and one that we will have to have together. But a lot of times we're talk talking about it because I do want artists to be able to sustain themselves. You know, if we go back a few decades into the US history of arts funding, there did used to be more funding for the arts. We did used to have more of a patronage system. Definitely some issues with the patronage system, but we don't have that anymore. We really not in any significant way, I can think of a handful of organizations that still do some arts funding where you could still get like fellowships and grants, but they are harder and harder to come by. And so now we kind of have to be our own support systems. If we ever go back to that, that place. I would actually love that. I would love it if there was more grant funding for the arts. I really, really desperately would. But in, in the gap that we have now, we are going to have to fill that for ourselves. And I think that's partly the reason why I do what I do is to help people with that process. Because I did not have a background in math, I did not have a background in business, I did not really have a background in financing. I was often like plugged into like light bookkeeping roles at various jobs that I had. But my path to getting to this point where I could read a balance sheet and help people with cash flow projections and do this kind of pricing strategy work was something that built over the course of almost 20 years and it wasn't an overnight process. And so I do share with people. I learned to find a joy in the craft side of running a business business, right? Like how this all worked together. Like, I love systems thinking. I love seeing how all of these things are connected. And that's kind of how I backed my way into this. But it wasn't, it was not a direct path for me at all. And I often share that with people. Like I was. I mean, I'm, I'm actually like honestly pretty anti capitalist in my personal life. But I want people to be able to find some sense of financial independence through this. And to do that, it is going to take learning and building some of these new tools and skills. And it isn't in that sense. It isn't actually that much different than picking up new tools and skills in your own like hands on craft, right? Like you can learn to read. I'm. I was telling Liz before we started recording, like, I've picked up sewing as a hobby in the last couple of years. It's been an on and off hobby for a while, but it's been my core hobby for the last two years. And I'm still learning new things and I'm learning how to read new instructions and I'm learning how to pick up new techniques. And it's really not that different for me personally than it was to learn how to read a spreadsheet and learn how to integrate what I could read from a spreadsheet into my business. And so I've Been working on the language that I use to really help people understand. Like this is also a craft and a skill. And it's one that I think like you even see this actually in like big business and tech companies like the CFO always kind of gets like crapped on, right? But, but it's, it's a very necessary part of running a business that often kind of gets the shaft. And I think that when I've seen businesses up close that pay a lot of attention to their finances, I was very lucky to have worked in the industry for a designer who had a core focus on the business side. And I learned so much from doing that. And I also learned that that was how you turned a profit. And I learned that that's how you could do things like offer your employees sick pay and offer them year end bonuses and make sure that they had like steady income. Like it happened. Because you turn and look at the business side of what you're doing and make sure that that's sustainable and supportive of your staff.
- [32:19]
Larissa
I think that's a good segue to how do you know when to raise your prices? Like obviously there's a lot of fluctuations in the metals market right now, but what are the signs that you should head that direction or really look at your pricing?
- [32:36]
Sharon Zimmerman
So I love this because it's, it's again one of those things that doesn't have like the firmest answer. It is going to go back to what your business is saying. Something that I've been talking a lot about lately is the profit margin that's ideal versus the profit margin that you can live with. And that's going to be a different answer for everyone. But it is a little bit basic based on feelings and it's a little bit based on math. So ideally you should know what your ideal profit margin is on a piece and you should know what that is at the wholesale level and you should know what that is at the retail level because those will be different profit margins. Wholesale is less profit, but more volume. Of course, retail is more profit but usually lower volume depending on the business. So knowing when to raise your prices is when that ideal profit margin starts slipping. Right. So if your profit margin at wholesale used to be 40% and now it's 35%, is it time to raise your prices? Maybe. Usually this is when I would start plugging some numbers into either a profit and loss projection or a cash flow projection to see what it means to shrink your profit margin 5%. Like, do you need to sell more volume? Do you need to Change your prices. Like, there's usually an answer hidden somewhere in there. So that's one thing. The other is kind of a feeling. So I referenced earlier the. The feeling of, like, oh, I didn't know about the credit card fee, and I didn't feel good about that. Was I actually in dire straits from, like, losing out on, like, $200 worth of credit card fees? Not really. I was just having to make choices that I didn't want to have to make. Right. So it was actually a little bit based on a feeling for me. I was like, oh, I don't like that. I don't like that at all. I'm going to raise my prices. Right. So it was. It was a little bit feelings based for me personally. But knowing when to raise your prices is going to go back to the reporting Larissa was talking about. Like, you're going to need to know when that profit margin shrinks to an uncomfortable level for you.
- [34:40]
Larissa
I'm going to ask another question, and then we're going to move on to chat with insiders. But what are you seeing with the rising cost of gold? And how are you. How are you consulting the designers you're working with to move forward?
- [34:56]
Sharon Zimmerman
You know, it's. It has been such an interesting kaleidoscope of responses. So on the one hand, I'm definitely seeing some designers return to working in things like silver, bronze, gold fill, gold plate. If they had been working in gold. And they're not giving up on gold, they're just shifting a little bit back into some more approachable price points. I have this feeling that if gold prices ever come down, that pendulum will swing back. Because I think we saw this back in like 2008-2011 with that gold uptick. A bunch of designers started working in bronze. A bunch of designers started working in gold fill, especially if they were just starting out. So I am seeing some swings back and forth with the materials people are using. An interesting discussion that I have been having with a number of designers, both in my circles and as clients and students, is about the platinum versus white gold. Because right now, even though platinum is. Platinum's less expensive, but it's very dense. And so usually, like, if you do like the same item in platinum and the same item in white gold, platinum will still be much higher. But because gold is so high, those prices are kind of even like, I actually did a spot check. I took an old piece of mine that I used to sell in a variety of metals, and I compared what the 14 karat white gold price was to the platinum price and they were the same. And so one interesting aspect has been that if you are a jeweler who has done any work in platinum in the past, now might be a great time to reintroduce that because you're still selling a fine metal, it's still on brand for you. But if the price is going to be the same for 14 karat white gold, why not get the platinum instead? Right. And I can see that that would appeal to certain consumers looking for fine jewelry. The other thing that I've been seeing a lot more of, and I will anticipate that as skills build that we'll see even more, is remaking people's old jewelry. So turning old jewelry in for scrap, reusing the stones to remake something instead of the getting something completely new. So I've definitely walked a few more designers through the process, through their own process for how they can manage that kind of client communication. So those are two. The, the materials changes are, are definitely having an effect. And then there are some designers, if they were already selling fine jewelry before, for some of them, like raising their prices 10%, 20%, like they're not necessarily noticing a drop industry wide. I believe that there's been a little bit of a drop in volume, but because of the higher gold prices, like some of the revenue has been greater. So it's been a mix. I'm going to be interested to see what happens after all of the summer trade shows are done to see what retailers decide they want to do if they're going to be picking up new lines, if they're going to be going in deeper with the lines that they already know if they're going to be buy all in on gold. I still think that I have a lot of question marks around that, but I, what I am seeing in a lot of solo designers is a, is a, there's a lot of openness and flexibility which I'm actually really impressed by because I think that now is a time to be open to, to change.
- [38:12]
Larissa
I love that I've seen designers who were working in high karat gold move to mixed metal and have success, especially if they move in their voice and you know, their creativity and their aesthetic. Like, I've seen a lot of really cool things coming out. And then I've also noticed some retailers who have been primarily fine jewelry in the past, like which sterling silver is a precious metal, but using more to silver, which I think is interesting to kind of see that marketing take place because I've heard those rumblings over the past year. But to see it kind of like coming out like, oh, silver stacks versus like seeing yellow gold all the time for the past how many years. It's interesting.
- [38:52]
Sharon Zimmerman
Yeah. And I, I do wonder too how that's going to be informed by consumer desires. Because some consumers are like, I won't wear anything except for white metals. Other consumers won't wear anything except for yellow. Personally, I'm a mix of rose gold and silver girl myself. So I'm going to be interested to see like, how consumer sentiment also plays into this because I do. I spend some time on Reddit and there's a number of like jewelry and jeweler subreddits on there where sometimes, sometime consumers will post questions about, hey, why did the price of this ring go up so much? Like, I had it in my shopping cart last year, six months ago, and now it's like $200 more. And every jeweler is like, okay, well this, hello and welcome to our world. This is just what we're dealing with right now. And the prices are going up. So I'll be interested to see if consumers decide to go ahead and purchase now because they think gold prices might go up if they'll make a shift to silver or even like, I know Liz, you've worked with a lot of designers who work in like totally non traditional materials and I think there's a lot of growth in that side of the industry right now. So I and also like to mix in with all of this like diamond prices have also been all over the map and like dropping in some cases. So I think we're in for some interesting times I think over the next year. But I think that there I'm seeing a move more to silver at the moment, as I mentioned, somewhat of a move to gold fill, but for designers who have worked almost exclusively in fine materials. So silver, gold, platinum, gold fill is actually a really hard sell for them as metalsmiths and also for their customers. It's just not. It doesn't have the same reputation. But yeah, I think we're gonna see some really interesting changes.
- [40:41]
Larissa
Definitely. So before we move on to chat with insiders, how can designers work with you? And also you have a new podcast.
- [40:49]
Sharon Zimmerman
I do. So if designers want to work with me, I will definitely be sharing a link. It's sharonz-consulting.com is my website and I have a few ways I work with with clients on bespoke projects all the time. I can help with business plan writing. My core focus though is on your finances, so helping you with financial projections and what they tell you about your business and where it needs to go. And then I do have a pricing strategy, one on one offering. And that has been one of my core offerings for a while.
- [41:22]
Larissa
And tell us about how we can listen to your new podcast.
- [41:25]
Sharon Zimmerman
Oh yes. So my new podcast is called welcome to Running a Business. It is a podcast that I have with my co host, Alana Rivera. She has a background in bath and body care development, had her own bath and body care line for over a decade. And we talk about, we talk to other business owners and to each other about all of the things wrapped up in running a business. And we are all on Patreon.
- [41:47]
Larissa
Love it.
- [41:48]
Liz
Awesome.
- [41:49]
Larissa
Thanks for being here.
- [41:50]
Sharon Zimmerman
Yeah, thank you.
- [41:52]
Larissa
All right. Do you feel confident about your pricing? Let us know. Visit successwithjewelry.com and if you love the podcast, we'd love to hear from you. Send us a message or leave us a review. Thanks for being a part of our community.