How to price a handmade silver commission: a worked method

What to take away

The method below is shown with one illustrative commission: a sterling-silver pendant with a supplied oval cabochon, a 52 by 31 mm forged frame, and a 460 mm purchased sterling chain. Every figure in the example is a made-up input chosen to show the arithmetic. Replace them with your own supplier records, hours and overhead before you quote.

Define the baseline

Inspect and photograph the supplied stone before work starts, and state that you do not guarantee its identity or durability. The customer should approve a dimensioned drawing and one metal finish sample. Record the boundaries in writing: the frame dimensions, the finish, the chain length, and the stone as received.

The quote should also list its exclusions: chain-length changes after ordering, stone replacement, rush delivery, and repairs caused by third-party work. Put these beside the price, not in a clause the customer sees after payment.

Estimate direct materials

Price each purchased input from a current supplier record, and add a cutting allowance for sheet and wire. Record any scrap recovery separately at a conservative value. Do not subtract it from the invoice as if the metal had already been recovered.

In the example, the direct inputs total $96.50: sterling sheet and wire for the frame and bezel at $48.00, the purchased 460 mm sterling chain at $36.50, and consumables such as abrasives, solder, pickle and polishing compound at $12.00.

Estimate labor by stage

Log the hours for each production stage, then multiply by one internal labor rate. The rate is your cost of productive time, not the customer-facing price. In the example the rate is $38 per productive hour.

Labor is a real cost. Do not set it to zero to make the job look profitable. Business profit is added later and cannot replace payment for productive work.

Allocate overhead and selling cost

Calculate overhead per productive hour: divide your yearly costs for workspace, insurance, equipment, maintenance, safety systems, software, administration and nonbillable time by your expected productive hours. In the example that rate is $21 per hour, so twelve hours carry $252 of overhead.

Add payment processing, insured shipping and fulfillment as a separate line. In the example that is $54. The full cost before contingency and profit is the sum of the three parts:

$96.50 direct materials
+ $456.00 direct labor
+ $252.00 allocated overhead
+ $54.00 selling and fulfillment
= $858.50 estimated full cost

Add defined contingency and profit

Name the uncertainties before you add any allowance. In the example there are two: forming time for the forged frame, and one permitted design adjustment before approval. A capped contingency of $86, about 10 percent of the full cost, covers them. It is a pricing allowance, not a promise that the money will be earned.

Add a target profit of $190. The example then gives $858.50 + $86 + $190 = $1,134.50, rounded to a pretax quote of $1,135. Sales tax stays outside that figure and is added at the rate that applies where the sale is sourced.

Run this check on every quote. If a price does not cover full cost and the planned profit, do not discount it quietly. Change the scope, the price or the terms.

Name the marking and tax rules

In the United States, marks such as "sterling" are governed by the National Stamping Act (15 U.S.C. §§ 291–300), and the Federal Trade Commission's Guides for the Jewelry, Precious Metals, and Pewter Industries (16 CFR Part 23) cover how products are described.

In the United Kingdom, hallmarking is compulsory for articles above the legal weight thresholds under the Hallmarking Act 1973. The four assay offices (London, Birmingham, Sheffield and Edinburgh) apply the marks and publish their current fee schedules. Check that schedule before quoting, and add the fee as its own line.

Sales tax is administered by the state tax agency where the sale is sourced, usually the state department of revenue. Confirm the rate with that agency before the invoice is issued. A custom quote stays pretax, and the invoice adds the tax that applies.

Set payment and change controls

A signed agreement should state:

The customer owns the delivered object, not the maker's tools, reusable samples, or general process knowledge. Address photography and design-use permissions separately, and do not infer them from payment.

Reconcile the finished job

After completion, compare actual hours, material use, shipping and overhead with the estimate, line by line. In the example, the finish took 12.6 hours instead of 12.0 because of a second masked trial on the satin transition. The 0.6-hour variance is priced at the same $38 rate, and the next estimate for a similar piece uses the new figure.

Keep the original quote unchanged. The reconciliation is a separate record that shows what the job actually cost, so that the next estimate starts from evidence rather than memory.

What the example changed

Common questions

Why is a deposit not treated as profit?

It is a payment against the contract. Revenue recognition, tax and refunds follow your accounting method and your contract, so confirm them with an accountant.

Why does overhead rise when labor rises?

Because this method allocates overhead per productive hour. Another defensible driver, such as bench space, will give a different result.

Should unused contingency be refunded?

That depends on how the contract defines the fixed price and the allowance. State it before the customer signs.

Can the maker quote only an hourly rate?

Yes, under clear time-and-materials terms. The customer then needs the rates, the material treatment, a reporting method, and a cap or an approval trigger.