Back to Ganoksin | FAQ | Contact

[Digest Post] Pricing / estimating custom work


#1
 It is wonderful that jewelry folks from all around the world are
willing to give strangers the benefit of their hard-won knowledge.
BUT, perhaps we are being TOO open about certain subjects (like
pricing.)...  While about CAD/CAM or soldering
techniques are GREAT, perhaps markup shouldn't be discussed so
openly where "civilians" can see it, IMHO. 

I don’t know David. If there was something shameful, unethical or
immoral about our approach to pricing, I can see why it may not be
prudent to broadcast this I’ve been following this
thread and think it’s too important to keep quiet. If the public
reads these posts and is educated on how we arrive at the prices we
charge- that is fine with me. (Hopefully they will further explore
Orchid while they are browsing and will understand there is much more
to this field than meets the eye).

The way I see it- I look at what my auto mechanic (or plumber, tool
and die maker, electrician…) does, knows and charges. I’ve put an
equal amount of - or more- time into honing my craft, learning all I
can and treating my customers with the great respect they deserve. I
charge a fair amount for the services I offer- I don’t mind if the
customer knows what my mark up is, or what my shop rate is. I am not
willing to work for less than my auto mechanic. When the pricing is
stated simply, with confidence, and the customer has seen my work,
talked with me enough to know I really care about my reputation and
want them to be thrilled with their jewelry- that seals the deal.

I know too many jewelers (and some who have been in the business a
while) who grossly undercharge for their services. I believe many of
them do not have a clue as to what their real overhead is. If this
forum encourages folks to allow themselves to price their work
fairly, and profitably -it’s worth the public exposure (in my
opinionated opinion). This helps us all.

In the past 20 years (since the public was given the option of
buying their gold ‘by the gram’ and so much of our jewelry is being
made overseas) our industry has gotten somewhat apologetic about our
pricing. The fact is- I can’t and don’t want to compete with QVC, the
Home Shopping Network and the like.

Thanks David Geller for your posts on this- I’ve been recommending
your pricing guide for years. And mostly, Thank you Hanuman for
providing this incredible forum. Best Regards, Kate Wolf- Who ever
heard of 80 degree weather in October in Maine?
http://www.katewolfdesigns.comFrom: Lee Einer appealsman@cox.net

I don’t understand the reason for concern. What if “civilians” (by
which I think we mean “customers”) find out about pricing practices
in the jewelry industry. Would they think that they are being ripped
off? Would they be right?

Why would we be afraid to publicly discuss pricing practices which
we believe are fair and reasonable?

Lee Einer

From: IMMENO1Ls@aol.com

people - what is the problem on this pricing question: take a $1.00
piece of ‘rough’, cut and or carve an interesting stone, polish it.
then take a $6.00 sheet of sterling, $4.00 tubing and perhaps some
wire, fabricate an unusual pendant, ring, etc. solder on some prongs
to set about $2.50 worth of melee. attach to $9.00 of sterling
fabricated neckwire, put on a $200.00 price tag. if it sells right
away you know it was underpriced. don’t get hung up in the process,
it kills innovation - ive

From: “David L. Huffman” dhuffman@gtii.com

    . . . perhaps we are being TOO open about certain subjects
(like pricing.) While you may feel that you are only sharing your
with other jewelry professionals, it just isn't so ! !
! . . . David Barzilay, Lord of the Rings 

Hi David; About 3 minutes after reading your post I began to actually
think about it. I think you’ve got a point there. In the trade,
we’ve always used terms like “keystone” or put coded costs on tags.
Fact is, and I think David Geller would agree, using a formula for
pricing isn’t a good idea anyway if you just pick one up somewhere
and use it with no consideration of things like . . .

  1. What kind of overhead do you have? Basement workshop or high
    rent downtown showroom, complete with Jeweler’s Block?

  2. What kind of market do you have? Blue collar market in the
    rust-belt where people work hard and save for a 1/3 carat in a light
    tiffany, or U-M-C Valhalla like Jackson Hole, WY (with a lot of
    people who will look at your low prices and conclude your stuff must
    not be very good if it’s so “affordable”)?

  3. What kind of investment do you have tied up? Silver and enamels
    or lots of gold, platinum and diamonds? (I’m not prejudiced, value is
    not always in the cost of materials).

Pricing is part of salesmanship, and it’s truly an art and it takes
years of experience to excel.

But you’re right. And people are likely to assume that our business
operates on the same economics as a discount store. We don’t
usually do comparably high volume, so the mark-up is on fewer sales
and it has to support the overhead of one of the more expensive, per
square foot, retail venues. Don’t know what we should do about it,
but I’m not sure secrecy is going to be the way to go either. It’ll
be interesting to see where this thread goes.

David L. Huffman

From: Noel Yovovich noelyovo@yahoo.com

Hi, folks, I feel inclined to emphasize a couple points that have
been discussed here before, with regard to pricing.

All these methods of setting prices have worth–they keep you from
unknowingly setting a price that will cause you to loose money. That
doesn’t mean they won’t cause you to loose business. Ultimately,
what you can charge is what someone will pay. So, the way I think
about it, the calculation is done to figure out whether you can
afford to make the piece. If your cost and necessary profit add up
to more than anyone is likely to be willing to pay, you have to
redesign, not make the piece–or go ahead and make it, if you feel
the urge, but understand that you’re doing it for reasons other than
profit in money. So, always and finally, it comes down to judging
(or testing) the market. And finding the right market, which is even
harder.

If you accept this so far, then you might agree with me that it
doesn’t matter whether your customer knows your pricing system, what
you mark up and by how much. The only thing that matters is whether
they believe that what they see is worth what you charge (assuming
there is nothing misleading going on). I admit it may make some
psychological difference to know what your markup is, but it’s an
illusion. If you’re selling unique or unusual work, shopping around
for a better price isn’t possible. The customer asks, “Do I like
this ring $650-worth?” (or whatever). The answer settles eveything.

Educating your customer can radically change their perception of the
value of your work. So, you price it so it’s worth your while to
make it, then you tell your customer why it is worth what you
charge, if you get a chance. And, as I like to say about pieces that
don’t sell right away, “they don’t get green and fuzzy.”

Just my attitude–

–No=EBl

From: Ron Charlotte ronch2@bellsouth.net

        Hi fellow Orchidians. The thing that I love the most about
this forum is the amazing SHARING which takes place. It is
wonderful that jewelry folks from all around the world are willing
to give strangers the benefit of their hard-won knowledge. BUT,
perhaps we are being TOO open about certain subjects (like
pricing.) While you may feel that you are only sharing your
with other jewelry professionals, it just isn't so ! !
! 

Pal, I’m primarily an amateur who does a bit of custom work.
Trust me, while many retail buyers don’t know the nitty-gritty
details of jewelry (and other decorative arts) pricing, a very large
minority know full well that the mark-up on such items is
substantial. The kind of people that such knowledge bothers,
generally are the sort of people that will find other forms of
discount purchase (estate sales, yard sales, even flea markets are
all places that I’ve known people to pocket surprisingly high value
pieces for pennies on the dollar).

All in all, the cat was out of this bag long before online forums.

Ron Charlotte – Gainesville, FL ronch2@bellsouth.net OR
afn03234@afn.org


#2

All, Hidden profits are my complaint about jewelry custom items.
When a store owner decides on pricing for the estimate of a custom
job how they arrive at the selling price for each part of the job is
where hidden profits come into play. For instance a custom ring may
consist of prefabricated parts which cost the store $100, stones
which cost the store $25, design work which cost the store $25,
bench work which cost the store $35, and packaging which costs the
store $5. For a total of $190. Most stores multiply the whole cost
times 3 which equals $570 for a custom job. That is 1/3 for the
cost, 1/3 for overhead, and 1/3 for profit to the store owner. Where
I disagree with this is when the store makes the same profit on the
items in which they have expended no labor in the manufacturing of
the item as they make on the labor they perform. I call this profit
hidden profit. Profit hidden from the customer who thinks that the
majority of the profit is going to the labor of design and skill of
assembly. By pricing items in this manner store owners misrepresent
the actual cost of their manufacturing. Skilled workers are paid
less than they deserve because the store owner still makes the same
profit off the hidden areas. What should be happening in the quotes
is the cost of parts should be marked up a lot less than the cost
of manufacturing the item. That way the profit would be better
shared by the employees and the customer would get a truer picture of
what they have spent their money on.

Gerry Galarneau
www.galarneausgems.com
@Gerry