As Forrest Gump use to say
“Repairs are like a box of chocolates, you never know what’s going
to come in the door.”
Yep Forrest was right you never know what’s going to come in the
door. But if you price it right you’ll always make money.
Whether it be a simple ring sizing, half shank or rebuild 7 channel
set stones in a wedding band you should always feel like it’ll be a
profitable sale. Why not? 90% of people say “Ok, go ahead and fix
One way to make certain is to price from your brain and not from
What’s the difference? Simple:
Your brain actually thinks where as your stomach has feelings.
That’s nice but not when it comes to the science of money.
PRODUCT SIDE OF THE STORE: Pricing from your brain, commentary from
your stomach: Product arrives and the cost has gone up.
So you stock a ring #1234 that costs you $400 and you sell it at
keystone for $799. Simple brain math. “If our costs are between $500
and $1500 we will mark it up keystone.”
Now gold has gone up. So what do you do?
Your brain tells you what to do:
Old cost: $400 New costs: $500
Brain Says: “My overhead hasn’t dropped, payroll continues, we have
to make a profit. Lets apply our markup formula of keystone.”
Stomach says "OMG, nobody will pay that! We must sell 100% of the
customers coming in the door. "
Brain Says: "You fool, who’s going to make payroll next week.
Your friend ’ ‘acid indigestion’? We still have to make a profit. We
can’t sell everybody. We need to continue with our selling 3 out of
10 people closing ratio."
New Selling Price: (was $799) NOW: $999.00
We sell it, takes a little more explanation but with all of the news
customers understand the cost of material goes up.
REPAIRS & CUSTOM WORK SIDE OF THE STORE
Pricing by the Brain:
“Cost of sizing stock, lobster claws and heads goes up in costs. One
jeweler got a raise (labor went up), another hasn’t gotten a raise in
3 years and my competition will soon hire him away with a pay raise.
The jeweler I want to hire is asking 20% more than I pay anyone in my
shop now. OMG!”
Pricing by Stomach:
“Yeah but if I raise my repair prices I’ll have people leave and
never come back. This could jeopardize my business. It could
collapse. I’d have to fire everyone.”
“You moron. Remember when it took you 7 years to raise your ring
sizing smaller from $20 to $25? A whole five bucks. That’s a whopping
25% increase. You didn’t raise the price because of rising gold price
but because 3 of your jeweler buddies told you they raised their
prices. Remember what happened?”
Stomach: “I had a pit in me. Nothing happened.”
Brain: “Excuse me? Nothing happened? Repair income went up as well.”
Stomach: “Ok, but this time its different. We fight for every dollar.
We can’t afford to lose any customer.”
Brain: “You really take the cake. How many people out of 10 who walk
thru the door with a repair don’t leave it and go home?”
Stomach: “One, maybe two.”
Brain: “How many people out of 10 come in, look in the showcase and
don’t buy jewelry and walk out? For whatever reason?”
Stomach: “Typically 3 buy out of 10 so I guess 7 walk. But we’ve had
many days where 5 people buy!”
Brain: “And how much do you own in inventory, Mr. Big Shot and what
is the average dollar sale when you do make a sale?”
Stomach: “Half a mil, give or take. Average sale is maybe $400, if
Brain: "So let me get this straight.
On showcase sales you keep 1/2 million dollars in inventory so you
can have an average dollar sale of $400. When 10 people come in to
look at buying jewelry, 7 leave the store without buying, leaving you
with 1/2 mil of unsold inventory that ties up your accounts
Stomach: “Yes, but you see…”
Brain: This doesn’t keep you up at night? Besides every time a
replacement item comes into the store you just double it, without any
thought to will the customer pay? Even if it costs more to purchase
it this time."
Stomach: “Yes I worry but we’ve got to make a profit to stay open”
Brain: "Indeed you do. But then when a repair comes in it has a 90%
closing ratio. You want to know why? Because unlike product repairs
are NOT price sensitive, they are trust sensitive. That’s why so many
folks say ‘gosh just go ahead and fix it’.
But cost of labor and materials go up and you won’t raise the price
in the repair department.
How about this question. 5 Years ago an average wedding band cost
YOU $300 and you sold it for $599. How much does it cost you today?"
Stomach: “Easy, it costs us about $475 now and we sell it for $950.”
Brain: "So let me get this straight. A plain wedding band has gone UP
by $351 retail and you won’t raise your price from $28 to $39 to size
that darn ring? Eleven dollars more to size a ring that itself
increased by $350!
For crying out loud. No wonder you take so much Prilosec OTC. Heart
You know what you need?"
Stomach: “No, what?”
Brain: “Besides maybe a knock upside the head, you need a crutch.
Just go get the Geller’s Blue Book to Jewelry Repair and Design. 2
shank jobs will more than pay for it and could easily increase shop
income 50%. The guy even trains you and the staff on his website.
You’ll keep the same closing ratio but you’ll be making more money.
Besides you can’t sell everyone, even though in the repair department
it sure looks like you do.”
It’s a no brainer. Here, take the 5 Tum’s, I’ll speak to you
Stomach: “Oh thank you brain, I don’t know what I’d do without you.”
Brain: "One last thing. Mama used to tell me this and it applies to
you: Stupid is as Stupid does
Don’t be stupid. Now drink this Maalox and get to making some real
money in the repair department. "
Director of Profit