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Gemstones Purchase price vs. market price


#1

Hi all,

Being stuck in Norway for a number of years, my only real sources
for gemstones have either been gemshows when home in Maryland or
Ebay. Now, with Ebay, I’ve often gotten gemstones for a fraction of
their value. For example, I recently bought a parcel of fairly bright
to very bright, smaller pear shaped opals. Total weight of about 75
cts…so assume at least 500 stones for around $25 including shipping
or about 5 cents a piece. Well, I’m certain market price is a fair
amount more than that.

So here’s the question, when calculating the stone into a piece that
you make, do you count the stone for 5 cents or for $1-6 depending on
quality?

Jeanne


#2

Jeanne,

Congratulations on such a great buy. There is nothing wrong with
passing a good buy onto a client except you have to consider how
much you should pass on.

If you where able to buy an ounce of gold for $200.00 per ounce with
gold over $400.00 per ounce how much would you charge for that gold?

What may be appropriate is to figure how much you normally would pay
for those Opals and then charge a much smaller markup over that
figure than you normally would. This way you clients get a good buy
and you make a nice profit.

Good Luck
Greg DeMark
email: greg@demarkjewelry.com
Website: www.demarkjewelry.com
Custom Jewelry - Handmade Jewelry - Antique Jewelry


#3

I would base it on the higher value reflecting what you would have
to pay to but those opals from a stone dealer at a local show.

It seems like you got an incredible bargain on the stones! Usually
the eBay tales I hear are horror stories.


#4

My suggestion is to sell for market price, with the proviso that it
gives you the CHANCE to lower the selling price at point of sale if it
seems wise.

Just 'cause you got a bargain, that doesn’t mean that you have to
sell cheaper jewelry.

David Barzilay
Lord of the Rings
607 S Hill St Ste 850
Los Angeles, CA 90014-1718
213-488-9157


#5

It is my general belief that you should charge what a stone is worth
regardless of what you paid for it. This, unfortunately, can also
mean that your markups are really low if you make a bad purchase or
if the market changes direction when you get around to selling
something. However, it’s also true that if something is being sold
for 5 cents apiece it probably isn’t really worth a whole lot more
than that. Adding value (i.e. making it up in a nice piece of
jewelry) can raise the price you can ask for just about anything
though.

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


#6
    So here's the question, when calculating the stone into a
piece that you make, do you count the stone for 5 cents or for $1-6
depending on quality? 

Jeanne,

Price for what you would pay to replacing them if you could not
replace them from e-bay.


#7

When I place a stone in a piece I charge the fair market value not
what I paid else how would I make a profit? Indetermining fair market
value I judge the quality of the individual stone(s) cut clarity size
rarity all play a factor

Teri
America’s Only cameo Artist
www.cameoartist.com


#8

One of my thoughts is that I have to remember replacement price… I
may not be able to get them so low again so that if I sell them too
low, and then cannot get them again, it may seem like I’m 'raising’
my prices too much…So what you are suggesting makes sense.

Jeanne


#9

That seems to be what I hear too…but I seem to do extremely well
on ebay most times. I’d say I get an average of at least 10 to 1
(value to price) most times. Once I bought a parcel of findings,
mostly silver cameo settings, earhooks, and even some 14 kt gold for
$47 plus shipping…when I totaled up the value based on Rio’s
catalog…it was worth close to $1500! I also got a lot of very
unusual cameos from the same dealer (and same source) which I payed
$100 for over 120 hand made, pate-sur-pate cameos which I have not
idea how to price because no one does that work any more! For those
unfamiliar with the technique, layer after layer of semi liquid
porcelain/porcelain paste are painted on to a porcelain cab and
fired and details are carved out afterwards. Some of these must have
taken hours and hours to make. If anyone wants to see them, I have
some pictures on my site http://jeanniusdesigns.com/cameos/ any info
on them or the technique would be appreciated. They were all made and
signed by the same artist except for one piece. What I do know is
that the silver and one gold settings alone used in this batch were
worth 3-4 times what I payed for the lot.

Jeanne


#10

Hi Jeanne –

I’ve just completed a thorough study of my costs of goods sold per
piece (including overhead) and my pricing and profit margins, and
then I’ve just completed some serious sourcing for stones at the gem
shows here in Tucson - so I’m with you in spirit on how to price
those things!

As for the post above, I guess I would have to remark that NO! Don’t
lower your markup if you have the same design energy, workbench time
and overhead into it as other pieces. Rejoice that you’ve got some
extra profit now built in! Use that extra profit as padding to get
you through lean times. I feel that if the line is selling, then
don’t lower prices, it cheapens your work if you do that a lot.

I am trying hard to source for a certain line right now - keeping my
stones under $20 total for a piece that sells for $150 wholesale. If
I can get the same stones for $5 or $10, which I just did at the
shows, it’s all gravy and I want that gravy!

So, price for your time and your minimum possible profit taking into
account cost of good sold to make back that minimum but at all times
maximizing your margins!

Good luck. Love your work!
Roseann


#11
I am trying hard to source for a certain line right now - keeping
my stones under $20 total for a piece that sells for $150
wholesale. If I can get the same stones for $5 or $10, which I
just did at the shows, it's all gravy and I want that gravy!

I don’t mean to be a pain in the butt, but I gotta wonder… When
you congratulate yourself for finding your stones for less at Tucson,
are you factoring in all the time and money you spent going to Tucson
in the first place?

I’m not trying to pick on you, Roseann-- I address this to anyone
and everyone. Because, as much as I would love to go to Tucson, I
can’t justify it as a business/economic proposition, only if I
consider it an expensive but worthwhile vacation (I haven’t ever
felt I could afford it yet).

On the other hand, I don’t use that many stones yet, and get more
than I need at the International Gem and Jewelry Show that is here
in Chicago three (four?) times a year. No Catalog in Motion,
though… Or Orchid dinner.

Well, everybody has a different set of needs, costs, and conditions.
It is just really hard to make myself (ourselves) see the true costs
and benefits of things.

Noel


#12

The other part of the price vs. market price equation, which I had
been waiting for someone to say, is that what you bought were unset
stones. What you are selling is (hopefully) art. That, in and of
itself, adds value. How much value beyond the actual cost of
production (which should, of course, include your overhead!) depends
on the piece. I tend to set prices based on cost, then adjust upward
to allow for added value based on the quality of my design. Some very
basic items are priced based solely on cost. Other items have a price
that has nothing to do with cost, and everything to do with design
quality. This is really what you were saying in talking about the
cameos you bought!

So don’t forget to leave design value out of your pricing equation,
as well as the replacement cost someone else mentioned.

Beth in SC where it thinks it is spring already!


#13
    I don't mean to be a pain in the butt, but I gotta wonder... 
When you congratulate yourself for finding your stones for less at
Tucson, are you factoring in all the time and money you spent going
to Tucson in the first place? I'm not trying to pick on you,
Roseann-- I address this to anyone and everyone. Because, as much
as I would *love* to go to Tucson, I can't justify it as a
business/economic proposition, only if I consider it an expensive
but worthwhile vacation (I haven't ever felt I could afford it
yet). 

I live in Tucson. For me, it’s on the way to the grocery store and
liquor store :wink:

Of course I always factor all costs into my pricing. And by way of
example, a customer wants a very specific tourmaline cab (teardrop
shape, pink, for his mum’s birthday) and I looked in 2 shows, thens
topped, realizing it was a waste of my time because he had already
found one at Thai Gem online, which was $35, and that’s what he
expects to pay - as I was not having luck in Tucson, I decided to
tell him to just order it and send it to me. An hour of my time was
all I wanted to try to put into such a buy, when I’d not make much on
it anyway, b/c of the online thing. As they say, “Why make it hard on
yourself?”

Anyway, one should always factor all costs, not just cost of stones,
into all art. Well, all goods and services for that matter! That’s
where so many artists go wrong…and bankrupt.

Roseann


#14

I think Noel has an excellent point. We have to look at all that is
behind the production, the shipping, the work to cut a stone, travel
to and from etc, etc. As a cutter, I roil at the idea one can get
quality for nothing.

Lets follow a stone. It starts out somewhere in the world found by
someone out looking for stones (Rockhound or perhaps a miner?). It
is packed or trucked to a city somewhere and sorted…time spent?
Unknown…the stone may sit around for months or longer waiting for
an accumulation of like material to be put on the market. At this
point, there is only the value figured by the person who found it.
It may be an amateur or a large company that actually mines it.
Lets say its a very nice blue, red or green chalcedony but it could
just as well be a pretty jasper or petrified wood.

When it sells, it goes for $12 a lb. A lapidary purchases it and
adds it to his/her collection. Now, if a pro…they can’t let it
set around very long …money spent must be turned into money
earned. If an amateur or hobbiest, it might lay around quite awhile
again. Nonetheless, the pound of stone might cut out 5 medium size
slabs. The stone no longer weights a pound…probably lost 20 to
25% to the saw kerf, chipping, etc., and then there are two ‘butt
ends’ that may or may not yield useful material. Now there are
three slabs left…each about 3x5". From that, you can cut two
30x40 cabs each plus several smaller stones including a free form or
two totaling six 30x40mm cabs plus maybe another 10-12 smaller cabs.

First you have to trim out the stones on a saw…probably a 6 to 8
in. A blade will cost $50 to $100 and last for maybe 300 such
cuts. So you have roughed out 16 stones or about 15% of the blades
life and it took you an hour.

In cutting the stones to final polish, you use time…about an hour
for each 30x40 times 6 = 6 hrs. The smaller stones probably took
30-45 minutes each times…say 10 stones = between 5 and 7.5 hours.

You have also used a lot of lapidary wheel to cut these hardness 7
stones. The two coarse wheels will last for several hundred stones
each given they are used carefully. But the soft wheels will start
loosing their effectiveness after 50-60 stones (you already just cut
16 of them) and these wheels can cost upwards of $100 each. So you
have already used about 1/3 the life of those wheels (though they
usually can be used for upwards of 100 stones…but it takes longer
to cut with them when worn).

Now, I won’t even get into the water, electricity, polishsing
powders and wheels used plus wear and tear on the machine itself
such as bearings, shafts, etc.

My conservative figure adding all this up and using a very modest
figure of $20 an hour labor equals about $287 just to cut those 16
stones or an average of $18 per stone regardless of size! This is
very conservative folks and doesn’t include the slabbing time, wear
on the large blade and saw and other necessary lapidary functions
(some people dop every stone and that takes time and material as
well). Oh, and I haven’t even mentioned rarity of the rough as a
factor in cost.

The point is, anytime you purchase a stone that is less than that,
you are buying something that has probably been machine cut
…overseas…possibly tumbled and usually done so fast there is no
attention to the intrinsic nature of the stone such as colors,
design, rarity or structure.

I’ve been cutting stones for over 30 years and sell stones from $30
upwards of $150 (or more) each. But you can bet they are carefully
selected for color, design, integrity of the structure and are
oriented to show their stuff. They are also cut here in America by
hand to exacting standards.

If you are going for quick turnover and don’t care much about how
beautiful or important the stones are…buy the $5 version. But if
you want the best, you must pay the price!

Oh, did I mention that all of my stones are signed and dated? Sorry
for ranting. I understand we must serve all levels of the public
but cheap goods just aren’t worth putting into a descent setting.

Cheers from Don at The Charles Belle Studio in SOFL where simple
elegance IS fine jewelry! @coralnut2


#15

One of my reasons for asking for this oppinion is that I’m trying to
set up a FileMaker Pro database for my gemstone inventory and then
one that will connect to that for price calculation to give me a raw
cost+work price which can then be adjusted up or down depending on
the artistic value. I’ve generally undervalued my work, so this way,
I can use the mathematical formula to at least give me a ballpark
figure to work with. With doing silver filigree though, most of the
value is in the work rather than the materials.

Jeanne


#16
When you congratulate yourself for finding your stones for less at
Tucson, are you factoring in all the time and money you spent going
to Tucson in the first place? 

Noel,

I think you have hit the nail on the head with your latest posting
on this. I did a cost vs benefit analysis of going to Tucson a
number of years ago. Granted I probably travel better than a lot of
Orchidians (no bargain hotels for me) but I found that unless I had
a shopping budget of at least $15,000 (and this was a fair number of
years ago) I couldn’t save enough to make it worthwhile going simply
because of the pricing. If you want to factor in the other events
(classes, meetings, socializing with other jewelers) then obviously
it can be worthwhile-and certainly for those who don’t have to
travel so far it can be more cost effective. But for those of you
who spend a couple of thousand dollars just getting and staying
there you’d better be saving a lot of money on your purchases,
especially if you are going to pass those “savings” onto your
customers.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
617-234-4392
www.spirerjewelers.com


#17
    I don't mean to be a pain in the butt, but I gotta wonder... 
When you congratulate yourself for finding your stones for less at
Tucson, are you factoring in all the time and money you spent going
to Tucson in the first place? 

I’ve often wondered about that too. In fact, it’s one of the
reasons I’ve never been. It’s hard to justify what feels like a
grand shopping spree.

Oh well, I’ll be there next year. : )

Elaine
Elaine Luther
Metalsmith, Certified PMC Instructor
http://www.CreativeTextureTools.com
Hard to Find Tools for Metal Clay


#18
I've often wondered about that too.  In fact, it's one of the
reasons I've never been. It's hard to justify what feels like a
grand shopping spree.

There might be no justification other than it is one of the biggest
gem, fossil, mineral, jewelry shows in the world, sort of like a
circus where you can see all the wonders of nature, literally
miracles in color, form, and quality of refraction, dispersion,
reflection. Not to mention the tools, and tools, and tools. And
incredible people from all over the world, sharing a passion.

Richard Hart