Back to Ganoksin | FAQ | Contact

Returning gold scrap


#1

Hi again folks!

Thought i would run this one past the group. I have been doing
repair work as an independent for about two years now and this week i
landed two new accounts… .wooohooo its my birthday alright! So
anywho i go to one of the stores for my fist pickup and all is going
great until this question rears its ugly head. Store manager says" So
you return all the scrap right?" Now mind you folks this company
hands me a price sheet as to what i can charge and is clearly priced
at their benefit. My response awkward and lumbering is “ummm, hmmm,
uh nope.” Manager response was a confounded and awkward " oh". My
next thought is i might not have this account long.

So i try to explain that in such operations as sizing down, clasps,
and head replacements. that the jeweler keeping the scrap should be
kinda factored into the wholesale price to keep costs lower for the
stores and the customers. (confused and non believing look on her
face now). I bury my self some more by adding that when my current
clients ask for that type repair scrap to be returned that i weigh
that scrap and tack it onto the repairs final price and that the
salespeople of my other accounts know this beforehand and
communicate that with the customers in their store if that scenario
should arise. So help me talk this one out guys and gals. This
practice is still common place, right? If this topic is brought up
again by the store i want to make sure i can talk about it at least a
little more edjumicated. Thanks in advance.

Sincerely,
I should have finished college.


#2

When I was doing trade work, the gold/silver scrap was part of the
wholesale price. If a client wanted the scrap back, I added on a set
charge for the scrap return. Be firm…trade accounts seem to want a
person to work for nothing…Teddy


#3

Nothing like having the best of both worlds, is it. Supplying you
with the price list that the store wants you to charge and having any
scrap returned to them.

How confident are you that they want you to do the work?

Perhaps if the store insists on having the metal returned (you can
be sure that they will not return it to the customer) you might have
to point out that the time taken to remove the tools from the skin,
sweep down the bench and sort the metal from scrap would be billed to
the store. Be sure to return the metal in individual bags as per the
job the metal came from to allow ease of return by the store to the
customer (all part of your customer service). Also urgent jobs are
likely to take longer to do because of the time taken to do the jobs
just mentioned.

How about giving the store the choice - you can return the scrap to
them and you provide the price list tha you work to or you work to
their prices and keep the metal.

Good luck,
Roger


#4

When I worked for trade shops, I had this discussion as much as
anybody else. Two arguments I found useful were:

1/ I don’t return scrap from sizing down, because I don’t charge for
the material for sizing up neither. And I need quite a bit of scrap
to receive fresh stock material.

2/ I don’t work by client, but in job order. I will do all sizing
jobs, then all chain repair, then all engraving… irrespective from
which trade client the jobs are. If you want me to return YOUR
scrap, then I would need to completely clean the bench between jobs.
Are you willing to pay this extra effort and time?

But your overall argument still holds: You offer good prices because
you have factored in keeping the scrap.


#5

I keep the scrap from size downs, and supply the metal for size ups.
(Unless it’s going up or down more than 4 sizes or its a massive
ring, then I give it back and/or charge for the gold + a markup.)


#6

I should have finished college too.

However I was not born yesterday.

Do keep your scrap. I tell folks that the sizing prices have
factored in that I keep the metals. That’s how is has been and always
will be. If they want the metals back I charge twice the normal cost.

A. for my time searching out that tiny little piece, bagging it and
labeling it to make sure it goes into the right job envelope. We’re
just too busy to stop working to look for a tiny little piece. After
all we charge $75.00 an hour for our time. Do they want to pay me
$75.00 an hour to look for something that’s worth 75 cents? B. I use
the metal that I got from that size down job to do the size up job.
So I’ll have to charge twice the normal rates for size down jobs as
well to make up for the time and metals that I “gave” back to them.

If they don’t like it, fine. Use some one else.

I’ll bet David Geller has something to say about this.

Have fun and make lots of jewelry.
Jo Haemer
timothywgreen.com


#7

Hi Guy, I always say, it’s all about crappy career choices. ; ) As
metal prices have increased I have found that more accounts expect
to get more scrap back. Typically I tell them that I return anything
usable or “big” (big being sort of vague). I find that they have
often included the scrap credit into the price they are charging the
customer, so they really do expect it back. I don’t return little
bits and pieces or filings, that would just be a pain and not very
profitable for them anyway. In your situation, where they are
telling you what you can charge and wanting every speck back, I’d
make darn sure that the prices covered my goal income plus another
10%-20% as income for the business itself. If they are squeezing you
everywhere they can squeeze and you aren’t making enough money,
you’re much better off finding another account. The most valuable
thing you have is your time, there is no point in wasting your most
valuable resource. If you spend 15 hours a week losing money you can
never make that time up.

Hang it there!
Mark


#8

Hi Guy;

I don’t know what you’re worried about, your writing is much better
than a lot of college grad’s I’ve seen, except you need to make a
habit if putting the final punctuation mark outside the quotation
marks when you quote (there’s an awkward sentence for you).

Now, more to the point…

I believe your first problem, and the more important issue, is that
you let your accounts give you their price list of what you can
charge them. How do they know what you’re operation’s overhead is? I
used to operate a trade shop and if they came up with that bright
idea I knew immediately I didn’t want to do business with them.
You’re not telling them what they should retail your work for. Maybe
they’re costing you business by over pricing. Maybe they’re charging
too little and they’re making it your problem.

But more to your issue: My policy was that we would return scrap
upon request, but we would charge a $2 handling fee for that. It
takes only a couple minutes, but my job is to get the job done, not
collect small bits of metal for them. At that time, sizing the
average ring down amounted to removing pennies in gold. Since then,
gold has more than doubled, so I guess it’s worth it for them. But I
agree with you, those old heads and small bits of ring shanks usually
belonged to the trade shop in those days. It was unspoken and
expected. But what are you going to do when they tell you they want
you to start collecting their filings?

Here’s the basic rule of business I abide by. Never let your
customers dictate the way you do business. They may be lousy
businessmen. In any case, the old saying is: “never let the camel get
his nose under the tent flap”.

David L. Huffman


#9
I don't know what you're worried about, your writing is much
better than a lot of college grad's I've seen, except you need to
make a habit if putting the final punctuation mark outside the
quotation marks when you quote (there's an awkward sentence for
you). 

No. See http://www.ganoksin.com/gnkurl/1ae
Not that many people care.

Al Balmer
Pine City, NY


#10
I believe your first problem, and the more important issue, is
that you let your accounts give you their price list of what you
can charge them. How do they know what you're operation's overhead
is? I used to operate a trade shop and if they came up with that
bright idea I knew immediately I didn't want to do business with
them. You're not telling them what they should retail your work
for. Maybe they're costing you business by over pricing. Maybe
they're charging too little and they're making it your problem. 

I haven’t read the whole thread but the retailer giving the trade
shop a price list is typical for national jewelry chains and yes the
last line speaks volumes about the chains.

That’s why the little guy struggles.

The chains have no clue how to teach the staff to charge and to
management the easiest way to make a profit is to cap their costs.

Asking for the gold back is not new since its so high.

It’s a profit strategy.

I have spoken to Zales and other large chains. Some of their big
managers were interested in my pricing guides for their stores but
the big wigs up top said no, this is the way we’ve always done it.

I have instituted my book in smaller chains, 8-20 stores and they’ve
done great with it.

I chewed out one large chain and told them THEY are the chief reason
we can’t get good jewelers, they don’t pay well in their stores and
they don’t allow the trade shops to pay well. Pay is a great
motivator for career choices.

I’ve told this David Geller analogy to many, including them, always
told to a male.

“As a young man, did you ever look up in the dictionary the word
’sex?’” They usually say “no” (yeah sure)

“Do you know what it says in the dictionary?”

“No”

"It says “See Intercourse”

“If you go look up the word intercourse, know what it says?”

“No”

"It says “See Sex”

“It’s a vicious cycle and jewelry repair is the same way.”

"The small retailer says “We can’t raise our prices like the big guy
down the street, customers won’t pay. After all repair prices are
very price sensitive (incorrect, they aren’t”)

Then you speak to the BIG guy down the street:

“We can’t raise the prices, if we get above the jeweler down the
street, customers won’t buy from us. After all there his staff is
better trained and they can speak to the jeweler directly”

It’s a vicious cycle.

You see the big guy can charge what they want. The consumer thinks
the will be there forever, can be trusted and if there’s a problem
they’ll stand behind it. They can charge whatever they want.

The little guy is THE craftsmen, the customer likes having the work
done where it won’t leave the store and they can speak to someone
that knows what their doing, has had previous great experiences
having things repaired or made. There’s trust here and the small guy
can charge what they want.

Both stores are scared but both stores can charge what they want.

As I write this a major jewelry magazines have reported the
bankruptcy of The Warner company in Fresno, California, a fine
jewelry store.

This is a short writing from a their local paper:

"The Warner Company issued a statement saying the untimely death of
owner Casey Stephenson in 2008, combined with the unexpected downturn
in the economy, have caused great challenges for this family-owned
business.

The company has been operating in the Central Valley since 1867."

When I started doing consulting in the late '90’s while still having
my store I did a store visit/training for Casey Stephenson, who died
from cancer in 2008.

I’m not sure when he bought the business himself, but it was in the
’90’s. He took it from a small mom and pop store and made it grow
into a multi million dollar store. He did a great job and he didn’t
work long grueling hours, he ran it as a business, not a store
housing beautiful things.

Whenever I visit a store I usually go out to dinner with the owner
and/or management staff to chat and set up the schedule for the days
to start.

I remember this gentleman vividly. He took me to dinner at a country
club and we sat outdoors overlooking the gold course. I’m explaining
the “Geller” mantra from making money from the shop.

Most people usually look you in the guy when they talk but I just
remember this guys looks and words.

Sitting outside, he looked over my shoulder, gazing out onto the
gold course and said these profound words:

“Repairs, its just another profit center”

I’ll never forget that short sentence.

They kept up on buying the newer books from me until he got sick and
passed away.

I do not know anything about the management team that took over but
I suspect they come from the “old world of jewelry”. Casey was new
world.

Sincerely
David Geller
JewelerProfit.com


#11

Are they asking for the scrap to be returned for their scrap pot,
or to return it to the customer? I’m guessing the former. There are
obviously no set rules on this kind of thing - it’s within their
rights to put it in the contract, but as the other party in that
contract, you should expect that the price reflects this.

Although I work directly for the public, this kind of issue does
come up from time to time. In many cases, the customer is worried
that you are the kind of person who sizes down 10 sizes and up 8, so
that you can keep 8mm of the wedding ring! I’m sure that’s not the
case, and if you can convince them that you’re not a crook, they
might change their mind.

If they are adamant that you have to return the scrap, then your
prices should reflect that - depending on the volume of your work,
your yearly scrap and lemel could be hundreds, thousands or tens of
thousands of pounds/dollars/whatever, and losing that from your
balance sheet is going to have a serious impact on your profits.

In this situation, it seems either that they are being greedy, or
you are. If you don’t feel like there is enough profit in the
account, then it’s an account that you just don’t need. If you only
break even on every sizing job…etc, then you might as well stay at
home and watch TV all day.

Hopefully someone more experienced with this kind of contract work
will chime in with some advice, but I can’t think of a time when I
phoned up a subcontractor and told them how much I was going to pay
them to set a stone for me, or cast a ring. Are you sure that the
manager of this place isn’t playing you? To paraphrase Jenny Lewis,
it’s OK for them to have their cake and eat it too, but not to have
you watch them while they eat it.

Jamie Hall
http://primitive.ganoksin.com


#12

Hi Guy,

I ran into this same situation back in the early 80’s when doing
trade shop work for a small jewelry chain here in Michigan. Seems the
managers of the stores would institute this little ploy to supplement
their own income, and collect all the scrap returned and have it
refined annually as a bonus to their wages. One of the managers
finally let me in on their little secret after he left their
employment, and yes he turned out to be a general thief!

Jon Michael Fuja


#13

I’m a little surprised at the adversarial tone that so many seem to
have taken towards their customers. Speaking from all three
perspectives of this issue, I have to respectfully disagree with
everyone.

As a retail customer, it is my view that what I bring into a jewelry
store for repair belongs to me. Therefore, everything removed from
that piece of jewelry also belongs to me. Believe it or not, most
people that are not in the jewelry business hold this view, as I’m
sure most everyone posting here would concerning something of value
of their own. Many may not say anything, but I guarantee they’re
wondering about where it went (not in a positive way either) and will
have a very inflated opinion of its worth, especially with gold being
so high right now. They’ll be wondering if they got ripped off or
not. Wouldn’t you?

As a retail jewelry store owner, it is my view that the customer is
always right, even when they aren’t. If Mrs. Smith wants the little
piece removed from her ring when it was sized or the old clasp from
her bracelet returned so she can keep it for her grandkids, I’m gonna
give it back to her. In addition, I’m not going to make her ask for
it, I’m going to offer it to her when she picks up her piece. To do
otherwise builds mistrust (consciously or subconsciously), and
mistrust is the kiss of death in the retail jewelry business. If you
(the generic tradeshop you) think it belongs to you and you are going
to be adversarial about it, I’ll find another tradeshop. You are not
the only game in town, you know.

As a tradeshop owner, I want my clients to be happy. I want my
clients to make money. If they’re making money so am I. If not, one
way or the other, I’m outta there. I also know that it is no big deal
to keep up with little bits and pieces. My whole professional life
consists of keeping up with little pieces and keeping them straight
as to what they are, where they go and who they belong to. Saying
it’s too hard to keep up with an 8X3 clasp or a piece of 3X3 sizing
stock tells me that the benchie’s bench discipline is either lacking
or considered unimportant. How can I trust someone with a carat of
1.3mm round diamonds when they fully admit and even insist that they
can’t be expected to keep up with a clasp tongue or piece of sizing
stock twice (or even ten times) the size of a 1.3mm diamond? Does
anyone that works the bench really want to convey that message to the
people that give them money to do what they do? I sure don’t want to
give my clients and customers the impression that I can’t be expected
or trusted to keep track of anything smaller than a half shank.

I may be wrong about this, but as a tradeshop owner and as a retail
store owner, I have never had to go looking for customers. I do no
advertising or marketing, I just take good care of my customers and
clients, to include returning their scrap (key word - “their”). They
tell their friends and they become customers too. Returning what can
easily be argued to belong to them in the first place is a very small
price to pay for a happy and trusting customer.

Dave Phelps


#14

I worked as a contract jeweler for two of what use to be major
corporations for many years. They did then, and I suspect still do
dictate the prices. I cannot say I did not make money working for
them, but I will never do it again. At one point in the 70’s when
gold hit its last high around 6 or 8 hundred an ounce (seems low now
doesn’t it) I approached the regional manager about changing the
price list to reflect the cost increase in materials. I was informed
that I removed as much gold from pieces as I put in them and there
would be no changes… at that point I passed this along
to the store manager and informed him that any gold returned to a
customer would be reflected in an equal increase in the price of the
work. I also made sure from then on that all work was fully billed.
No more, I tipped a couple of other prongs while I had the piece on
the bench at no charge. I also made sure that the retailer was
informed of all costs before proceeding with the work and required
all work to be done that I deemed necessary if they wanted the piece
to be guaranteed. Lots of struggle and confrontation with managers
trying to keep costs down for the home office. A constant battle of"
you work for us you work for yourself syndrome". Hope this helps some
with your issue, my advice is stick to your guns, and remember they
are supposed to make money from their customers and so are YOU.

Frank Goss


#15

Hmm, this really a sticky wicket. I don’t know about you out there
but at my contract labor bench job we’re getting more requests for
return of material on sizing from customers. The only thing I can
think is to charge extra for the service. Also remember that + 90% of
previous sizing joints are butt joints rather than dove tails and
when you have more than a couple of joints in a shank it’s often
necessary to replace the sizing bar to eliminate those old solder
joints from previous work. I use Plumb hard solder for sizing (best
color match) so I frequently use a larger sizing block in such
situations. You’re going to need to show your stores that those
upsizings are sometimes consuming more material than the requested
size especially if they want all the lemel and scrap back. You might
try a product called solder prints from rio:

http://www.ganoksin.com/gnkurl/1ai

I usually use my torch for this purpose but hope fully this chemical
will do the same thing. Remember to charge them for the bigger block
of material and mark it up ; keystone, you deserve to make money
too. My guess is if they quoted the customer for a single size up and
discover that they’re going to be charged for the larger block of
material and the extra work to return the scrap they’ll stop bugging
you pretty quick. You must identify these extra costs when you accept
and pick up the job ;they’ll have the option of calling the customer
for additional monies (they don’t like to call the customer after
they already quoted) or eating the cost themselves. Let it by their
decision and don’t let them pin their price list on you. Their price
list doesn’t take into account commodity prices changes or previous
work on old jewelry.

Michael Edwards
Flying M Designs


#16

Hello again,

First and most importantly i have just ordered The Blue Book of
Grammar and Punctuation by Jane Straus. I am very excited about this
purchase and you should see my posts cleaned up shortly.

Now as to the topic at hand.

Jamie, I’m not being greedy. I posted the question simply to get the
general consensus of the group as there are far wiser craftsman who
have most certainly encountered the same situation. My intention was
to be sure that if the topic was broached again that i could speak on
the matter with confidence. Thank you for taking the time to reply.

Overall i am not really all that worried about it. The price list
isn’t horrible especially for my geographical area and its not the
hole company that’s asking for the scrap back just one misguided
overzealous store manager gunning for a district manager position.
Anyway i am not trying to put my kids through school on snippets of
shank. I believe in working smart and in an efficient manner and i
should hope i can make a profit in all areas of the business. Some
areas you make more money than others and hopefully it all balances
out in the end. I just thought it was a odd request for a company
who tells you what you can charge to make such a request.

Unfortunately for me chain stores are about the only game in town,
couple that with having one of the largest trades shops in north
america only 30 miles away makes slightly difficult to impose my own
price sheet as the big trade shop offers rock bottom pricing and
making profit on sheer volume.

Nope, i don’t think it was a crappy career choice but when your
dealing with the " i sold cell phones last week and this week i’m
selling fine diamonds generation of the industry" from time to time i
do take pause.

Thanks to all who took time to reply, much appreciated.

Sincerely,


#17

I sympathise with your plight. I have always returned broken clasps,
chain etc but wouldnt consider returning filings and clippings from
ring resizing etc because the the cost of recovering the lemels from
1 job would outweigh the benefit to anyone.

Now, I can see where the store manager is coming from if you are
doing a lot of work for them in terms of a percentage of your time
as they would think that it would build up into a considerable amount
of metal over a period of time. I think the answer is that you cannot
allow yourself to be dictated to in terms of the contract and you
should look at that (whether written or verbal) to make a decision
as to whether it will continue to be worth your while working for
this particular customer. You dont have to accept the terms they
offer as you are not employed by them.

Nick Royall


#18

If Mrs. Smith wants the little piece removed from her ring when it
was sized or the old clasp from her bracelet returned so she can keep
it for her grandkids, I’m gonna give it >back to her. In addition,
I’m not going to make her ask for it, I’m going to offer it to her
when she picks up her piece. I almost always like the way David
Phelps thinks, and this= makes a lot of sense. If I had the pleasure
of doing Davids work I would surely return every little thing to him
with the completed job. That said, I have done work for dozens of
very different retail jewelers over the past 33 years and David is
the very first one to suggest that everything should automatically go
back to the customer. What I think this represents is just one of the
many good things that sets David apart from his competitors. But I
don’t think that keeping the sizing piece necessarily represents a
poor business practice. I think it’s become customary for the
goldsmith to keep it to offset costs and that is something that
customers readily accept. But I do like Davids argument, and those
sizing pieces don’t add up to so much that the cost of giving them
back couldn’t be built in to the wholesale charge. The problem in
Guys original post was that the store wassetting the prices and
asking for the scrap both, creating a potentially win-lose situation.

Mark


#19

Guy, perhaps you should contact the district manager. Continuity
among his district is important. This one store manager may be
making this decision without the consent or knowledge of the district
manager. Company policy may already be in place on this issue. You
can contact the district manager and inquire about company policy on
the issue without ever bringing the one store manager into it. You
then have company policy to fall back on should the store manager
give you any problems in the future. My experience with corporate is
that store managers change much faster than contract jewelers. One
store I worked at changed store managers 5 times in 3 years. I
stayed till I was ready to leave.

Good luck, Frank Goss


#20

David P, I agree completely and couldn’t have said it better!

The value of the scraps from sizing down a few sizes is embarrassing
if you offer to buy the scraps from a customer, and those scraps do
belong to the customer. Our profit margin would also be embarrassing
if the value of the scrap was the breaking point between profit or
loss.

Sorting the lemel on the bench takes little time provided you
collect between jobs of the same carat. I know that high volume trade
shops cannot afford that time because they are driven to the last
cent and believe that price is all there is…a race to the bottom.

Honesty is having nothing to hide.

No matter how cleverly done, hiding a tiny little thing is cause for
greater hidings.

Alastair