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Charging for Custom Work


#1
...most of my work is now custom work, and the design work for a
customer can take as long as the actual work at the bench, so the
time crunch can get pretty hairy sometimes... 

This comment is excerpted from Jan’s response on another thread, but
it spurred me to pass along something I’m just starting to deal
with, and learning the hard way.

Here it is–

When you have to give a price for custom or special order work,
quote twice what you think the piece is worth, because the
back-and-forth with the customer will take so much of your time.

Twice recently, I was asked to do a piece for a customer “just like
that one except…” a different size, or some other "minor"
difference. I quoted the same price as the original, which I had
made with no one to please but myself. Big mistake!

Also, I’ve got to keep myself from giving prices off the top of my
head. I always underprice when I do that.

I mention these things in case someone else can learn the easy way
what it is costing me so much to get through my head.

I can’t remember where I heard it, but someone once told me (or I
read) “If your toes don’t curl [when you quote a price] you’re not
charging enough.” I think there’s a lot of truth in this. Those of
you who do a lot of custom work-- how do you set the price? Is it
just mostly a matter of experience? Did you do a lot of "bargain"
jobs before you figured it out? I don’t want to scare off a big job,
so I don’t charge enough. I’m afraid I’ll be like Milo Minderbender,
losing a little on each transaction but making it up in volume ;>).
(That’s a reference to Catch 22)

–Noel


#2

Noel- well this is a tall order! there are some rules like triple key
etc. that everyone must follow then there are other things in my
brazen opinion that you should calculate on your own, such as over
head + - the going rate for your area. then of course the celebrity
factor ie how famous are you? and the common sense factor,
example,are they lined up outside your door ? now for me in my
situation ive calculated it down to how much per minute my time is
worth for my shop to make a profit. this comes in handy when i am
assaulted by telemarketers or sales people who cannot read the orange
sign on my front door that say’s “sales calls by appointment.” back
to serious…you solved your own problem by saying “every time i
price somthing off the top of my head” if it was me ( im going to do
this today since ive now given you advice and i am dutifully bound)
put up a small yet attractive reminder in some form be it subtle or
to the point,to remind yourself to price quote in an enlightened
manner. and remind your self that you are not the only one under
qouting jobs, i did it myself last week ! best regards goo


#3

Hello Noel,

... Those of you who do a lot of custom work-- how do you set the
price? Is it just mostly a matter of experience? Did you do a lot
of "bargain" jobs before you figured it out?

Good questions, and none too easy to answer I’d wager.

I’ve been doing nothing but custom orders the last three months and
I’ve lost my shirt on just about every job, largely because I priced
it “off the top of my head” as you said. In just about each and every
case I should have charged double what I did, at least.

On the other hand each job took me into new areas and I’ve had to
learn a lot of new stuff along the way so I don’t much feel like
complaining about it. It’s been a lean few months but I’m a better
jewelry maker because of it.

Cheers,
Trevor F.
in The City of Light
www.touchmetal.com


#4

Noel,

Using Mr. Geller’s Price Guide will generally keep you from ever
losing money, and likely allow you to make more money from custom
work than you ever dreamed. You simply open the book to the correct
page, and the numbers are there in black and white. Customers will
generally not try and work you down in price, just simply make a
decision as to whether it’s worth it to them or not. I have used his
book for many years now, and find that the biggest problem is my
employee’s “toe-curling” attitude much more problematic that our
customer’s resistance to paying.

No relationship, just a satisfied customer.

Jon Michael Fuja


#5

Hi Noel,

Assuming that you are not a bench jeweller, I feel its only by
experience that one learns how to determine the labour for an item.
I tried by showing the design to different bench workers, getting
their labour prices, and then negotiating with them to get the best
bargain. At times I set prices lower than what job was worth, just
to test whether any one picks up the job. If not you can rest assure
that the job demands more labour.

The more you understand about the nature of work involved, the
better it would be for you to determine a range for your labour
costs. That solicits knowledge about jewellery manufacturing. Books
and practical experince can help a lot. For example a necklace which
has a repeated pattern will have less labour than one that does not
have. Quite obviously, the first one can be easily casted and it
turns out to be much cheaper than the second one which involves more
of hand work.

Now, assuming that you are a bench jeweller, I prefer being
reasonable at all times when quoting customers to gain their trust.
I dont believe at all in quoting them twice the amount as you have
put it. Stick to one price. Be reasoanble so that the customer
returns back to you. Take you setting charges, polishing and filing
losses into consideration which fixing labour estimates. Again, i
reiterate that the nature of will invloved will help you determine
the level of labour price that a particular job demands.

Last but not least, the field of jewelry manufacturing is a field of
illusion. At times you feel that the job seems easy but turns to to
be difficult when actually done. More loss of precious metal can
occur than estimated. Experience only helps you to fix a range for
your labour costs and not a fixed value. Once you establish a range,
rest is all illusion.

Thanks
Rahul Rampuria


#6

Hi Noel, I finally got it through my thick skull not to give prices
off the top of my head. Even when pressured by the customer for a
ball park. I am always way out of the ball park when I sit down and
do my homework for the cost of parts and labor. What has worked for
me is to say I have to have some time to figure out the design and
costs, please come back in a day or so and we can talk about it
then. I save a lot of hassle and the ones that don’t come back
weren’t serious anyway. I have been making jewelry for almost 30
years now and I really wish I could go back and get paid for some of
the wonderful things that I really missed estimating the price on.
Live and learn,

Janine in Redding, CA


#7

Noel:

I have done what you are talking about too many times myself. The
new method I force myself to use, take the order, all the details,
and tell them you will call them tomorrow or later this week with the
estimate, give yourself time to think it through. They will wait that
long if they are truly interested. I carefully think through the
entire job and picture every step, all the materials I will use
including ordering the materials I may need, then double the amount
of time I think it should take. How many times I have given a price,
cringed myself as the words came out of my mouth, to have the
customer say…“OK, when will it be done??” That was too easy! IF
you don’t get the “big job” because your price was too high, go make
something else you have been wanting to make and have fun.

Kathy
www.kathyanderson.net


#8

to all - navigating the stormy sea of custom pricing with the winds
of discount store import pricinig in our faces and the gales of
consumer low price vs. quality demands. doesnt it make me wax poetic
(sp?). ive given up trying to make alot of $ for my time ever since
9-11 ive made almost exclusively custom bridal. basiclly you try to
cover as much of your cost as you can on the time and then kickit on
the diamond sale. ive found if you want a profit yove got to triple
key and lock your feelings up in the back room somewhere. eventually
you either get better @ pricing or do somthing else i havent found
any easy answer to this question. there was mentioned in a recent
post a reference to a book by mr. gellar a pricing guide which i
hope to find so i can hopefully learn to function in a more
businesslike manner. where i live i get customers who cannot even
conceptualize (sp?) that jewelry can be made in a small shop let
alone justify paying a premium for a quality piece - then i get those
who dont even give me specific details of what they want" just make
me a pendant… " they pay the bill and leave smiling. it’s mind
boggling - goo


#9

Charging for custom work can be a little tricky but it doesn’t need
to be as complex as some of you are making out. The first thing you
should do is establish a base price for any new design you are
doing. This price should not include stones or additional settings
for stones, just simply a price for the metal and design work. We
have ours set at $750 in gold (platinum is higher simply because the
cost of goods is so much higher). Unless you’re doing a really
chunky, heavyweight piece (having written this and thinking about the
price of gold lately I may have to boost my starting price), a
starting price in this range should give you enough of a jumping off
point with most customers. It also weeds out the chaff–those who
really aren’t interested in having you develop a new design for. The
other advantage of having a base price like this is that while on
some work you may not make quite as much as you would like (if you
screw up and don’t quote higher than the base price) on some jobs
you’ll make a lot of money which can help pay for the times you screw
up. You should also remember that there is absolutely nothing wrong
with giving a customer a quote that covers a range in pricing. If
you’re simply not sure if the piece will be $1000 when it’s done,
tell them it will be between $1000 and $1500. If it comes in at a
grand they will think they got a deal and if it runs higher you can
still make your money on it.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
617-2344392
www.spirerjewelers.com


#10

Hi Noel,

Assuming that you are not a bench jeweller, I feel its only by
experience that one learns how to determine the labour for an item.
I tried by showing the design to different bench workers, getting
their labour prices, and then negotiating with them to get the best
bargain. At times I set prices lower than what job was worth, just
to test whether any one picks up the job. If not you can rest assure
that the job demands more labour.

The more you understand about the nature of work involved, the
better it would be for you to determine a range for your labour
costs. That solicits knowledge about jewellery manufacturing. Books
and practical experince can help a lot. For example a necklace which
has a repeated pattern will have less labour than one that does not
have. Quite obviously, the first one can be easily casted and it
turns out to be much cheaper than the second one which involves more
of hand work. Now, assuming that you are a bench jeweller, I prefer
being reasonable at all times when quoting customers to gain their
trust. I dont believe at all in quoting them twice the amount as you
have put it. Stick to one price. Be reasoanble so that the customer
returns back to you. Take you setting charges, polishing and filing
losses into consideration which fixing labour estimates. Again, i
reiterate that the nature of will invloved will help you determine
the level of labour price that a particular job demands.

Last but not least, the field of jewelry manufacturing is a field of
illusion. At times you feel that the job seems easy but turns to to
be difficult when actually done. More loss of precious metal can
occur than estimated. Experience only helps you to fix a range for
your labour costs and not a fixed value. Once you establish a range,
rest is all illusion.

Thanks
Rahul Rampuria


#11

HI Noel,

You have hit a nerve there with your post. I know I do not charge
enough for my custom work, probably because of my insecurities: I
don’t think my work is good enough; I am very slow, so I feel I
can’t charge for my time when I should be able to work faster; I’m
afraid I’ll scare away the business if I charge so much. All of which
may be true, but I am trying to be bolder. Maybe by the time I’m 90
I’ll have it all figured out :–)

Jan


#12

A ballpark estimate? Take your 1st guess and add a zero to the end;
then when the real estimate is lower they will be happy, and you will
be adequately paid.

(My under experienced.02 lira)


#13
Give them the flinch test. Say, for example, you are making a
custom pair of glasses. Give them a price, say $500. If they don't
flinch, quickly add "plus lenses...

My own variation on this is to say that most custom jobs start at
$1,000 and go up from there.

Most jewelers and goldsmiths I know (myself included) are notorious
for under pricing, and thereby under valuing their work. I have a
rudimentary formula I use, and I try to estimate on the high side. I
even developed a spreadsheet that tries to cover every conceivable
possibility for custom design. It’s amazing how much can go into what
seems like a simple piece. Everything always takes longer and costs
more than you think it will.

-BK in AK


#14

I ordered David Gellar’s price book and ended up returning it as I
could not use it because the prices were too…Low, especially in
custom work. I worked hard and made my own price list for repairs.
(BTW I still think Gellar’s one of the star assets in our industry.)

After 20 years as a custom design studio store
(http://foxfirejewelers.com) I am really starting now to struggle
with prices. Diamond sales have been eroded by the internet and
those we do get are at lower margins. Meanwhile any prospective
employees who are even remotely competent seem to want way too much
money. Medical and dental insurance is through the roof. I’m squeezed
between expenses and gross to the point that even a decent month
finds a tight bottom line at bill paying time.

We just got the repair price list formatted as a spreadsheet so we
can raise prices as needed. Think about it- how much was gas three
years ago, how much medical insurance, how much gold, but have you
raised YOUR prices? If you add up your overhead and expenses and
they total $90 on a $100 job (a profit of $10), that means that if
you raise your price just 10%, to $110 your profit doubles(a profit
of $20). But I digress.

Custom work is the one thing they can’t get anywhere else. No volume
discounter type is capable or even interested. Our custom rings now
start around $700-800, but far more typically are $1,100 to 1,600
not including stones. Platinum we charge 3x for. I think maybe our
prices still aren’t high enough… or maybe they are and it’s just
the goofs we make and lowball that are hurting us. Think about it,
the last time you did a big man’s ring that should have been $1,300
for only $900 (like we did this week), you didn’t lose $400 from your
gross- you really lost it from your net profit.

I am going to create a custom price list that takes all these
factors into account, and still allows me to quote a firm price up
front, to save me from mine, and my employee’s pricing goofs.

Michael Babinski
Designer Goldsmith
Foxfire Jewelers


#15

just an observation from my point of view. everyone has said the
same thing about charging for custom work. insecure, worried about
business walking, etc. Heres the bottom line. If the customer can go
across the street and get the job done cheaper with the same quality
standards, then go across the street. the beauty of custom work is
that the piece is a one of a kind piece wheather it is a copy of a
piece they saw or not. it was made by you for them.

dont underestimate yourselves. if someone really wants to have a
custom piece then charge them for what you have invested in the piece
they want, stones, metal, and time. stones, excluding diamonds,
triple key, metal, excluding platinum, triple key, time, whatever you
think it is worth. if someone brings in a job for you, set your
standards to what you think your time is worth. the materials take
care of themselfs for price.

charge what you want or you feel is worthy of the diamonds and
platinum if need be. otherwise the main factor is the time it takes
to make the piece. we, the orchidians, are talented people. as are
others that know a trade or are blessed with a talent of any kind.
time of manufacture is the main concern for custom work. for what
it’s worth, in the last year, i have had 1 person complain about what
i charge for the work i do. and that was 20 dollars to solder 2 toe
rings together. cheap ass if you ask me. corner your market and do
what is necessary to put food on the table, and some extra to buy a
gift for your loved ones.

this isnt an industry of undercutting a higher seller. sell yourself
with the piece. if you feel the job is worth the time and expertise
you have to make, then the customer will be as happy as you are to
have it done. if someone wants a piece done, they will pay the money
to have it done. if they can get a higher quality of the same piece
at wal-mart, then tell them to go for it. the best quote i have heard
so far, “if your toes dont curl when you give the estimate, then it
isnt high enough.” you have to make money too. if you undercharge to
keep the job, who is the winner? the consumer. if you over charge and
loose the job, who is the winner? you because you now have time to
make something for someone that wants to pay the money. keep in mind
the market around you. stay consistant with other custom makers. the
customer will stay with the people they trust most. Sell Yourself

Andrew
Sandy’s Jewelry/ Carr Fine Jewelry


#16

At the store that I work at, we charge a flat fee of $250 for the
design, and carving. Then $110 for each DWT of gold used (that’s
14k). On top of that we use gellers book for setting and soldering
fees, and the price of the stones. It seems to work out pretty well.

Phil


#17

You do have to charge for your work. Luckily, there seem to be a
shrinking number of hand craft goldsmiths out there. Those that
remain should be able to charge a living wage. Figure your needs and
overhead, divide it by 40 hours and thats your rate.

If you want to survive in this market, you must do fine work and
charge for it. Globalization is killing off mediocre craftspeople. If
you are in the U.S. market with no overhead to speak of you should be
charging $40-50 per hour, at least.

Richard
www.rwwise.com

For Information and sample chapters from my new book:


#18

Hi Noel,

I think the problem lie in honesty, self respect, and considering
other people.

Some people does the same job in twice the time as the others do.
For example even though I have been making hand made custom jewelry
for years, it still takes me an awful long time to finish a piece,
perhaps I go too much in detail or perhaps thinking for changes
while performing, so what happens is that a feeling of overcharging
takes over if I take time and effort in to consideration. Now,
reversing that thought, it might take you less time to carve or
produce some thing which others may spend a lot of time on it, then
if you charge what they charge, you might feel you have overcharged.

Then of course there is the problem of the piece coming back and
forth for little changes the customer requests, as a gentleman
mentioned in an earlier post, which takes up a lot of your time, so
that’s another thing to consider while calculating your charges so
that you don’t undercharge. It is a vicious circle!

So I actually couldn’t find any solution to make myself feel
comfortable yet in that respect.

Best of luck and regards,
ekrem.


#19

I have read a few of the comments about charging for custom work,
add this to your questions. How about the the person that does both
wholesale and retail custom for. Should there be a difference in
those prices? Is labor the same and just the charge for materials is
different? I won’t go into it, but it does present new problems? What
do you think?

jon dinola


#20

When I had my store (sold it in Jan 2000) we did 1.8 million in
sales, 3/4 of that from the shop. My price book was developed froma
time study and paying commission. You don’t have to pay commission to
the jeweler to make money, just know how much to charge.

Paying commission helped me find the right price. We pay the jeweler
26% of the labor. Add in matching taxes and such and the jeweler
costs you 33%.

You want a 3 time markup on labor.

Then add in materials, usually 3 time, up to about $300 cost.

Paying jewelers on commission told me the price was right. If I
charge $500 to hand carve, cast and polish (gold extra) and I pay the
jeweler who did ALL OF THAT WORK 26%, then SHE (:slight_smile: ) would be paid
26% of the $500 OR $130.00.

If she spent, with interruptions, 5 hours, divide $130 pay by 5 and
she made $26 per hour. Does $26 per hour make an employee happy? If the
answer is yes then I know one big thing:

“$500 is the right price to charge because with a 3 time markup the
jeweler is paid over $50,000 a year”

If on the other hand the jewelers take 9 hours to do that job, 9
divided by $130 equals $14.44 an hour. If that’s too low of a wage,
then either the jeweler is too SLOW or we don’t charge enough.

If you or someone else can do it faster, get that person to do the
job and charge $500.

But if no one is fast enough to take a 9 hour job down to 5, RAISE
the price to $865 and she’ll make $25 an hour.

That’s how I did my book. I know my prices are correct.

Here’s the stats:

A. I have 2 books. Version 3.2 is good for jewelers with 2 things
going:

  1. Average product sale is LESS than $300 
  2. The jeweler is paid UP TO $35,000 a year. 

B. Version 4.0 is good for stores with:

  1. Average product sale over $350. 
  2. Jeweler earns $40,000 to high $50's a year. 

More stats:

When 10 customer walk into a store looking for a showcase piece,
TYPICAL stores sell only 3 out of the 10 (30% closing ratio)

When 10 customer walk into a store looking for a repair, TYPICAL
stores sell 9 out of the 10 (90% closing ratio) NO MATTER WHAT YOU
CHARGE!

When 10 customer walk into a store looking for a custom piece,
TYPICAL stores sell 7 or 8 out of the 10 (70-80% closing ratio) NO
MATTER WHAT YOU CHARGE!

You should be more worried that when 70% of customers walk after
looking in the case, leaving you with over 1/2 million dollars in
unsold OLD inventory than a few walking from a custom job.

As a gift, here are the custom design prices for version 3.2 and
version 4.0. LABOR ONLY, charge extra for gold.

You can see more of my book at my site, comes with 30 day money back
guarantee and CD’s to train the staff.

www.jewelerprofit.com

There’s also a free 10 page sample there to download as a pdf file.

CUSTOM PRICING 3.2:

$425.00 Ring, hand carved, Gold
$475.00 Ring, Detailed hand carved, Gold
$600.00 Ring, Filigree - 1, up to 1 stone hand carved, Gold
$700.00 Ring, Filigree - 2, 2 or more stones, hand carved, Gold
$675.00 Jaws Ring guard, hand carved, Gold
$325.00 Shadow wedding band, no stones, single (1), Gold
$500.00 Shadow wedding band, no stones, double (2), Gold
$350.00 Shadow wedding band, with stones, single (1), Gold
$625.00 Shadow wedding band, with stones, double (2), Gold

$120.00 Two Piece Casting - small area, Gold
$190.00 Two Piece Casting - medium to large area, Gold
$285.00 Three Piece casting, Gold
$180.00 Two Piece Casting - small area, Plat
$280.00 Two Piece Casting - medium to large area, Plat
$405.00 Three Piece casting, Plat

$35.00 Exchange one color of gold for another
$35.00 Exchange Dental gold for other gold
$35.00 Alloy a higher karat gold to a lower karat gold.
$35.00 Alloy a lower karat to a higher karat

CUSTOM PRICING 4.0

Custom Design-Carve, Cast & Finish
In Gold In
Plat
Shadow Wedding Band (1) - Plain $400.00 $475.00
No stones. Contured to fit customers

Shadow Wedding Band (1) - For round stones $450.00 $525.00
Contoured to fit customers engagement ring.
Layout for round stones.

Shadow Wedding Band (1) - For fancy stones $500.00 $575.00
Contoured to fit customers engagement ring.
Layout for fancy stones. i.e. princess cuts.

Typical Rings: Custom Designed, labor only
In Gold In Plat
Ring - Normal $530.00 $600.00

Ring - Detail 1 $595.00 $675.00

Ring - Detail 2 $700.00 $775.00

Ring - Detail 3 $875.00 $950.00

Additional Assembly Charges
2 piece casting, small area $145.00 $188.00

2 piece casting, large area $235.00 $320.00

3 piece casting $325.00 $410.00

These are the prices to carve a wax, invest, cast with someone’s
metal (if yours, charge extra) and to file up and polish. The "PLAT"
column is more labor because polishing plat is a pain.

For some of you this is scary. But look at the “I don’t make any
money” posts.

I almost went bankrupt in 1986 doing as many of you do. Then I went
to commission and 5 years later did the book to help my 5 member
sales staff price without me. I had the costs for labor (commission)
and the cost of parts from Stuller, only took 2.5 years to make it a
book.

When we opened the book up and pointed, here were the stats

90% of customers bought the repair
70-80% of customers bought the custom job.

ABOUT the same as when I was lower in price. Even then, with higher
prices we delivered custom in 6 WEEKS.

You have to advertise it too. We advertised every week in the paper
that we did custom.

When charging the customer for custom, make 2 columns on a piece of
apper

LABOR MATERIAL

Add up parts and pieces for both, then ADD THE SUBTOTALS together.

If the customer squawks you can talk more about them and IF you have
to come down "We can’t discount labor, but maybe I can do better on
the diamonds).

It works.

Any questions, happy to answer them

David Geller

JewelerProfit, Inc.
510 Sutters Point
Atlanta, GA. 30328
(404) 255-9565 Voice
(404) 252-9835 Fax
david@JewelerProfit.com