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Platinum wedding band pricing concerns


#1

I am trying to work out price estimates for a men’s platinum wedding
band. It happens to be for a family member, but I’m trying to apply
the same pricing formulas that I would with any direct customer,
which is to sell at 2-2.5 times my cost (essentially, wholesale
pricing). One of the selling points in convincing my family members
to buy from me instead of a store is that they would save money
(because they are paying wholesale instead of retail price).
However, my price calculations are coming up extremely close, and in
some cases over, prices for a similar band at retailers that I’ve
researched from Zales, to Tiffany to random retailers that show up in
google. It would seem to me that because of the retail mark-up, my
pricing should be coming out at about half of what retailers
advertise. When I’ve done women’s bands before, this has pretty much
worked out to be the case.

So I’m wondering, is there a different markup typically used for men
in retail? Or a different markup for higher priced items, in order to
keep the retails reasonable? If these retailers are marking up 2-3
times (as seems to be the typical markup according to several
sources), and they are buying from a wholesaler who marks up 2-3
times, I can’t imagine how they are arriving at these prices.

For example: I found this ring online which even tells you the
weight of the ring.

The value of 14.4 grams of platinum (according to dendritics.com’s
precious metal calculator) is $599.38, and they are selling the ring
for $1029. That’s less than twice the value of only the platinum.
What about the labor? What about the wholesaler’s markup? Does
anyone have any insight into how these people are pricing these
things so low? Alternatively, if anyone has any tips/suggestions on
pricing formulas or pricing ethics I’d love to hear them.

Thanks,
Annie


#2

Annie, most all plain wedding bands are done on CNC machines so the
labor component is practicaly nil. You are just buying metal.


#3
but I'm trying to apply the same pricing formulas that I would with
any direct customer, which is to sell at 2-2.5 times my cost
(essentially, wholesale pricing). 

Not sure what market you’re in Annie, but a 2 - 2.5 time markup over
cost ain’t wholesale anywhere I’ve been. That’s retail, and for
platinum bands in today’s marketplace, it’s top retail unless you’ve
got a famous name or box to go with it.

Competition, especially for mundane things like wedding bands is
fierce these days, with some on-line retailers accepting a 1.5 time
markup on materials and almost nothing for labor. Refer to David
Geller’s recent post about turn on inventory. Someone that can turn
something at a 1.5 time markup six times a year will blow someone
that turns a 2 time markup once a year out of the water. That’s who
you’re competing against, if price is the issue.

Wholesale on platinum bands usually works out to about a 1.1 to 1.2
time markup on metal and maybe an hour or two’s worth of labor.
Sorry, I know your time is worth more than that, but welcome to the
twenty first century, a faltering economy and some very hungry
competition.

Dave Phelps


#4
Or a different markup for higher priced items, in order to keep the
retails reasonable?

Annie, generically speaking, absolutely. When you punch-press steel
wash ers by the millions, your cost is.001 cents per unit, and you
sell them for a penny (say…) that’s a 1000% markup, if my math is
correct (or is it 10,000? s’not that important, it’s a lot) If you
sell a million do llar stone, you might get 2%, which is $20,000.
Even if you triple that it’s still 6%.

There is no labor to speak of on the ring you posted - those are made
on ring-lathes, come off of the machine polished, and take about 90
seconds apiece to do. I came up against Tiffany on a band and their
price wasn’t that far from my cost… The salesman had told them
(correctly) that Tiffany’s is selling weight, just like everybody
else is.

Just some input… In your particular case, instead of agonizing over
anentire profit structure, I’d suggest getting an overall retail
price online for your exact band and then shaving $50 or $100 off of
that for your customer. In with the right hand, out with the left,
several $hundred sticks to you, what’s not to like?

http://www.donivanandmaggiora.com


#5

Hi,

Pricing is about the stickiest subject there is in any business and
it’s secrets are often carefully guarded. It takes people a long time
to figure out the right formulas and usually they want to keep them
to themselves. It sounds like you’re sort of comparing apples and
oranges. For example, there is nothing special about a plain 1/2
round band bought directly from a manufacturer, anyone can get it
anywhere and everyone pays about the same price. With something like
that everyone is competing on price alone and customers can compare
those prices, that drives the margin down. The manufacturer or
wholesaler is also dealing with downward pressure on pricing for
commonly available products, the margin on items like these can be
remar= kably low (as you have seen).With custom work, it’s usually
"one of a kind" and special in some way, that increases it’s
perceived value (and your costs) and allows for a higher margin.

A problem develops when you’re custom making a readily available mass
produced item, you can almost never compete with that on price. Your
only selling point in that case is usually quality and sometimes that
may be enough.

Usually a business looks to maintain a profit margin range. For
example they might look to keep their profit margin between 30% and
70%. The 30% margin might be on quick turn items that are very price
sensitive like your plain band.

Typically your margin needs to be somewhat flexible if you’re
selling a wide range of products. Some people make a fortune selling
very common jewelry items at very low margins.

Why can’t things ever be simple?
Mark


#6

I try to get over this problem by doing work on the band of some
sort: drawing an unusual shaped wire giving an unusual texture to
the band layering bands together, either soldered or riveted say,
platinum and 18ct yellow.

I find that customers are prepared to pay a much better price and I
have sold some really platinum heavy rings, all hand made. I have
even sold to classy shops, so just think what they charge. But if it
is a plain band they want I often tell them to go else where, Then
sometimes get the job anyway.

I always try to tie in the wedding and engagement ring and a matching
mans ring. When possible.

David
jewellerydavidcruickshank.com.au


#7
Wholesale on platinum bands usually works out to about a 1.1 to
1.2 time markup on metal and maybe an hour or two's worth of labor. 

Ouch! How does an independent wholesale jeweler (not a big
manufacturer) make any money? I also got a response offline from a
guy in the UK that says his wholesale markup is only 25-30%. This is
contrary to what I’ve been told by friends in the business and to
what I’ve read about wholesale pricing (namely, in “The Fashion
Designer’s Survival Guide” by Mary Gelhar. Jewelry is fashion, no?
Gelhar says that wholesale markup should be the same as retail
markup.), but maybe the discrepancy is in that my friends knew that I
was working with mostly silver then and therefore cheaper product.

I just don’t understand how it is that I do all of the hard work,
am expected to only make piddlings off of it, and then the retailer
gets to charge more than double just for putting it on display. My
goal of opening a store has suddenly become more urgent!

I’d really like to take a poll on wholesale pricing formulas. I’ll
start a new thread. Please, everyone chime in!


#8
I just don't understand how it is that I do all of the *hard*
work, am expected to only make piddlings off of it, and then the
*retailer* gets to charge more than double just for putting it on
display. 

Remember that “just putting it on display” includes inventory
investment, sales salaries, workers’ comp, rent, electricity, heat,
insurance, janitors, furniture and fixtures, income tax, and RISK.
If your jewelry doesn’t sell, the retailer still has all of these
fixed costs, so they deserve to be rewarded for taking a risk, in
addition to covering their costs.

The grass is always greener… :wink:


#9

I just don’t understand how it is that I do all of the hard work,
am expected to only make piddlings off of it, and then the
retailer gets to charge more than double just for putting it on
display.

Retailing jewelery, when done well, can be a very expensive
undertaking… There is a lot more going on than just putting pieces
in the case and selling them for huge profits. Establishing,
marketing and growing a retail business year after year requires a
skill set very different than that of a bench jeweler. The stores
operating costs can be huge. My experience has been that the mark-up
in retail stores is typically reasonable and seldom excessive when
compared to the stores costs.

If you’re selling wholesale you need to produce work that is both
unique and marketable enough that people are willing to pay more for
it. Or do work that, if not unique, is consistently of unusually
high quality and find people who are willing to pay more for that.
Ideally you’ll do both.

Mark


#10

Hi Annie,

I just don't understand how it is that I do all of the *hard*
work, am expected to only make piddlings off of it, and then the
*retailer* gets to charge more than double just for putting it on
display. My goal of opening a store has suddenly become more
urgent!

Know exactly how you feel but at the end of the day opening your own
shop has its own issues. Insurance, rent, business rates, gas,
electric, water, etc… It aint cheap and theres a good possibility
you wouldn’t be hugely better off for a lot more work!

Im doing mostly repair work in the U.K and i charge the retailer
between a quater and a third of what they charge the customer. Ive
thought about setting up my own premises in the past but in doing
that i would be competing with my client in a very small town and
lose their custom. They have given me workshop space, water and
electric free of charge and they supply all the findings. I can also
make whatever i want to put on sale in their shops, using their gold
that they buy off customers.

So, for me it may be frustrating looking at a ticket and seeing how
much they are charging the customer, realizing how little i get from
it but i am so much better off in other ways. Having said that
everyones in a different situation, you just gotta make the most of
yours.

As for the wholesale side of things could you not do more one off
pieces?

As others have said on Orchid, the wedding bands are machined/milled
in the masses and so many other things are cast in huge quantities.
With handmade/custom orders you at least have the chance to charge
for your labour (whatever that may be per hour) and a steady income
providing you get orders or a shop is prepared to buy your work off
you.

Sorry if Ive totally missed what you were asking, i cant remember
your original post.

Cheers,
Jon Horton


#11

imho cut out the retailer on a % od your items and sell them at
retail your self… haveing been a retailer in a different area
then jewelry i still don;t see why a retailer can justifey making
that much as they dojust my 2 baht worth


#12
I try to get over this problem by doing work on the band of some
sort: It sounds like you're sort of comparing apples and oranges. 

You’re right, I am comparing apples to oranges. My proposed design
is not just a simple band, it has some unique detailing. I was really
only comparing it to the simple bands online because the weight
would be about the same, actually only comparing my price before
labor/materials on the unique aspects of the ring.

Anyway, now I am understanding that apparently I am just marking up
too high. This has all been really helpful. Thanks to everyone who
has chimed in. Feel free to keep it coming.


#13

Annie,

I was really only comparing it to the simple bands online because
the weight would be about the same, actually only comparing my
price before labor/materials on the unique aspects of the ring. 

Charge for your material costs with a reasonable markup, labour at
wholesale should include markup, shop expenses have to include
mark-up. You are not making simple mass made bands.

Much better to skip the job than working your ass off to loose the
same $$$

Charge what the piece actually costs you, or better yet more if
possible :slight_smile:

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


#14
i still don;t see why a retailer can justifey making that much 

think of the retailer as providing a valuable service to you. He
supplies consumers for your product. If you think its not costly and
time consuming to nurture a loyal following, one that has automatic
faith in the retailer’s selection of YOUR goods to be on display,
then you might want to consider going into retail yourself.

But instead of visiting your reliable account one time and walking
away with a 30 piece order, you’ll have to find and then hold hands
with 30 consumers and maybe walk away with a one piece order. So the
retailer has to develop a loyal client list of 900 people in order to
sell your 30 pieces. That’s not worth something?

Oh, and you’ll have to split your time between being a full time
manufacturer and a full time retailer. You didn’t need a life
anyway, right?


#15

There are many that are great skilled artists and craft people,but
few are good at running a bussines…imhoI can see you wanting more
for your work… try putting it into a art studio on consignment or
do shows in your area part time…