How to sell custom design using - as you know

Jewelry Discussion
1

“As you know”

With the higher price of metals more customers are price conscious.
But many jewelers have found Custom Designing to be still strong.
Labor hasn’t really increased much but the gold and platinum used to
make the ring, WOW!

Across the country jewelers are still repairing and making new
jewelry but you might have found your closing ratio dropping some
because of metal prices. There is a fix but you shouldn’t fret as
much about custom as it has a terrific return on investment. So let’s
examine the true profitability of custom and then a strategy to
increase our closing ratio while keep making money without a huge
discount. I’m going to make a “David assumption”. The average sale
from the showcase, without bridal is about $200-$350. With bridal
added in some stores have an average sale of $850 to $1200 but let’s
use another “David assumption.”

Let’s assume that your average product sale is $1000 for a good
round number. I want to use this amount because the typical custom
design sale is $1000 to $3000. So think about this, when you make a
sale from the showcase for $1000 you have to have on hand, amount of
inventory. So let’s “assume” again that you have $500,000.00 in
inventory.

Think about this statistic for your store:

“To make a $1000 sale from the case I have to have on hand every day
half million dollars of inventory”

Now to custom. How much inventory does the shop in the back keep on
hand to custom make a piece of jewelry? The typical store keeps about
$5000 in grain, sizing stock, findings, small stones because most
custom jobs have the parts and material ordered just for that
customer after we take the order.

So here’s the custom statistic:

“To make a $1000 custom design sale all I have to have in inventory
is $5000 of findings and grain, plus 1 week’s jeweler’s wages.”

Can you begin to see the difference?

Of course to sell from the case takes “some expertise” but selling a
custom design takes a lot of expertise. That comes from experience on
your part and training the staff.

Here’s how to handle customers that have sticker shock. When quoting
a custom job do not quote a gazillion prices. Many of you are bench
people and think procedures. I’ve seen too many people quote like
this: "Mrs. Jones the cost to make your ring is the following:

  1. Design fee
  2. cad fee
  3. wax cutting fee
  4. casting fee
  5. Finishing fee
  6. Setting fee
  7. Gold grain fee
  8. Stone fees

"Sheesh, you’re killing me here! Ever have a customer say “Thanks,
but I’ll just take the wax. My husband can cast it.”

No! Numbers 1-5 should just be called “To make the ring” I’d make a
few suggestions for you:

  1. Write the quote on paper for the customer to see, one column for
    labor only and another for material, like gold and stones. Let’s do a
    quote to make a matching wedding band, 3 pennyweights with 7-2 point
    round bead set diamonds:

LABOR

Design and manufacture ring $425.00

Bead Set 7 stones @ $28 each = $196.00

Total Labor $621.00

MATERIAL

3 dwts 14kt gold @125 = $375.00

7 2 pt dias @ $16 pt = $224.00

Total Material: $599.00

| Total $1220 |

Draw 2 arrows to point to the total box below. What you want is to
show all of prices but notice we didn’t break down the “Design and
manufacture”. Some jewelers break that down further:

Designing fee
Cut Wax
Cast
Finish

Do you have customers say:

“No thanks, I’ll take the wax and cast it myself?”

Nope!

Don’t make it more confusing. So just point to the prices and say
"and that’s all it’ll be". You don’t even speak the words; the
customer can see the numbers.

“That’s all it’ll be.”

So what happens if the customer says “That’s a bit more than I
wanted to spend”?

If you look back at the price break down you’ll see lots of ways to
lower the price to the customer without discounting. Can you see some
ideas?

  1. Use less stones
  2. Use smaller stones
  3. Use her stones
  4. Lighter weight.

Then of course you can offer to buy any remaining gold and credit
her total bill. But there’s one more thing you should realize.

If you buy a $300 ring and sell it for $599 (like the materials on
the right side of this quote) in the showcase it could sit there for
a year and that would be a turn of “1”.

But it you design the ring on January 4th, order the material, make
the ring and deliver it on January 30th you’ve made the ring and sold
it in 30 days. Do that once a month and that’s a turn of 12!

This means if you have to discount to make a customer happy you can
discount the material because you have a turn of 12!

But labor (manufacture and setting charges) doesn’t have turn. A
jeweler can’t work really faster. Therefore you shouldn’t discount
labor because you can’t make up for time.

So if the customer needs a break in price after trying everything
else deliver your close this way:

“As you know we can’t discount labor, but maybe we can do something
on the diamonds and gold.”

“As you know we can’t discount labor…” says it all. Most American’s
know that labor (car repair, plumbers, and electricians) isn’t
discounted. Being “turn” is everything in merchandise and with
special orders for this ring has a turn of 12 you can discount.

So if you discounted the whole job it would be $244.00.

But if only discounted the $599 in material the discount would only
be $120 giving you $124 more in dollars and still giving the customer
a break.

So as you know there’s lots of money to be made in custom design.

David Geller
Director of Profit

2

If I have indoor work for carpenters and electricians here in the
shop for the winter…believe me…I get a discount. Most of the trades
give discounts on labor for jobs that are more sweet than others.

The bid for the new shop building I hope to have up next year is
more for outdoor winter work for the carpenters and less for indoor
winter work for the carpenters. They want the warm jobs in the
winter and do not want the cold winter jobs…so they play that game
all on their own without me asking twice.

I have found that labor prices, rather than material, is the one
thing that is the most flexible. Of course some of this depends upon
your raw material mark-up…and how many hundreds of percent that may
be.

I have had some say that they will stay home on the couch for that
low money…I ask them how much they make sitting on the couch…

Ric

3

I have a real problem with “business people” who are invading the
"custom design" end of the jewelry industry. This is the one portion
of the business where a REAL crafts person can work hard enough to
put a business and a shop together to earn a living for themselves
and their family.

Now that the economy is down and the capitalist retailers are not
having their greed satisfied with commercially produced jewelry
selling at a fast enough rate they want to step on the " custom "
jewelry end too. Stop trying to package custom jewelry into a kit, it
is not a kit that you buy somewhere and resell. What you are doing is
confusing people and destroying the meaning of something that is
special for your own profit and it is wrong

Gustavo Hoefs
Beechwold Custom Jewelry

4 
I have had some say that they will stay home on the couch for that
low money...I ask them how much they make sitting on the couch...

One cannot and must not compare labour of common trade to physical
and mental efforts the goldsmith expends on creation of jewellery,
and objets de virtu.

While there is an over-supply of common labour; there is, and always
was, tremendous shortage of goldsmiths who know their way at the
bench. Goldsmith does not jump at any work offer. It is client who
has to show that he/she is worthy of goldsmith’s time.

Gold and gemstone merchants are different, and they do have make all
kinds of deals, but do not compare them to goldsmiths.

I have been a goldsmith for over 40 years, and presently I am
semi-retired. I am still working 7 days a week, no less than 12 hours
a day. Still, much more things to do than hours in a day. So I will
answer your question about sitting on a couch in the following way:

While gold and diamonds are expensive, and goldsmith labour is a
gift, regardless of the charges, the time on a couch is priceless.

Leonid Surpin

5

Hey Goo,

I agree with you - to a point. What you say here is absolutely
correct. The part I think you underestimate a tiny bit is the
patience and consummate product knowledge required for a craftsperson
to become successful at retail. A lot of business people think they
can get a CAD system, even one produced and serviced by a famous
findings supplier, set it up, spend a couple of hours learning how to
cut and paste and then email the design, and they too can become a
custom king. Or hire a $15 an hour benchie, keep them in the back
never to be seen by the actual public, give them jobs to do and make
a fortune. You know as well as I do that it’s not quite so easy as
all that. You just can’t learn all we’ve learned about creating and
selling custom work from a few emails, a weekend seminar, or even a
year of seminars.

Just like you, 90% of my business involves custom work. Our job is
to listen. Ask a pointed question or two directed at finding out what
is most important to the client and listen some more. Cut a wax or do
a partial fabrication, and listen some more. Make a change or two,
and listen a bit more. Then, present the finished piece and ask them
to send their friends. Then we listen some more.

Your average retailer isn’t really into doing all that listening,
changing, listening, etc, etc, they’re into showing something,
writing it up, setting the stone, cashing the check and moving on to
the next pigeon - er- customer. We can take a big bite out of their
piece of the pie, but they can barely taste our slice. What we do is
one heck of a lot harder to master than most of them consider us
capable of; it’s much more difficult than just selling stuff,
although that can be hard too. Many if not most traditional retail
jewelers don’t hold a very high opinion of bench people, and really
think that if a simple tradesperson can make a living doing it, they
should be able to make a fortune. As long as they continue to
completely underestimate the skills involved in what we do and try
to commoditize and computerize custom work, we have absolutely
nothing to worry about. They just don’t get it.

Just keep on doing what you are doing Goo, and don’t worry about
what David is telling the average retailer. They don’t understand,
they don’t want to do what it takes to do true custom the way we do
it and the vast majority never will figure it out. Their customers on
the other hand have been figuring out the difference between true
custom and what a lot of retailers are claiming is custom, and they
will continue to figure it out in ever-increasing numbers.

Remember that during the recent major economic downturn, one of the
very few segments of the jewelry industry to not get really hurt was
the custom design studio. When virtually every segment of every
industry in America was in a major decline, we not only didn’t get
badly hurt, we were among the only ones in our entire industry that
actually showed real growth, both in gross volume and market share.
This according to the most recent Jewelers of America “Cost of Doing
Business Survey”. They can’t beat us at our game.

Keep the faith, Brother!

Dave Phelps

6

It is interesting to me that this topic has come up because the
profit margin on custom pieces; that no product exists unless the
design appeals to the client and there is no overhead cost associated
with the item until it has been paid for has been on my mind
recently.

I work in very high-end retail store and am getting design requests -
from walk-in clients and for the top tier clients who frequent
specific sales people who are then requesting I create designs for
their client(s). Fortunately, I work for a jewelry store with an
amazing bench jeweler - we actually have several on staff. Working
together, we have produced some great/unusual pieces. The store
multiplies every element by 3… labor ($150/hr); casting (bringing
the gold price up to almost $3500/oz); materials, etc., etc., etc.

While I help with sales, that is not my primary responsibility, so
there is no commission structure with any sale I make (only about
$25k so far). At my review, I asked for a 10% design commission on
every part that was marked up so dramatically (i.e., not on stones
since there is not as much upside on diamonds these days)… three
weeks later, I was offered 1%.

There are a few options: 1) Don’t design for them at all; 2) Create
my pieces; pay for them myself and “memo” them to the store in
addition to designing for clients for “free”; 3) Just accept not
being paid and look at this experience as an opportunity to build my
resume/client references for a better position down the road.

Any insight/advice from the experienced Orchid crowd would be
appreciated.

7

Leonid,

common trades?

A bit hierarchical I think…but don’t be afraid to tell me what you
think.

I have found that most who dedicate their lives to an activity
believe that activity to be special, noble and whatnot…regardless
of other’s thoughts or reality.

If you are doing 12 hour days 7 days a week in semi retirement then
maybe you really love what you do…or you charge too little or you
are in a very unique situation where there is a line for your work
regardless of the costs.

There was (is) an engraver of some renown here in the Midwest who
was bemoaning the fact years ago that he had two years of work
booked. My Father-in-law said he should try to keep that at about
six months so raise your prices till you weed out those who are not
presenting work you really wish to do. The engraver did this…now my
father-in-law can not afford his friends work any longer…but the
friend is better off…shorter demand, higher respect and more money
for the same work…and he uses very little gold.

“diamonds are expensive”…I often wonder why…are they rare? Are
they so much more difficult to work? or are they the beneficiary of
a wonderful, well executed and calculated marketing push? It appears
that perception of a thing is more important that the thing…true
of course to some extent with many things completely unrelated to
jewelry. It maybe part of out human condition.

But, I still got a deal on winter work in my shop…and in reality,
which is important, a goldsmith sitting on the couch makes the same
as a carpenter sitting on a couch.

Ric

8

Don’t worry Goo, our livelihood is not under threat although it
could be easy to make yourself think it was if you were to dwell on
it. There has always been a segment of the jewelry buying public that
are drawn to things that are less than they should be. Like the
"custom ring" that is really just a ring out of a catalog with a few
heads soldered to it or a stock ring that is altered using retail
store counter CAD software, altered enough to accommodate the stones
but possibly not really reaching the projects full design potential.
Much of the custom work being done isn’t being done well. A fancy
gadget does does not a skilled craftsman make…and that works in
your favor. No matter what, you can’t get all of the customers and
you probably wouldn’t want them if you could.

All you need to do is work as hard as you can to fully maximize the
potential of the niche you find yourself in. There is enough work
there to last you a lifetime, one customer at a time.

Best regards,
Mark

9 
There are a few options: 1) Don't design for them at all; 2) Create
my pieces; pay for them myself and "memo" them to the store in
addition to designing for clients for "free"; 3) Just accept not
being paid and look at this experience as an opportunity to build
my resume/client references for a better position down the road.

To say it plainly, you are been taken advantage off. There is a
saying “Do not cast perl before swine”. There is no reason to stop
designing, but what you should do is to stop others from using you.
So built you design portfolio and use it to get a job, where you will
be appreciated.

Leonid Surpin

10 
common trades? A bit hierarchical I think...but don't be afraid to
tell me what you think.

I remember when I bough my house, the builder guaranteed free from
defects for 3 years. Well, in about 4 months, the tiles in the
bathroom popped off. Builder sent two guys to repair, but in another
6 months, tiles popped of again. Builder brought an old guy, who
proclaimed that he had been doing it for 25 years. Well, tiles
survived for a year, but than popped off again. I got tired of BS,
and did it myself. Never, laid tiles before. It has been 30 years
and tiles still holding. That is what “common trades” means.

Some people work for money only, and some charge a fee to be able to
continue their work. Some do not care what happens to what they make,
and some care a great deal. The former category is very common, while
the later is very rare and always has been in great demand.

Leonid Surpin

11

Hi Cameron,

There are a few options: 1) Don't design for them at all; 2)
Create my pieces; pay for them myself and "memo" them to the store
in addition to designing for clients for "free"; 3) Just accept not
being paid and look at this experience as an opportunity to build
my resume/client references for a better position down the
road....or 4) Find another employer that will encourage (and pay)
you to spread your creative wings.

Numbers one and two really aren’t great options. Number 1 is
self-defeating in that if you don’t do any designing with clients at
all, you are denying yourself some fine experience that one day may
serve you well. I know, I’ve been there too, and I’m really glad now
that I have the experience with one-on-one design work, even though
at the time I didn’t get a cut (I actually got in trouble because I
was spending too much time working with clients. Even though it was
much more profitable for the store, that design and sale time didn’t
count at all towards my productivity numbers because I was a benchie,
not a sales person and only got credit for bench work. But that’s a
story for a different thread). In fact, without that experience and
similar experience in a previous job, the very non-traditional
jewelry business I now own couldn’t even exist.

Concerning Number 2, unless your employer is a really special kind
of person you are asking for trouble. I doubt they will take kindly
to you spending “their” time making things for which they think that
they will make less when sold (which they probably will think,
whether it’s true or not). If you do it at home, with your own tools
and materials, they will probably wonder what else you’re working on
and for whom you may be doing it, and that’s not a good thing no
matter who you’re working for. In addition, using your own materials
will tie up your own money until the piece sells, and they may
actually sway customers towards other things just to keep from paying
“extra” for your pieces. I have done this with a different employer.
It sounds good at the start, but it is so fraught with the potential
for misunderstandings and professional jealousy that I really would
recommend you stay away from it, unless you are like family.

Unless you are wholesale vendor, don’t put your own money into
inventory for a business that you or family members don’t own. Even
as a wholesaler, you gotta be really super-careful with memo! Been
there, done that. Even had the T-shirt, but I had to sell it. It was
either that or boil it and eat it.

Number three may not be a great option, but of the three you listed,
it sounds like the best one to me. I worked in a place that sounds
very similar to your situation (the one where multiple 10 and $20,000
sales at triple key didn’t count one dime towards bench productivity
when the numbers were added up at the end of the year), and I promise
you, the things I learned (and the clients I worked with) there are
serving me very well today. I learned a heck of a lot from both the
good and the bad. Experience can be better than money. It actually is
money, it’s just deferred.

Number four, believe it or not, really is an option. You just have
to find the right place. Such people really DO exist! At 25K, even
these days, if you have any decent bench or sales skills at all,
finding such a position shouldn’t really be a problem, you just have
to start looking, and it may take some time. If leaving isn’t really
an option now, the longer you can put up with your current situation
the better your portfolio will be (make sure even if you don’t get
paid for your design work that you get pictures - even if the work
isn’t your own, the designs are, and the kind of potential employer
I’m talking about will give you credit for that). When the time is
right, you may have to move to another part of the country, that’s
what I did to go to the place where I learned the most. Or you might
just find that such a place exists right around the corner. You won’t
know until you start looking around and showing off your stuff. Just
remember it’s a whole lot easier to find a job if you already have a
job!

The very best of luck to you Cameron,

Dave Phelps
www.precisionplatinumjewelry.com

12 
survived for a year, but than popped off again. I got tired of BS,
and did it myself. Never, laid tiles before. It has been 30 years
and tiles still holding. That is what "common trades" means.

Boy isn’t that the truth. If you want something done right, you have
to do it yourself.

Don’t you wish everyone took the pride in their work that we do? I
hate plumbing, but no professional plumber has ever done it as well
(or anywhere nearly as cheaply) in my house as I do. Darn it. They
act like soldering copper pipe is some kind of engineering miracle
not to be attempted by mere mortals without multiple licenses and a
degree or two.

And don’t even get me started on auto mechanics. Nothing but
butchers. Not even the guys at the Ford dealership know that a 302
has two drain plugs.

Dave Phelps

13 
survived for a year, but than popped off again. I got tired of BS,
and did it myself. Never, laid tiles before. It has been 30 years
and tiles still holding. That is what "common trades" means.

Boy isn’t that the truth. If you want something done right, you have
to do it yourself.

Don’t you wish everyone took the pride in their work that we do? I
hate plumbing, but no professional plumber has ever done it as well
(or anywhere nearly as cheaply) in my house as I do. Darn it.

And don’t even get me started on auto mechanics. Nothing but
butchers. Not even the guys at the Ford dealership know that a 302
has two drain plugs.

Dave Phelps

14

What I believe you mean is poor workmanship…not common trade…as
David Pye had written a great deal about.

Ric

15 
here has always been a segment of the jewelry buying public that
are drawn to things that are less than they should be. Like the
"custom ring" that is really just a ring out of a catalog with a
few heads soldered to it or a stock ring that is altered using
retail store counter CAD software, altered enough to accommodate
the stones but possibly not really reaching the projects full
design potential. Much of the custom work being done isn't being
done well.

What an interesting turn and so many avenues that this thread has
taken! I love custom, and creating things to my customer’s requests
has proven to be the most interesting and frustrating parts of my
career.

I am a hand engraver and goldsmith with over 30 years of experience,
some working within a variety of retail operations, and the majority
being self-employed, until things became slow several years ago. At
that time, I returned to working within retail to supplement my own
work with some repair and custom work. My experience has been that
most stores see “custom” as described above, i.e. taking some basic
stock ring and modifying it by the least expensive way to
accommodate the customer’s stones. There is very little in the way
of an artistic approach, and frankly, those customers only want
their stones in the setting of their heart’s desire, with a minimum
of cost, and little understanding of the processes involved. The
staff in those stores have never been introduced to the concept of a
hand-carved wax, and have no idea of how to even start the creative
process beyond this shank, and this stone. They will often ask for
“several design options and estimates” without any input for the
customer’s wants/needs other than budget, and without regard for the
time it would take me to work with numerous stones of varying sizes,
colors and conditions. I used to do that sort of thing in my early
years when I was an employee, and newly working at the bench, but I
did not get any compensation or commission for those efforts. When
my “thumbnail” sketches left the store with the customers, despite
my pleas with the staff and management that the designs were
confidential, I stopped providing sketches and asked to work with
the customers directly. I left and became self-employed shortly
thereafter.

My most successful collaborations have been with stores whose
owners/managers understand the potential for custom design. They are
very involved with the process, have already established the design
criteria with their customers, and are open to my input and
suggestions from both a technical and artistic point of view. Their
staffs have been trained that there are many paths to the same end,
they are not afraid to lead the customer towards something they will
love to wear, and they are not afraid of charging fairly for the
time and expense it takes to make those dreams happen. This is a
dialog with the customer, planting seeds and cultivating them, until
the plan is clear and the work can begin. At that point, I am happy
to have a clear idea of my part, the customer is happy because he is
getting a unique piece that is special, and the owner is happy
because his customer is happy and he has made some money.

I believe in David Geller’s system, and it does provide some basic
groundwork for stores to work with, whether they fall into the shank
and stone custom design, or the fully involved and totally custom
design. He does not quantify the artistic merit, and how could he?
That is something that needs to be determined by the jeweler who is
doing the designing and creating, and needs to be included in the
price as was previously mentioned. In this day of so many venues of
competition, doing custom design is one way that your store can set
itself apart from the competition, and if done successfully, will be
profitable and rewarding. Done poorly, without a full understanding
of the customer’s desires, it can be frustrating and unhappy for all
involved. The trick of the tale appears to be the willingness/
ability of the store owners and staff to become aware of the
possibilities, the support and confidence to work with the
customers, and the belief in their abilities to satisfy that special
request.

Loving the challenges,
Melissa Veres, engraver

16

Hi Cameron,

While I help with sales, that is not my primary responsibility, so
there is no commission >structure with any sale I make...

In my experience it is customary for only the sales staff to receive
directcommissions from sales. The rational is that they are usually
working at a reduced hourly rate and really make their living from
commissions. The goldsmiths are typically compensated by a higher
hourly rate and have a more consistent income. Usually you can’t
have it both ways. That doesn’t mean that you should not receive
profit sharing or bonus’s based on store sales goals or the like,
just don’t expect commissions.

I think that in all cases, it’s your job to take advantage of where
you find yourself. Push to learn as much as you can from the skilled
craftspeople you work with. Push to be trained to do more difficult
work. And push to continually self educate yourself. Work with your
employer to set goals for yourself and then work hard to reach them.

If you exhaust your current employers ability or willingness to help
you advance in your career…then it’s probably time to go.

Good luck!
Mark

17 
When my "thumbnail" sketches left the store with the customers,
despite my pleas with the staff and management that the designs
were confidential....

This is why when Tim does counter drawings with the customer he
ALWAYS draws in a small book that pages DON’T come out of. We always
advise our students to never let the drawing leave their hands
because they will never see that customer again. The design will be
shopped around and given to the cheapest person to copy.

Have fun and design lots of jewelry.
Jo Haemer
www.timothywgreen.com

18 
Done poorly, without a full understanding of the customer's
desires, it can be frustrating and unhappy for all involved. The
trick of the tale appears to be the willingness/ ability of the
store owners and staff to become aware of the possibilities....

I fully agree. I also know the store owners and staff may appreciate
the dollars far more than the artistry and in effect undervalue the
jeweler/artist. They may totally not understand the need for both
technical and artistic design. Worse of all, a jeweler who has
consistently taken pride in work produced may remain at the short
end of the stick, no recognition other than a half hearted “good,
they loved it,” or waiting for that raise always promised but never
being given. Creativity taken for granted may be easily bruised.
Then, when enthusiam lags and creativity is a push in that
environment, surely is time to move on…if there is a place to move
to.

Still, seeing you work being appreciated some time after it was
first delivered can result in a most rewarding personal event, even
if no one else understands.

Tom

19

Hi Joe Haemer!

Try charging $50.00 for your sketches deducted from the final price
of the piece. Most customers won’t take it and the ones that do will
have their piece made by you.

Sigi Eurich

20 
Try charging $50.00 for your sketches deducted from the final
price of the piece. Most customers won't take it and the ones that
do will have their piece made by you.

Sketches are part of making any piece. They aren’t free ever.

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