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Revamping price list- contract jeweler


#1

Hello to all. I am requesting hints, suggestions, suppositions, and
tried and true wisdom in my endeavor to construct a new pricing
schedule.

80+% of my work load come from a retailler from whom I rent my one
man shop space from. I am responsible for any and everything that
happens to the jewelry once I am handed the job (Breakage incl.) The
store provides findings and casting grain, I supply the stock
material for shanks and sizings, wire, fabrications, etc. I do
quality work for him and my comeback rate is a fraction of a percent.

I have no desire to compete with the other jewelers and jewelry shops
in my area on price.

We have been baseing our prices roughly on 1/3 jwr rate from Gellars
recipe book.

I was looking at some older jobbers $ lists circa 1980 and the prices
are not too much different than mine today.

If you have any which may help, please e-mail me directly
at @J_Robert_Suzanne_Sae. If you send me a copy of your price schedule, I
will not pass it on unless you specifically tell me I can.

Thank you and Make Something cool today.

Rob


#2
    We have been baseing our prices roughly on 1/3 jwr rate from
Gellars recipe book. 

David told me that a jober should be getting 40% of his retail prices.


#3

Rob,

Hey, I’m curious, too. I know that prices may vary regionally, but I
often wonder if I’m undercharging too often, and overcharging too
little…

There is also the issue of varying degrees of workmanship and
warrantee. I frequently get work to repair, after someone else has
"repaired" it. I seldom get retipping jobs, or simple sizing. I get
far more “total restoration” jobs and jobs that other repair shops
have (wisely) declined. These time-consuming projects are often
easier for us to bill, because we’re used to them. Soldering on a new
prong is SO easy that we sometimes forget to charge for it!

Maybe several of us could share, off-line.

Doug Zaruba


#4

Rob, I had a very similar work arrangement a couple of years age. My
immediate advice is to stop letting the store supply you findings and
casting grain, especially if the other 20% of your clients don’t do
the same. As well, your discount rate is very high. The markup for
the store is essentially 300%, I believe it should be 200% (a $300.00
job costs the store $100.00 as opposed to $150.00). This is not
acceptable since you are responsible for breakage and that you pay
rent in the store (I am assuming that you are also responsible for
any and all equipment cost. If not then you should also be paying
rent on any equipment that the store owns). They are also saving on
the markup that a totally independent manufacturing jeweler would
normally make on materials, another advantage for them.

Having a jeweler in-house the way you are working is a significant
savings to the retailer. First they are not obligated to pay certain
taxes. You must pay what is essentially a self employment tax to
make up the difference. This is a rather significant cost for you
that must be made up. The other advantage for the retailer is the
convenience of having someone like you in the store who is not
subject to overtime pay or a regular 8 hour day, not having the
capital tied up in machinery and tools and not having to pay employee
taxes, workers compensation, vacation or sick time. In fact, if they
are subsidizing you at all, they are blurring the line between
employee and contractor, thus putting them at risk of being obligated
to pay the taxes and compensation of an employee.

In a nutshell, unless you are getting a real discount on the rent
(that is, the rent per square foot of your shop does not reflect the
retailer’s per square foot cost for the store and not paying for
equipment of theirs that you use to make money) you are not being
fairly compensated or you may be allowing yourself to be subsidized
by the store. This subsidization/unfair compensation can be a drag
on your motivation and worse on your cash flow. Try to imagine that
you were a trade shop in a totally separate location. Would you
still do the things you do for this retailer? Some of them yes, but
others, no. Your rent would probably be lower as you wouldn’t be
paying store front rates. Since you are, or should be, paying higher
rent, you should get higher prices.

I am sure that the store will be hesitant to lose the higher markup,
but if there is added rent income it should make it easier for the
store to swallow. When I started working for myself as an independent
contractor, I found that giving the store such advantages and a high
markup, meant that they had little reason to focus on the bottom line
of the repair/custom department. Subsequently my area, though
important for the store, ran on autopilot unless I made a stink about
something. It should be more of a partnership, with reasons for both
parties to feel motivated to make the department work.

The amount you should be charging is a totally separate issue. If
you do not care that you are in line with what others are charging
for similar services in your locale, then the point isn’t how much
anyone else charges anywhere in the world but instead on 1) how much
you want/need to make, 2) whether consumers will pay your fees, 3)
how much you may need to invest in the coming years in new equipment,
4) very important, what your productivity is and finally 5) what the
cost of doing business for you actually is (rent, utilities and other
overhead).

Once you have factored in these areas you can determine a per hour
cost for labor and a markup on materials. The last step is then
figuring how long it takes for you to get any particular job done
and, viola, that is the price you charge. It isn’t as easy as
getting someone else’s pricelist and using that for yours. Someone
else’s cost of doing business and how much they want to make may not
be the same. You may also need to do some kind of marketing to make
the consumers aware that your work is more valuable and desirable
thus justifying higher prices than competitors.

Larry Seiger
LS Hancock Design Studio