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Hidden charges in fabrication fee


#1

The other day I got in a big order (for me) of silver from one of the
larger jewelry supply houses. I’d specifically added a bunch of
casting grain so as to hit the number of ounces that qualifies me for
a discount on the fabrication fee this house charges. The more ounces
you order, the bigger the discount. I usually order for myself and
all my students so as to get biggest discount possible. When the
order came the discount didn’t seem right; it was too small, off by
about $0.43 per ounce on each type of silver I’d ordered (sheet,
triangle wire, tubing, round wire, etc). I did the math on each item:
Total cost charged, divided by number of ounces per item to get a
cost per ounce, subtract the spot price of silver and get the
fabricaton price, right? Wrong! At least not any more. I called the
house and asked. It seems that this house has recently (they wouldn’t
tell me exactly when they started) adding an additional 2.5% to the
spot price before adding on their fabrication price. On prompting and
looking at the current catalog, I did find that in the fine print of
the two pages of fabricationtables that this 2.5% IS, in fact,
mentioned. Funny, it was NOT in last year’s catalog or any of the
previous ones. And when I ordered no one mentioned it. I asked the
phone rep what it was about. She couldn’t tell me.

I asked to talk to the product pricing manager. It took a few days
but finally I got a call back. Basically he said that due to the
economy, milling companies are charging this house a surcharge and
they are passing it right along to the customer. But they are not
calling it out in the fabrication charge. It’s hidden. I told the
manager that I thought it was a devious way to hide the true cost. We
agreed to disagree.Now, about once a year I do a survey of
fabrication charges charged by about 6 or 8 precious metals
retailers. I like to see who has the best prices. I look at 6
standard types of sterling product (again, sheet, tubing, wire, etc.)
In our current economy, every penny counts, right? I balance the
fabrication charges along with my subjective sense of the service
I’ve received. This particular house is usually about no 3 in highest
fabrication price. But the service is usually first rate. But now I
cannot do the survey the normal way because of this hidden 2.5%
surcharge on the metal itself. The actual “added- on” price is
higher. A devious practice I say. Okay, so now this house is likely
the top of the survey list for my silver costs. Does the service
balance it out anyway? Try this. Two orders ago I ordered several
sheets of differnt gauges of silver. NONE of them was cut square. I
lost about 1/8 inch at top and bottom of each sheet. Or this. In my
last order I’d ordered 21 inches of no. 2 triangle wire (a heavy
wire). I got four miscellaneously cut pieces that totalled 20.5
inches. It looked like it had been cut with a bolt cutter. So I lost
1/8 inch on each end, and with 8 ends, I lost an inch, plus the half
inch I’d been shorted. This is service? Apparently it’s more prudent
to send out the bits and pieces before stocking up.

They seem to be depending upon customers not complaining. I brought
these matters to the attention of the product manager and he did say
it shouldn’t have happended. But my student had to modify his
project. It shouldn’t have happended. So my suggestion to this list
is: Check your fabrication charges and determine if there are any
surcharges hidden away and if the bottom line “cost-above-spot” is
worth the service you are getting.

I’m changing vendors.Denny Turner, in San Diego, where it’s been
cold the last few days, down to 65 degrees. ;o)


#2

Denny,

Even a stronger reason to DIY. Jay Whaley’s students, as well as
Jay, buy the fine silver coin at spot, and then alloy and roll it as
needed. Zero fabrication percentages.

Our students working in 22K also buy the 24K coin and alloy it down.

Certainly works for us.

Boo hiss on hidden fabrication charges.

Terrie
Jay Whaley Studio


#3

So who was it? I certainly don’t want to waste time and money
getting bad cuts of stock.

pete m.


#4

Denny,

Try Silversupplies.com I just made an order and I was really pleased
with the promptness of the shipping and the cost beat everyone that I
checked out.

Veva


#5
Try Silversupplies.com I just made an order and I was really
pleased with the promptness of the shipping and the cost beat
everyone that I checked out. 

Comparing silversupplies.com with Indian Jeweler’s supply and
Thunderbird supply on purchasing a 1x6 inch piece of 24 ga silver
sheet (0.65 toz).

Silversupplies.com $17.80
Thunderbird $11.69
IJS $13.49

No discounts applied due to the small amount ordered so YMMV.


#6

Terrie, I greatly admire and respect folks like Jay Whaley who can
do the alloying of their own metals and can and do fabricate their
own products. But I must respectfully disagree that there is “no
fabrication charge” in doing so. If not in dollars, there certainly
is in time and hassle. And time is also money. I suppose one can
learn to do all the alloying, forming of ingots, and rolling/forming
the sheet, triangle wire, tubing, gallery wire, etc. that one wants
to use. That is, IF you have the expertise, time, and tooling (and I
do have a top notch rolling mill). And some folks may posses that
and actually enjoy the process. I know Jay does. And some make their
own hammers and stakes, and other tools. And I suppose one could take
it even further and one could mine the ore, ship it, smelt it, and
refine it into fine silver and 24K gold, and even enjoy that
process. Same for scrap: one could refine it oneself. And I know
people who cut and facet all the stones they utilize. But we’re not
all set up or suited to do all that. And it does, or certainly could,
take an incredible amount of time. Many of us depend upon mills,
fabrication houses, and suppliers to provide the products we work
into our jewelry products. I don’t have the skills, tools, or time to
do all that. And I’d rather apply my time to the creative processes
of design, making, and teaching. None of which does away with the
issues of escalating and, sometimes, hidden costs associated with a
troubled economy.

With respect, Denny Turner


#7

Well just for giggles, I went to silversupplies.com as Veva
suggested, and did a comparison order for 100 dwt of deox silver
casting grain vs Stuller. Silversupplies wanted $130.40 and Stuller
was charging $107.63 for the same quantity. I’d say that if pricing
structure changes depending on how much you order, then there’s
already a “hidden” charge present. Sloppy cutting of wire & badly
rolled sheet are no excuse. I’ve stopped ordering from different
vendors because of that, rather than a few pennies difference. Yes,
it is cheaper to start with pure metal and alloy it down, but who is
going to pay for that labor cost? My suggestion is that since most
metal houses have an online presence, do the research, figure out the
costs from their shopping carts, then make an informed decision of
where you are going to spend your money.

Ruthie Cohen


#8
So who was it? I certainly don't want to waste time and money 
getting bad cuts of stock. 

The company with whom I’ve had the difficulties is Rio Grande. I know
that they are sponsors of Ganoksin, and I am somewhat reluctant to
name them because of that support. However, if their policies create
problems with my business, then I feel they’ve earned being named. I
do believe the non-square cuts on sheet that were shipped were a
one-time situation and the product manager with whom I talked said
that that should never have happened. It has not happended on one
subsequent order. On the other hand, the practice of sending “bits
and pieces” to make up an order for product seems to be the current
policy, not a one-time error. To be fair, Rio did try to call me to
ask if it was okay to send the four pieces instead of the 21 inches
of triangle wire I’d ordered. However, when I wasn’t there to take
the call, they said, in their phone message, that they’d send it on
anyway lacking a dissent on my part. When I talked to both the
service rep and the product manager they both said that washow they’d
do things. I told them they should place a back order and NOT to send
the bits and pieces absent a positive agreement from me to accept
them. The rep said that’s not their policy. So the policy remans: If
youdon’t tell 'em not to send bits and pieces, that’s what they’ll
send you if that’s what they have in current stock. I told them I’d
much prefer that they a dequately stock what they advertise in their
catalog.

Denny Turner


#9

To Mr. Turner - I have offered our apologies for the poor judgment
in sending you cut pieces of triangle wire. I affirmed with you on
the telephone that this was a bad decision. Since our conversation,
I have talked with our personnel pointing out that the decision to
send four cut pieces was wrong.

Regarding the method we use to price sterling sheet. I may not have
stated a precise date to you on the telephone, but I tried to be
very clear. At the start of the financial crisis, we were presented
with a new bill from the mills that produce the sterling sheet and
wire we distribute. Generally, these mills do not own the metal they
mill. They lease the metal from a bank. Due to some losses, some
banks are refusing to continue this practice. The ones that continue
to lease metal are charging higher lease rates than ever before.

The mills now add a % onto the metal cost to cover these high lease
rates. Rio Grande began passing this bank fee along, once we also
began receiving it. We included a pricing example in our catalogs to
disclose what we are doing. I agreed with you on the telephone that
our step-by-step instructions did need to call out the markup to the
Spot price. This will happen in our next Summer Findings catalog. I
also explained that since the new fee is a % based on the silver
market, we chose to pass the fee along as a % of the Spot market. In
these days of silver bouncing anywhere from $10 to $20, it was the
only way to be fair to both our customers and to Rio Grande.

Naturally, I am sorry to lose you as a customer. I wish you well with
your endeavors, and please feel free to contact us again at Rio
Grande if we can serve you.

Best Regards,
Kevin Whitmore
Metals Manager
Rio Grande


#10

I buy a lot of silver wire - in excess of 100 lbs per month. I have
experience with 2 big mills and they both have similar pricing
structures.

They look like this:

metal cost = (instantaneous market price + buying cost)

manufacturing cost = spot price on day shipped x surcharge +
manufacturing cost

wire price = metal cost x alloy factor + manufacturing cost

alloy factor is the amount of metal used - for example 0.927 for
sterling.

For silver I pay $0.05 per Oz over the spot price - basically I call
my broker and say “buy 2000 Oz” and he gives me the market price at
the instant. I then have 72 hours to get them a check for the metal
and the metal goes into my “toll” account.

Then I send a purchase order to my sales guy and when the silver
ships they invoice me for the manufacturing costs.

Its interesting to me that my negotiated manufacturing cost is fixed

  • I need to buy a min 320Oz per line item on average but it does
    matter is I buy 2mm or 0.3mm wire it the same cost. I have a wire
    drawing machine and it takes me a fair bit of work to go from 2mm to
    1mm :-).

Jon Daniels
The Ring Lord Chainmail
http://theringlord.com


#11

I appreciate the remarks and explanations from Rio Grande metals
manager. However, I have ceased buying wire from them. My orders
were not respected. Deaf soft came as half hard and no apologies. One
order the wire was tarnished and cut instead of continuous. Students
in a class I attended also had the same problems as well as the
teacher who also had ceased buying from them. I buy wire only from
large foundry firms and have had not one problem since.

In fairness to Rio Grande, all other departments have been
excellent, prompt and accurate and I use them all the time for orders
other than sterling wire.

Thank you for sharing your experiences as I now feel more sane.

Ruth Mary


#12

Regarding Rio Grande sending you multiple pieces of metal stock in
place of a single piece:

If you order metal from Rio Grande online you get to specify how many
pieces you want per item (one piece by default, but you can request
more, with a small charge for each additional cut). If they do not
have the length or weight you specify in a single piece, the website
will inform you of that, and ask if you want to backorder, or if you
are willing to accept the pieces they have on hand. Thus, the problem
you experienced would not happen if you order online.

Best wishes,
Neil A.


#13
And I know people who cut and facet all the stones they utilize.
But we're not all set up or suited to do all that. And it does, or
certainly could, take an incredible amount of time. 

With respect Denny, I do all of that. Cutting a stone, maybe an hour
or two. Making enough wire for a week, ten to twenty minutes. Making
plate for a job, ten minutes. Far easier than ordering from a
supplier and having to wait for it to arrive.

Fabricating your own stuff beats ordering hands down. And another
plus is you don’t have to keep a lot of raw stock.

Cheers, Hans


#14

Thanks to Mr. Whitmore for his concise explanation of the strange
discrepancies in current silver prices.

This is just another aspect of bank deregulation in which the
ultimate consumer takes the hit. The only one who comes out ahead is
the entity at the top of the heap. All we can do is follow the
silver prices and order on a down day so that the fabrication fee is
less painful…and raise our own prices.

Dee


#15

I have done business with RIO for years. They have always done the
right thing. As far as shipping the cut lengths of triangle stock. I
think they did the right thing, because if you really needed a piece
that they were able to supply you got it, but if not you could easily
return it to get the length you needed.

At least you had the material. If they chose not to ship and you
were, desperate for a 4 inch piece you would have been upset they
didn’t send the cut lengths.

In this way, they were caught in the damned if we do and damned if
we don’t scenario. And they chose the only way to possibly help you
out.

James


#16

Denny,

There are many ways to reach an end, few of them wrong. It is in the
goal of the student and the teaching that positives come together.
This is not a right or wrong issue. All factors need to be included,
fabrication as well as time involved with ordering and delivery.

We are planning an Open House for all the Jewelry Instructors in the
San Diego area. This is a long in the planning, yet soon to come
event. We would appreciate any names you may have to offer. I am
gathering them now.

Thank you for your comments.
Terrie, for myself


#17

I’m with Hans in regards to making your own materials. For the
chains I make I draw my own wire from 12 gauge round dead soft. I
chose 12 gauge because I don’t use anything larger and it is the
largest I can comfortably pull through the drawplate, as long as you
call pushing on the bench with my foot for max leverage comfortable.

I suppose I’ll have to make a drawbench some day.

Mike DeBurgh, GJG
Alliance, OH


#18

It’s been my experience that you should specify all your
requirements. If you need a single piece instead of pieces when
specifying length, then make sure that’s included in your order, as
well as other requirements that you must have.

Mike DeBurgh, GJG
Alliance, OH


#19
Fabricating your own stuff beats ordering hands down. And another
plus is you don't have to keep a lot of raw stock. 

My metal cupboard contains mainly fine, alloyed grain, and leftovers.
If I want a prefect large sheet I will order it., otherwise it is far
faster to just make what I need. Final price in the end is either
phone time or torch and cranking time, both come out close but with
one you have the metal in minutes. Sure beats overnite shipping $$
and waiting by the door for the brown truck

jeffD
Demand Designs
Analog/Digital Modelling & Goldsmithing
http://www.gmavt.net/~jdemand


#20
It's been my experience that you should specify all your
requirements. If you need a single piece instead of pieces when
specifying length, then make sure that's included in your order,
as well as other requirements that you must have

I believe the “culprit” in question is Rio Grande, and on their (on
line) order form, there is a check box with a default setting for
"one piece", optional “can be multiple pieces”. I did not notice it
in the past, so I don’t know whether it was always there.

Noel