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Metals... the price we pay


#1

Ciao All-

I’m still reeling from the spike in silver prices…I almost drove
off the road the other day when it was announced that it was above
$12 /oz. ( not to mention gold…over $600!)

What to do? I’ve already told my galleries that I’m raising my
prices (not much, because most of my work’s value is in design and
creation) I’ve bought an igot mold, and am not thrilled with refining
my scrap…but you gotta do what ya gotta do I guess ( wish I had
bought a rolling mill with a motor!)

I’m starting to think this is a time for Alternative Materials!
(thank goodness we have so many diverse examples of Alternative
Materials in those 500/1000 books huh? I just HAD to go there…tee
hee…) What about you? What are you thinking while facing an ever
increasing raw materials bill?

-Having some fun in the sun this weekend—while Tucson is still
just on parboil-

Ciao from- Maureen Brusa Zappellini


#2

Maureen,

What to do? I've already told my galleries that I'm raising my
prices (not much, because most of my work's value is in design and
creation) 

It sounds as though you may not be giving enough weight to the cost
of materials in your pricing structure. The cost of materials is the
ablsolute first thing to cover when calculating price! Double your
material cost (at least) for each piece at wholesale, and you won’t
have to worry about the rising cost of metals. Especially if you are
using silver, where the material cost may not be much (unless your
pieces weigh ounces each).

I've bought an igot mold, and am not thrilled with refining my
scrap..but you gotta do what ya gotta do I guess 

Are you refining, or recycling? Big distinction to consider. By
recycling, ie: remelting and repouring ingots, you will encounter a
degradation of the metal quality over time. You could get perhaps a
couple useful repours of metal before there was too much
contamination and loss of alloying components. You could add fresh
material to each melt to keep it usable, but at that point you are
essentially buying new metal anyway. Plus, do you really want to
spend your time rolling/drawing metal, when you can just order the
correct size and shape you need? And if you do roll/draw, are you
factoring the time/cost into your pieces? Which, as you stated
earlier, is more heavily weighted in your pricing than the metal cost
you are trying to avoid.

However, by refining, you can actually trade your metal in for new,
minus a very few dollars. Find a reliable, trustworthy refiner (I’ve
used United Precious Metals in Alden, NY for 15+ years, and have
always been satisfied with the results…no affiliation, just a
happy customer), and send in your metal to actually be refined. A
refiner will send you a check for the value of your metals, or issue
you a credit for the same amount to be used for purchasing new
metals. This is the road I travel, as well as most any professional
metalsmith I know. Yes, you will initially have to purchase a little
more metal as you build a pile of scrap to refine, but once you get
over the hump, you will always have that same amount of scrap
available to you, whether it’s cashed out or in a pile in your safe.
And these days, that scrap is rising in value as it sits around,
further increasing the benefit of this approach.

Last thing to do would be to buy the equipment to actually refine
the metal yourself. Then you could re-alloy it, then pour ingots,
etc… Sounds like way too much work!

Matthew Crawford
www.MatthewDesigns.com


#3

Try being in the platinum business!!! We do special order work - one
of a kind, not production. We simply have a chart on the wall that
prices platinum, 14k, and 18k per ounce, pennyweight and gram for
increments in the spot price. (Excel spreadsheet - I can post them
somewhere is enough people want them) Then we just weigh the
piece, and price it acccordingly. If you need to fudge a little,
that’s up to you, but our attitude is simple: You want platinum, you
pay for platinum, that’s all. Gold=cash=gold.


#4

If you are pricing a job (gold for sake of arguement) and it rises
20p per gram (12cents).

Presuming an average ring weight of 8g, this has an impact of 1.60
($1)

If this rise in cost of materials worries you, then there is a very
serious problem with your initial business model in pricing the job.

Kind regards
Chris Parry


#5

Ciao-

I guess the real question for me is how to balance this (biz no biz)
market with the ever increasing price of raw materials…I don’t
want to make my prices prohibitive but I do need to get Paid for my
hard work and skills!

I figure I’ll have to just be realistic and take a hard look at my
prices, which is most likely overdue. I’m thankful to have other
means of income thru teaching and such…so I guess I’ll just have to
suck it up and price accordingly.

Oh yea, I did already send my scrap to the refiners a few months ago
when the price of gold was 435 and silver was $7----I recieved a
huge credit and turned around and stuck it back into a big metals
order…My big problem now is that my metal had almost run out (
I’ve been productive) and I need to buy more to keep me
hopping—I’m suffering from sticker shock.

I’m having a show in the summer so I’ll hope it’s a sellout at my
new prices! Oh, worry worry, fuss fuss! Time to get the kid to school
and my bondoonie to the studio

thanks
Maureen (bzapdesigns.com)


#6
We simply have a chart on the wall that prices platinum, 14k, and
18k per ounce, pennyweight and gram for increments in the spot
price. (Excel spreadsheet - I can post them somewhere is enough
people want them) 

A chart like that would sure be handy this year!

Jeff


#7

Hi-

Thanks for the advice-

I must say that I think that pricing work in silver is a bit
different than gold—with gold and platinum there is a perceived
value that is more prevelant in the market- Conjuring up images of
kings and castles…while silver is looked at as less valuable
"common" and less likely to withstand a big price increase… The
consumer who has no trouble shelling out thousands for a piece wont
blink as hard at a 10% increase in price…however My market is more
in the 100-1000$ range where the customer is less likely to be loaded
to the gills with kuggerandsand more likely to balk at a slightly
higher price. for example the weighing of the metals…while
essential in gold and platinum, is not commonplace in silver retail
(perhaps in the mexican silver market)…and I work with mixed metals
so things can get even more hairy there… So I guesstimate and I can
say that approx. 15% of my wholesale cost is in materials. So my
descision is to increase that cost (double it) to compensate for the
market shifts. Making my total price increase about 15%for each
piece. ( I’m not a math person, obviously) I plan on keeping an eye
on the markets and flexing my prices if needed…but this 10%
increase I have made is permanent. I realise I am in a better place
than most—I am now sitting on a largebatch of work made from the
($7) silver and am ready to ship to my summer galleries, with the new
pricing. Hopefully the biz is good(!) though with the increase in all
consumer goods that seems to be coming our way due to big oil I’m not
holding my breath.

I am not However willing to step down from the realities of the
market and artificially keep my prices low. I’m thankful that I have
other financial stability in my life but not dumb enough to shoot
myself (or others in my field) in the foot.

Viva la price difference!!!

Thanks again for your imput and thanks for letting me rant-

Ciao- Maureen BZ


#8

Perhaps a better way to price your work and accommodate the current
price of metals would be to include in your product prices on the
market price of metals, at least while it is going up. That way when
you need to re-order, you have already figured the cost of materials
replacement. Try making an excel sheet with the manufacturing price
of metal per inch or foot, and adding from a constant the spot price
of the metal. That way when you use two square inches of gold 22
gauge 18K, your prices would reflect the market. It would save
recalculating and give you a fighting chance to fund your metals.

I learned this the hard way when years ago I was running a
deli/grocery store in a resort area. I was marking up the price of
canned goods based on what I paid, not on what it would cost to
replace stock. I had a great season and sold very well, but had
insufficient funds to replace stock because the price had increased
for new stock. Needless to say, while sales were great, the business
is no more.

The solution becomes obvious when you quit using your labor charges
to cover up the increase in metal price.

Judy Hoch