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Design Fee?

As the "Fab Four said, so many years ago, “The love you take is to
the love you make”.

Thanks for taking the time to be present and sharing your wisdom
with so many of us over the years. My grandmother would have called
you a real Mensch.

I wish you and Jo-Ann the best of what this season has to offer…in
its original conception… the celebration of kinship,
generosity, peace and joy.

aloha,
rp leaf

Hi Noel,

If you have an Idea how much you are underpricing things, percentage
wise, when you come up with a price for the customer add that
percentage, before speaking. Example: If you think its going to be
$100. And you undercharge by about 50% tell them $150. If they balk I
say, “I usually estimate high because I can always lower my price.
But I have a hard time raising it after the fact.” If you go high
with estimates it can end up covering the PIA factor you didn’t know
about. And if everything works out great, you can always come in
lower than your estimate and that makes them very happy.

Candy

So my question is, how do you arrange with the customer so they
feel comfortable, but the final cost isn't known until the work is
done? 

This is an easy one

  1. I ASSUME I was going to make them a ring or whatever.
  2. We discussed what they wanted.
  3. I then gave a hint up front of the costs.
  4. If they gave me the impression I then went to stage 2.

Stage TWO was this

a. You can hand make a ring and in our price book that starts at
$530 plus material.

b. Your second choice was to use one of our 2000 waxes, which we
showed, and that starts at $195 plus materials.

c. Third option is to order a ring from a catalogue, which we showed
several.

Much better off giving 3 choices, Many folks choose the middle
choice. It also “bends” them to the fact if they want what they want,
they have to pay the price.

“6 months from now you won’t remember what you piad but you’ll be
looking at what we made for ever.”

David Geller
JewelerProfit
510 Sutters Point
Sandy Springs, GA. 30328
(404) 255-9565
www.JewelerProfit.com

Hi Noel,

I think anyone who’s done some kind of custom work has run into
this. I like to work on a worst case scenario. I figure what the
price might be…bump it up and tell them that this price will be
the “worst case scenario”. It’s much easier to drop the price than
tell them it’s going to be more. I realize you don’t want to scare
anyone off with the high price, but most people will understand the
situation. I recently did a platinum ring that I way under bid and
wound up making $150 on a $1000 sale…no fun, but it happens.

Good Luck,
Scott

I just had a customer come to one of my accounts with a fist full
of printouts from internet sellers 

I once had a customer who wanted large mabe pearls, I ordered somein
and he came in to look at them, and then stated that he had ordered
some on the internet.

Oh, I was pissed. But I said to him, I am going to keep these, when
yours come in please let me see them, I would really like to see how
they compare, quality and price.

Weeks go by, I don’t see him, I call and inquire, he has not got
them yet. At this point he is thinking he got took. He comes in soon
after that, pearls in hand, and the ones I have are the same price,
but the quality is so much better, he purchase mine, sends the others
back, and commissions a high karat anniversary gift for this wife,
about $1000 sale.

Another situation with this same guy, he wanted a Colorado
rhodocrocite, so it just so happened that the SNAG conference was in
Denver, and the owners of the mine were there to display, not to
sell, but they did give out the info for thguy who had exclusive
rights to the material (mine is closed now), and the only person to
buy faceted stones from, to anyone who came to the booth.

Guess who I bump into while I am trying to find gems for him? I did
not make that sale. He ended up having one cut by a gem dealer who is
a cutter. But he has come to depend on me as his jeweler for custom
work, he has money, he spends for quality and custom made pieces.

Richard Hart

Hi Dave,

I wonder how many folks look at "per year" and say "Not good
enough, must do something different? 

I know how it feels! I left a beautiful career to explore my love for
jewelry making and I have made very little. As a matter of fact
Christmas is coming soon and I won’t have enough to make my mortgage
and things are thining down. Oh! what to do, what to do. My
grandchildren won’t be getting their Christmas gifts. I feel so
ashamed. Hang in there.

Nan

Hi Richard,

Odd that you mention faceted Rhodochrocite. I just obtained a
crystal which is orange rather than the usual red or pink, from the
N’Chwaneng mine in Africa. It came from a famous collector, but has
a chipped tip and so is not acceptable in his collection. So, I get
to cut an orange one!! Sure not many of THOSE around!

Wayne Emery

Dear David,

I guess I am confused by your response to my post. Perhaps you can
clarify your point about lost time.

In my experience the time any jeweler/jewelry maker spends with
potential customers can never be completely compensated. Marketing
statistic have shown that only one in ten individuals will commit to
a purchase over 750 dollars at any given time. Making pre-qualifying
a useful tool.

Alternatively, charging an up-front design fee just to meet with
potential customers would be commercial suicide. The cost of “lost
time” spent meeting with potential customers or providing the
services loyal customers expect must be considered a part of a
business’s advertising costs. Customer service is an essential yet
often misunderstood aspect of our trade.

But if what you’re saying, to those who are trying to make a living
at custom work, is to make sure they are charging a minimum design
fee per custom job to cover more of their up-front labor costs, then
I have to agree with you.

Nanz Aalund
Associate Editor / Art Jewelry magazine
21027 Crossroads Circle / Waukesha WI 53187-1612
262.796.8776 ext.228

Nanz

When I had my store I didn’t charge a separate fee to sit down with
someone. But I’ve met MANY jewelers who do.

Marketing statistic have shown that only one in ten individuals
will commit to a purchase over 750 dollars at any given time.
Making pre-qualifying a useful tool.

I don’t know WHERE you got that number and if your number is for
custom designing, which is what this thread is about. I poll, visit
jewelers, speak to hundreds. Here’s the real numbers.

If 10 people walk into jewelry store and ask a question about:

REPAIR: 9 out of 10 will go ahead with the repair.
CUSTOM: 7 or 8 out of 10 will have the item made.
BUY FROM CASE: 3 out of 10 will buy from the case.

My store had those same repair & custom closing ratios. When you
sell 70% or 80% of everyone you sit with a fee generally is not
needed.

To say its suicide to charge the fee is not 100% right nor wrong. If
you’re only selling 10% of those who sit in front of you, YOU will be
committing financial suicide. If you sell a 10 hour day, see 10
people, each takes 1 hour to try to sell and make ONE SALE at $750
and then have to stay late and spend 3-5 hours making that one sale,
that is a recipe for closing up shop.

Your 10% is way too low (unless it was product and that’s low), but
let’s say it’s 30-50%. You’ll still go out of business.

My suggestion of the design fee came from polling a lot of jewelers
who do cad/cam. I have found touching cad/cam is a longer process
than hand carving a wax. They could spend 3-5 hours just to show the
cad/cam rendering. Some folks charge a $100 design fee up front to
keep price shopping to a minimum and have only people interested sit
down and if they like it it’s credited against the labor and
material. If not, they got paid a WHOPPING $33 to $20 an hour for
getting to the screen shot. :slight_smile:

But let’s address the 10% you mention. They stink at selling. Fee or
no Fee, they can’t sell and everyone here must NOT present a design
without knowing that customer must be sold.

You don’t make any money until you sell something. Keeping out of
poverty then goes into how much you charge.

Always offer a customer THREE CHOICES in design and they all 3 don’t
have to be custom. We showed 1 or 2 ways to custom make the item,
plus maybe a wax from a rubber mold and if need be a picture from a
mounting catalogue.

Many folks in a store will sit FOREVER discussing the design and
hardly speak of BUDGET. Asking after a few minutes about the budget
will help you point the customer in the right way. No reason to
design if they were looking to keep under $400. That’s where our wax
and casting charge STARTS, no material.

Many people on this network have more than just a few reasons why
they might struggle, but mainly it’s because (not in order):

  1. They don’t charge enough for labor
  2. They don’t sell enough units from their case
  3. They don’t have enough folks walking through the front door
  4. When they do walk in looking at product, over 50% walk without
    buying anything.
  5. They keep jewelry over a year old rather than dumping it.

There are 5 reasons for financial distress. 3 can be read now on my
site:

http://www.jewelerprofit.com/page/page/4056875.htm

David Geller

Dear David,

I don’t know WHERE you got that number and if your number is for
custom designing, which is what this thread is about.

I got my marketing statistics from 3 respected jewelry industry
sources:

The Jeweler’s Circular Keystone (JCK),
The World Gold Council,
The Diamond Information Service

I am sure they poll, visit, and canvas the many retailers they serve
too.

I am not claiming to have an all encompassing comprehensive view of
the jewelry retail market, nor do I wish to be in contention with you
over these issues.

This forum is for sharing of experience and if my experience is
different than yours, that does not make it less valid.

In my 20 odd years of experience 9 out of 10 repairs estimated to be
over $750 were refused or a second opinion was sought.

Most of my custom design averaged between $3,500 and $10,000. and
customers often need time to make those kind of purchases.

Nanz Aalund
Associate Editor / Art Jewelry magazine
21027 Crossroads Circle / Waukesha WI 53187-1612
262.796.8776 ext.228

If you use a design fee where do you draw line between initial
consultation and actual design development? When does the clock
start? What complications have you encountered? Or do you spread
your hidden costs (basically lost time) over all your jobs? 

Your post above is a valid concern regarding custom work. When we
have a jewelry line that we spend a lot of time doing the R&D, the
sale of multiple pieces essentially absorb the time it takes to
develop a sellable product. Custom work is a totally different world.
95% of my work is custom order and I am learning as I go how to
create policies that are good for my business and the client. I don’t
have all the answers but perhaps I can help. When I meet with a new
customer, my first hour with them is “free”. In the past, I would
also, like you, spend a lot of time doing research and design work at
"no charge" hoping the customer would buy the piece. In this
scenario, the client is getting free consulting and design time.
When I had my website created, I paid the web developer $80.00/hour
for everything: design time and build time. Why not do the same with
jewelry? I just had a long conversation last Sunday with a good
friend (who also happens to be a lawyer) regarding this issue. I am
in the process of developing a system where the client will be
informed that design time has an hourly fee of $$$. I will give them
an estimate for what this fee will be and they will be required to
pay it before design work begins. If they buy the piece, the deposit
gets integrated into the final work. If they do not buy the piece,
they get a copy of the design but I still own the property rights to
the piece. I still haven’t hashed out the documentation, sales pitch,
details, etc. but the the bottom line is creating an intention to be
paid for design time. I feel that if the customer understands what
they are paying for, they will have no problem with the cost. People
pay for consulting and design time in many other industries without
question. If your business is predominantly custom, you may spend 30%
of your week designing, 30% of your week at the bench and 30% of your
week doing sales and administrative work. If you don’t bill out for
the design time you essentially only make money on 30% of your time
every week…can you survive this way? I am finding that I cannot. I
would love to hear what others may have to contribute on this issue!

Chaya Caron
Chaya Studio
www.chayastudio.com

If they do not buy the piece, they get a copy of the design but I
still own the property rights to the piece. 

I’ve got news for you. Even if they do buy the piece you still own
the property rights to the design.

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

If they do not buy the piece, they get a copy of the design but I
still own the property rights to the piece. 

Although I used to do that too, many, many more jeweler don’t give
them a picture of the design as they say “it’s copyrighted”. They can
now take your picture, go down the street and say “Melvin wanted $xx
for this, how much will you charge?”

David Geller
JewelerProfit
510 Sutters Point
Sandy Springs, GA. 30328
(404) 255-9565
www.JewelerProfit.com