If your jewellery sells but the bank balance never seems to move, the problem may not be demand. It may be the price. A product can cover its components, look profitable in a sales report and still leave the business owner working for very little. Here is a clearer way to price jewellery for the business you are trying to build.
A profitable jewellery price has to pay for the piece, the sale, the business and the person running it.
Why materials multiplied by two is not a pricing strategy
The quickest jewellery pricing formula is often some version of ‘materials multiplied by two’ or ‘cost price multiplied by 2.5’. It feels reassuring because it produces an answer. The trouble is that it only works when the original cost already contains every expense and the multiplier leaves the margin your business needs.
For a bought-in piece, your supplier price is only the beginning. For a piece you make, the metal, stones and findings are only the beginning. The order may also need time, hallmarking, packaging, card fees, photography, returns, customer service and a share of the software, studio and marketing that allow it to be sold.
When those costs remain invisible, a busy month can be strangely unprofitable. More orders create more work and more cash leaving the business, without producing enough contribution to pay overheads or the owner. That is why pricing needs to begin with a true unit cost, not a convenient multiplier.
Build the true cost of one jewellery sale
Choose one representative product and cost it line by line. Use the amount you expect to pay when the next order is placed, not the amount left in an old spreadsheet. If metal or component prices move regularly, add a review date so the cost does not quietly become fiction.
Separate product costs from general business overheads, but include both in the decision. A unit cost tells you what one sale consumes. Your overhead calculation tells you what the whole range must help to support. The exact method can vary, but the costs cannot simply disappear.
- Materials, components or the supplier cost of the finished piece
- Your making, personalising, quality-checking and packing time
- Hallmarking, casting, plating, engraving or other outsourced work
- Packaging, inserts and any delivery cost absorbed by the business
- Payment, marketplace and commission fees attributable to the sale
- A sensible allowance for wastage, breakages, remakes and returns
- A share of overheads such as software, insurance, rent, photography and marketing
Your time is a cost before it becomes profit
One of the most damaging habits in a small jewellery business is treating the owner’s labour as whatever happens to be left. If a necklace takes 45 minutes to make, personalise, check and pack, that time belongs in the product cost. Profit is what remains after the work has been paid for, not the payment for doing the work itself.
Choose a realistic hourly labour rate and record the full active time attached to the product. Include preparation and finishing, not only the most photogenic part of making. For bought-in jewellery, there may be less bench time, but there is still receiving, checking, merchandising, listing and fulfilment work somewhere in the business.
This does not mean every minute of your week should be loaded onto one product. It means you need to distinguish direct labour from overhead and profit. Once you do, you can see whether a bestselling piece is genuinely productive or simply very good at keeping you occupied.
Know the difference between markup and margin
Markup measures profit against cost. Gross margin measures gross profit against the selling price. They are not interchangeable. If a piece costs £50 and sells for £100, the markup is 100%, but the gross margin is 50%.
For pricing decisions, gross margin is often the clearer measure because it shows how much of each pound of revenue remains after the direct product cost. The formula is: selling price minus unit cost, divided by selling price. To calculate a price from a target gross margin, divide the true unit cost by one minus the target margin.
A target margin is not a universal jewellery rule. It needs to reflect your model, price position, sales channels, returns, marketing costs and growth plans. Use it as a commercial test, then check the result against customer value and the market. Cost sets the floor; positioning and demand help determine the achievable price.
- Gross margin = (selling price − true unit cost) ÷ selling price
- Price before VAT = true unit cost ÷ (1 − target gross margin)
- A 50% markup produces a 33.3% gross margin, not a 50% margin
A worked jewellery pricing example
Imagine a necklace with £22 of materials and outsourced work. Making, checking and packing take 45 minutes, costed at £24 an hour, so direct labour is £18. Packaging is £3, transaction costs and allowances add £5, and £6 is allocated towards overhead. The true unit cost is £54.
If the business tests a 60% gross margin, the price before VAT is £54 divided by 0.40, which gives £135. A non-VAT-registered business would compare £135 with the value offered, its position and comparable products. A VAT-registered business selling a standard-rated product would need to consider the VAT-inclusive customer price and should confirm its treatment with its accountant.
Now test a promotion. A 20% discount reduces £135 to £108. With the same £54 unit cost, gross profit falls from £81 to £54 and the gross margin falls from 60% to 50%. The customer receives 20% off, but the cash available after direct cost falls by one third. That is why every planned discount needs its own margin check.
The example is deliberately simple and is not a recommended margin for every brand. Your figures may also need to account for corporation or income tax, stock losses, channel commissions and the cost of acquiring the customer. The useful part is the process: build the cost, choose the commercial test, then model what happens when the price changes.
Price for the business you expect to become
UK businesses must register for VAT when taxable turnover exceeds the current registration threshold. As at 6 October 2026, GOV.UK states that threshold is £90,000. Businesses can also register voluntarily below it. This is a turnover test, not a profit test, so a growing jewellery brand can reach it while margins still feel tight.
Do not wait until the month before registration to discover that your prices cannot absorb the change and your market will resist an immediate increase. Model the effect earlier. Decide whether the customer price would rise, whether the business would absorb some of the tax, and how each choice affects the money left after a sale.
The same principle applies to hiring, moving into a studio or adding a fulfilment partner. If the current price only works while you do everything unpaid from the kitchen table, it is not yet a scale-ready price. Build scenarios for the next version of the business before growth turns them into emergencies.
What current gold demand tells jewellery brands about value
Material pressure is not theoretical. The World Gold Council reported that global gold jewellery demand fell to 278 tonnes in Q2 2026, one of the weakest second quarters in its data series, while the value of demand grew across many markets. It also noted that customers adapted through lighter-weight jewellery and other value-conscious choices.
That does not mean every jewellery business should raise prices or make lighter pieces. It does suggest that fewer units sold does not automatically mean customers have stopped valuing jewellery. Some are changing what they buy, the weight they choose and the proof they need before spending.
If your cost rises, explain value with specifics rather than apology. Show scale, finish, construction, wear, materials, provenance and aftercare. Make comparison easier. A customer cannot understand why one piece costs more when both descriptions rely on the same vague words.
Check wholesale viability before approaching stockists
A retail price that works on your own website may fail when a stockist needs room for their margin. Before offering wholesale, start with the proposed recommended retail price and work backwards. Deduct any VAT correctly, the retailer’s buying terms, your product cost, carriage or agent commission and the operational cost of supplying the account.
If the remaining amount is too small, the answer is not automatically to accept it for the exposure. You may need a different construction, a higher retail price, a channel-specific range, a minimum order quantity or a decision that the product is direct-to-consumer only.
Wholesale can create useful volume, but volume magnifies the unit economics you already have. A poorly priced product does not become healthier when a retailer orders 30 of it. It simply creates a larger commitment to a weak margin.
Create a pricing review rhythm before margins drift
Pricing should not be a one-off decision made when the product is first listed. Review it when supplier costs change, when you add a sales channel, before a promotion and at a regular point in the year. Keep the old cost, new cost and review date visible so decisions can be explained rather than guessed.
Start with the products that matter most: bestsellers, highest-revenue pieces, labour-heavy personalisation, low-margin entry products and anything included in a seasonal offer. You do not need to rebuild the whole catalogue in one sitting to find the first serious leak.
- Re-cost the components, labour, packaging, fees and allowances
- Calculate gross profit and gross margin at the normal selling price
- Test the price after discounts, free delivery and marketplace fees
- Model VAT registration, wholesale and planned operational changes
- Check whether the page communicates enough value to support the price
- Set the next review date and record who owns it
Jewellery business consultant · Devon, UK · Clients worldwide