How much is a necklace worth?

My friends have been telling me that my prices are too low. Over the past few months I've gradually raised my prices from the the $20-$30 range to the $40-$60, which I thought was pretty ballsy of me. Then I did some looking around and was startled to find pieces similar to mine going for hundreds of dollars. Not that the people charging those prices are out of line - it just made me wonder, where does the value in a piece of jewelry come from?

Right, this isn't neuroscience - there are standard formulas out there for pricing jewelry and all of them are some version of cost of the materials + overhead + hourly wage for the artist. So the difference between a $40 pendant, like the one on the right, and a $315 pendant should come down to things like the quality of the materials used, how long each took to make, differences in overhead, and the wage each artist pays herself.

Let's break it down for these two necklaces. Both are made of sterling silver and fine silver (PMC) - the prices for those materials are fixed by the silver market so the only really substantial variation is going to come from quantity. My pendant is smaller, about half the size of the other one. The freshwater pearl is definitely a less expensive embellishment than the fossilized wood - hard to tell by how much. Let's say the raw materials for the other necklace cost twice as much as the raw materials for mine.

Hourly wage for the artist is is much trickier - and not just because people work at different speeds or pay themselves differently wages. Do you count just the time you actually spend working on this very piece or do you count the hours you spent coming up with the design and refining it? What about time spent sketching? or buying materials? (or is that overhead?) It only took me about an hour to make my pendant - but there were many other hours spent trying to figure out how to work with PMC, trying out different shapes to get the curves I wanted, texturing and re-texturing, etc. I don't figure that into the selling price - maybe the other artist does. As for overhead, let's assume we both added in about 10% of the base price.

Working through this makes me think I did undercharge for my pendant - the price should've been more like $60. That's still a long way from $315. So where does the other $255 of value come from?

It could be quality of workmanship: I'm still a beginner and there are lots of things I do that could be improved. For example, the back of my pendant isn't finished very well - it's reasonably smooth, but that's it. I've seen pendants with lovely patterns, design elements, or artist marks on the back -- all of which make the jewelry look much more professional.

It could be that the other artist pays herself a significantly higher hourly wage. I could try doing that, but would anyone buy my jewelry then? Now we're getting to the real issue: what will the market bear? Do you have a product that people are willing to pay a premium for? Clearly the other artist does and, just as important, she's found the people who are willing to pay the premium. And you know what that means, don't you? Promotion, marketing - my twin nemeses. I can work on my jewelry-making chops all I want, but if no one knows about it, my prices are going to languish in the middle two figures. Is doubling, or even tripling, the price of my jewelry worth the extra marketing and promotion I'd have to do to make it salable at that price range? Does the extra income balance the time and mental anguish of getting out there and selling? Honestly, I don't know.