Should you try and track the cost of EACH job in the store?
Over the years myself and others have concocted ways to track costs
to see if we are making money on repairs and custom design. For the
most part it’s a waste of time.
How can rings. Why not repairs and such? The answer is pretty
simple-you have no clue what your labor cost is and neither does the
“Yeah but I’ve been doing this for 20 years and I know how long it
Sorry Charlie, no you don’t. There are three numbers to costing
labor. Lets see if you know what they are:
The amount of time you “thought” it took to do that job. It
typically takes 25 to 50% longer than what you figure.
The down time where you didn’t do any work. Talking to the staff,
answering phones, rolling emery paper, changing light bulbs.
Freebies. Whether you size a ring from the case (no charge), had a
redo come back and just plain old doing nice things for nice
I’ve done time studies on the jewelers and what I found was that we
paid a jeweler for an 8 hour day but they only did 5.5 hours work of
That means if your jeweler said it took him/her 1 hour to do the job
it really took 1 and a third hours (1 hour and 20 minutes). So if the
job supposedly took 1 hour and he’s paid $20 an hour you think your
cost is $20.
The $20 should be marked up just like merchandise. If you’d sell a
$20 cost chain for $60 then the jeweler should sell for $60.
(Actually he should sell for $70 because of
Triple key on $20. Pretty good, eh? WRONG!
- It didn’t take 1 hour it took 1 hour and 20 minutes.
So your cost has now gone from $20 to $26.
- You also forgot about your matching Fica/Medicare; vacation; sick
pay; unemployment. You need to add 25% more to that $26 number to
handle those costs.
The $26 cost now costs you $32.50. All from a guy making $20 an hour.
So if you’d triple key $20 to $60 would you also triple key $32.50?
If yes then the jewelers work shouldn’t sell for $60 but $97.50!
That’s means your pricing was 38% off the mark. OMG!
Want a simple way to see how your shop is doing without keeping
track of all of these numbers?
Track everything by totals by month not by job. Then compare total
shop costs to total shop sales. If shop sales are at least double
shop costs (keystone) then you’re doing a good job. Go for more?
Great! but doing this by totals takes into account all of the
freebies and redo’s.
So on your P&L, spreadsheet or legal pad the numbers might look like
Custom Design $4200.00
Total Shop Sales: $9800.00
Jewelers pay $3200.00
Jewelers taxes $800.00
Findings & Supplies bought $900.00
Total Shop Costs: $4900.00
Gross profit $4900.00 50%
See how much easier it is to see how the shop is doing without
counting pennies? This also means you probably shouldn’t ask a
jeweler how much to charge. Just ask "how long will it take? Say
“thanks” and add 25% to whatever they say and multiply the time by
$100-$125 an hour for your time.
Most findings will be triple key added to the labor.
if you’re not getting at least keystone its time to raise your shop
That’s the only way to fix your problem unless you can lower the
jewelers paycheck. Good luck with that!
Now you’ll be making money and not to worry.
You’ll keep your closing ratio because “Repairs are not price
sensitive, they are trust sensitive.”