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Setting customer stones


#1

I am sure that I am not alone being bugged by the situation that the
internet presents. I offer some designs, but smart shoppers find the
stones cheaper at someplace like Blue Nile. So now I am in the
position that if I accept the job I am making no profit on the stone,
but taking on a certain liability when I set it. It seems like this
is the way things are going to be very often from now on, so how do
we deal with it? I have been telling customers $100 extra to set
their diamond from another vendor. My wife says that this is not
enough when you consider the risk. Any thoughts?

Stephen Walker


#2

warrant your work and materials not the stone. If you do elect to
set a stone you have not purchased and designed originally into a
piece, then you may offer additional coverage for a lifetime
factoring in the cost of the rappaport value of replacement for
it/them and deducting that figure less your cost minus 20%. you make
up the cost in the stone setting charge that will be incurred when
replacing it should it become necessary. Before agreeing to- what is
essentially insuring a stone- make sure you appraise it carefully and
note all flaws etc. clearly in a document that you hold and take a
photograph ( a micro-photograph is best ) of it in the mounting. you
will probably never make money on covering a stone you do not supply
though and the point of the entire 'service" is to ensure repeat
business. It is important when drafting a replacement coverage
contract to spell out what yo consider normal wear and tear and
specify that that is the only coverage you are offering. Putting an
emerald that is worn on a customers hand near an oven (say to remove
a turkey) has caused many a stone to fracture due to the thermal
change that is rapid and inescapable…think about that when debating
the wear and tear issue and the types of stones you will or won’t
cover, and list them from amethyst to zircons…and regarding zircons
the issue of colour change shouldn’t be overlooked…every stone has
idiosyncratic properties that you should take into account when
covering them or not.the entire business is that you are not an
insurance agent, but there are independent agents you may wish to
retain specifically for stone coverages and other customer insurance
policies on jewelry that may actually, if you offer insurance on
jewelry apart from homeowner’s policies, increase your business and
store traffic…it is a vast undertaking but once in place and profit
is realized can be beneficial. If it is a simple addition to your in
place services it is probably not feasible in the long run on an
individual case basis without a good bit of careful forethought and
cost analysis when you perhaps really just want to make jewelry that
you are fully responsible for from design to delivery.

rer


#3

If you’re a good setter, that’s fine. In my price book, setting and
a head & set have an extra $6.00 per thousand added in for breakage.
It works over time.

I pay $1200 a year on car insurance. Had a wreck and it costs $3500
to fix. How do they make a profit? Its spread over many.

Also, if you sold a 1 carat diamond, what would you make? $1000.00?
If you broke it, the cost to replace it is 3-4 times your profit.
Doesn’t matter anyway.

Law of averages. $100 extra is fine.

David Geller
JewelerProfit
www.JewelerProfit.com


#4

First of all, you should have it clearly spelled out that all
customer’s stones are set at their risk and it should be signed off
on by the customer at take in. You should verbally reinforce this
statement to them as well. Then make all of your prices high enough
to accommodate the fact that you aren’t selling the stone to them.
You can always discount something to someone who ends up getting
their stones through you or simply reduce the price of the stone to
them by whatever extra you’re charging to cover the non stone
buyers. You might also want to start looking at selling branded
stones as they aren’t available through places like Blue Nile. Lazare
Diamonds. Hearts on Fire. Something like that.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
www.spirerjewelers.com


#5

$100 extra for setting a stone?! You don’t take responsibility for
any mishaps full stop.You need this in writing & make sure the
customer reads and understands. What would happen if the item had a
dozen big stones? want $100 xtra each just in case?! Not sure the
customer would like that idea.

Chris Mead of C.M.Settings


#6

I treat it just the same as I do when someone brings in Grandma’s
diamond, and charge according to the Geller Blue Book.

The only part of it that really makes me have to bite my tongue and
take a deep breath is when I hear “You’re the only one I trust to set
this diamond I got from Whatever.com. Can you tell me if I got a good
deal? I’ve got thirty days to return it.”

How do you answer that? How much time do you spend on it? Do you try
to turn it into a sale or do you just blow it off and be happy you
get to make a custom setting?

Dave


#7

Stephen,

While I am not an attorney, this scenario involves the legal
situation called “bailment”. Unless you act with negligence or
recklessness, you would not be held accountable for the loss. You are
getting a small sum for your work and you are, simply, NOT
accountable barring negligence. it is prudent to have your client
sign a form, designedd by an attorney, that acknowledges that, given
the small sum you are charging, they will hold you harmless should
damage or destruction occur. I do the same in my stone repair
business. All work done at your risk, period.

Wayne


#8

Stephen,

I can see two ways of handling it.

In the scenario where you make a design pitch, thinking you’ll get a
stone sale with it, then they bolt on the stone but still want you to
do the work…Initially, price the project with a higher cost for
the mounting/design. Explain that you would be happy to offer a lower
price if the design purchase is accompanied by a stone purchase. And
be creative in how you price each component. Make the stone cheaper
and the mounting higher accordingly.

This will both encourage the stone sale if the numbers work and it
covers your extra liability of setting their stone without coming out
and saying you’re charging more. You don’t look like you have sour
grapes over losing the stone sale. I don’t think a seperate 'charge’
is a good way to go. Build it into your presentation.

Or you could just have a policy that you do not set new stones from
other sources because you may be assuming liability if the stone
turns out later to not be as it was represented by the seller, and
you just dont want to get in the middle of something. You could
charge a fee for stone verification if you accept the job, but use an
outside Gem Lab so there is no hint of collution. And it takes time
of course, usually customers want it quick. The best time to outline
either of these policies is before you lose the sale.

I learned a long time ago to price each aspect of a project as if it
were the only aspect. Offering a package deal is fine as long as its
understood the special price is contingent on getting the entire
transaction.


#9

Usually when a customer buys a large stone from me I do not charge
for the setting. So I always add $150 per carat to set a stone
bought elsewhere. I appraised jewelry for years and just this year
quit appraising. If someone asked if they got a good deal from a.com
dealer I always say, if you think you got a deal then you most
likely did. I had the same scenario just a few weeks ago but I beat
the Blue Nile price by thousands. It surprised him so much he still
bought the blue nile diamond, he could not understand how a small guy
could beat blue nile, something had to be wrong with my stone. This
would never happen but wouldn’t it be great if every jeweler stopped
working on the cheap crap from the internet and discount stores. Make
them repair their own stuff no more sizing qvc rings it just might
put a stop to the online sales.

Bill Wismar
www.metalbendersgallery.com


#10

Stephen,

I run into this problem almost daily now, and agree that the price to
set other seller’s stones just has to be higher than if you or I sell
and set them. I always defer to David Geller on pricing, but
sometimes more than double his blue book price to set stones brought
in…the cuts are usually horrible (I had an 7 mm. aqua with no
girdle!), and the chances of breaking the stone have to be mitigated.
The customer usually thinks they got a great deal, and we many times
have had to reply with “do you have return privileges?”. Yeah, not a
nice thing to start off with, but the online comsumer has got to be
educated…the happiest customers I have gotten lately are the ones
who got stones that I had ordered from my reputable dealers…the
quality has got to be better from them and the price has to reflect
the quality…that is how they stay in business, and earn our trust.

And, I have got to always return to my background in the auto parts
world in answer to the question of customers’ stones…your
mechanic would almost certainly NOT install parts you bought
somewhere else! He/she, like us at the bench and in the store, have a
certain markup on the parts along with the basic repair/setting
charges. If you bring in your own parts, even if they are exactly
the same brand as the ones the mechanic would get you, there is never
going to be a warranty on them. Warranty is part of the installation
process! Same thing with stones brought in for setting…I offer
warranty/guarantee on the setting and process (within limits), but
when you buy a stone online, it’s gonna be “buyer beware” when I have
to set it.

Gawd, I have a many more horror stories of online purchases coming
into the store lately, but won’t bore ya with that list.

Best Regards,
Tim


#11

Thanks very much for the feedback from those of you who took the
time to answer. This situation comes up more and more in my business
so getting my act together about it is taking on greater urgency.

I can usually meet an online discount diamond price if I am willing
to take a fairly small markup. As I see it, I would rather have
several hundred dollars in profit on the stone than no profit and be
left hanging if I damage the stone or something else goes wrong. In
the case that inspired this thread the customer wanted a 3/4 carat
round diamond. I priced the ring at $1800 plus the stone. He found a
much better price at a discounter, which I then offered to meet. All
was fine and good until I suggested that a 0.90 carat cushion cut I
had available would be better in the design. I offered him that stone
and he found a certified stone with very nearly the same specs for
less than my cost. The total value of the project went up, but my
gain actually went down. Oh well!

I think it is important not to cast any aspersions on other vendors
or other jewelers, such as insinuating that mark-ups are too high or
that dishonesty is rampant in the jewelry industry. The folklore of
the alleged ?switched stones? probably comes from jealous jewelers
slandering their rivals more than any actual practice. These stories
make us all suspect. But that is all another story.

The deal has already been made to set this stone for $100 in my
design without getting into any specific statements about liability
or warranty. This is very sloppy business on my part and I ask for
the sage advice of more experienced Orchadians so that in the future
I can handle this better. Thanks again for your suggestions.

Stephen Walker


#12

Hi Stephen,

Yes we’re all fighting the good fight with web sites selling
diamonds,service and trust issues are our only advantage, which to
some does not warrant an extra 300. or so dollars

I think your/our anger is misplaced and should be on the diamond
dealers that sell to us and internet “jewelers”,Who do you think
owns some of the biggest diamond selling websites??? Could it be
diamond dealers?

And why can’t I buy products from RDA (hair product wholesaler) yet
when I go to jewelry shows in Dallas,I always run into 10 to 15
hairdressers from my home town,not to mention interior designers?!

Our business has one of the biggest profit margins in the free
world. Any time there is that much money on the playing field
customer loyality is a myth. So, we can be part of the problem or
the solution…in a David and Goliath way…like most of you I am
a small fish in a small pond,no power here…

Well that’s my opinon,

Happy Holidays!
Lisa McConnell
Ft Worth,TX


#13
It seems like this is the way things are going to be very often
from now on, so how do we deal with it? 

Interesting question, Stephen. I have run across this many times, in
a number of different scenarios. A potential customer will bring a
stone which they have just had delivered to them, and want to know
if they have picked out a good stone/good deal. I will examine it,
ask what they are paying, investigate what I might be able to sell a
comparable stone for, and then give them the bad news…that for
what they may have saved on the stone, they will pay to have it set,
or there will be no further discussion. They are dumbfounded, as they
actually approach us believing that my company will jump at the
opportunity to set their precious stone for the mere price of a
custom mount, barely 10% of the total finished value including
stone.

Can’t, won’t, not gonna happen.

If we work with them, design a mounting for a one carat stone, go
through the paces to make it, set their stone, and charge a price
which covers all expenses and allows us a meaningful profit, there
is maybe $500-$1000.00 left over when the work is complete. Damage a
stone we haven’t sold, and we need to use a similar profit from 5 or
more sales in order to come back from the loss.

By comparison, if we are allowed to sell the customer the stone and
add that margin to what we net on the mounting, our hourly profit on
the entire transaction increases by about 300% or more. This is the
"self-insurance" that allows us to justify the risk in handling and
setting a stone. Without that margin, there is no incentive. They
won’t get 5 minutes from me in the friendly form of explanation.

Internet vendors who sell loose stones counsel their customers to
take advantage of the services of local jewellers because they are
well aware of the minimal profit available in the manufacturing of
mounts, and actually prefer to sell the stone loose. They seem to
think that the local jeweller should be content with the “crumbs” of
profit available beyond the sale of a diamond, and if we agree to
set a stone we didn’t sell, we have enabled the internet vendors to
continue to successfully sell stones to more people with little or
no responsibility to their customers where setting/handling risks
are involved.

We had a fellow approach us about creating a mounting for a rather
nice sapphire he had sent to him on approval from an out-of-country
vendor, and I congratulated him on his wisdom, complimented him on
his choice of stone, and with feigned, excited curiosity, inquired
about the financial particulars of the transaction…the details of
the importation, approval, taxes, etc.

As I suspected, he proudly told me that stone had been shipped to
him via FedEx labeled for customs purposes as “mineral samples” and,
if he decided to keep it, his credit card would be charged the price
of the stone, and there would be no taxes or duties billed.
Brilliant! This vendor isn’t engaged in smuggling, they are simply
saving their customers money!!

I then informed him, straight-faced, that I would happy to design
and assemble a mounting for him as soon as he brought me copies of
import documents proving that he had paid the appropriate fees,
which are always a part of mine and other jeweller’s costs. He turned
red, and was understandably taken aback, and when he left I felt
victorious. There was no way I’d ever see him again, and that was a
good feeling.

I discovered that I could have sold him an equivalent stone, my
profit included and all taxes paid, for roughly the same price he
paid to the internet vendor. It would have been a "working uphill"
sale, though, as the internet purchasers have it in their head that,
no matter what, they have already made the most clever and
economical choice by web-shopping, and that the local jeweller
cannot possibly compete in price or selection, but will happily
serve them and hold their hand while they dither on mount design and
express anxiety about leaving the jeweller their stone.

As most internet vendors have a 30 day return policy, I take full
advantage of that window to swipe every sale that I can from them by
suggesting to the potential client that they will be better served
if they buy the entire package from me, which more often than not
makes perfect sense to them. Turning around that sale gives every
brick and mortar jeweller an opportunity to create a great deal of
goodwill with a first-time client, which can translate to referrals
and exponential growth in business. Yes, you can fight back, and
win.

David Keeling
www.davidkeelingjewellery.com


#14
Unless you act with negligence or recklessness, you would not be
held accountable for the loss. You are getting a small sum for your
work and you are, simply, NOT accountable barring negligence. 

While this statement technically correct, the legal semantics of
"negligence" are tricky. It is not difficult to make a case that any
damage to a gemstone can only happen as a result of the negligence on
the part of the jeweler.

The better strategy is simply do whatever it takes to insure
gemstone safety. Sometimes it takes only a few extra minutes,
sometimes it could mean that a lot of time needs to be spent
carefully
fitting the stone. Each case is different and amount charged would be
different also. If you feel that you cannot charge proper amount for
the job performed in the safe manner, simply refuse the job.

If we compare butcher and surgeon, they all do the same thing. Both
work with knifes and both cut meat. However, one is paid a few
dollars an hour, but another gets many thousands per procedure. Do
you
think that patient survival has something to do with that ?

It is up to every jeweler to decide whether he wants to be a butcher
or a surgeon.

Leonid Surpin.


#15

I seems so simple, doesn’t it? One client told me that a setter
wanted $250 to set a diamond, and the guy said that much of that was
"setting insurance". The client told me, with an air of
preposterous-ness (and, “I won’t be going back there!”), “He’s not
going to buy me that stone if he chips it…!!” There’s not really an
answer, because it depends on your business philosophy - some do
this, some do that, and they’re all right. Everybody needs to think
it through, though. For myself and most of my collegues, setting is
at the customer’s risk, period. If you don’t trust me, take it to
someone you DO trust - I have no problem with that. If I make a
mistake, which happens, I will make good on that just because that’s
how I am. Often I’ll replace a $5 stone no matter what just because
it’s easier, and “don’t sweat the small stuff”. But the world of a
"real" diamond setter is a different place than just putting 2
pointers into holes. I’ve set stones well into 6 figures, and most
of us have. So, IF you are charging “setting insurance”, and IF you
damage a $300,000 stone, you are saying that you are going to buy a
$300,000 stone to replace it? Or are you just a con artist and your
"insurance" is merely a profit center? Are you or are you not? If
it’s a 3 carat D/IF, then you MUST replace it in kind, if you take
that posture - an I/SI2 is not the same thing. Once you stand up
there and say that you are insuring your setting, then either you are
commited or you are a liar. Yes, you can polish out a chip on the
girdle, but you said you were insuring the stone, meaning it would be
returned intact, which I take to mean weight, too. Didn’t you? It’s a
slippery slope, to be sure, and mostly the industry handles it by
communication and good will, and also people knowing their
limitations. I’m a real decent setter, but I will suggest that people
take some work to a “real” setter for these very reasons, which they
appreciate. It’s so simple to think about insuring $100 stones, but
when you’re talking about mortgaging your house because you made
promises, it’s quite different, isn’t it? Or did you put that
"insurance" into a fund, as any good insurance company does? Many
people who take the insurance stance are people of goodwill, and
there’s a statement of trust and integrity being made, and that’s a
good thing - except that they have to follow through, and every time,
in order for it to mean anything. Many others are just greedy… I’ve
seen it with my own eyes: “I cleaved a 1.5 ct. so I need the cheapest
flash 1.5 I can find…” That’s not insurance…

http://www.donivanandmaggiora.com


#16
deep breath is when I hear "You're the only one I trust to set this
diamond I got from Whatever.com. Can you tell me if I got a good
deal? I've got thirty days to return it. 

How do you answer that? How much time do you spend on it? Do you try
to turn it into a sale or do you just blow it off and be happy you
get to make a custom setting?

I don’t try anymore to convert something like this. The one or two
times I may have been successful doesn’t warrant the effort, if you
extrapolate how many times you’ve tried. Its the same as when they
bring you something they got on vacation. Really, they shouldn’t feel
as though they are insulting you, even if you are insulted. If they
sense you are insulted you just may have ruined a relationship.
That’s if they’re straight about it.

The one that taught me was… lady looks at sapphires, lots of
sapphire parcels. Process took several visits til she found exactly
what she wanted. We discuss design in detail. I get the go ahead. I
make the mounting and call her for her diamond. Husband comes in with
sapphires purchased elsewhere and wants me to set them. Since I was
already in for the mounting I was kinda stuck, ya know? So now she’s
on THE LIST. Everyone keeps THE LIST don’t they?

The many years that have elapsed since prove she deserves a place on
THE LIST.

Moral, keep a list, get a deposit, don’t count your chickens.


#17
I am sure that I am not alone being bugged by the situation that
the internet presents. 

As far as I’m concerned, you are.

I offer some designs, but smart shoppers find the stones cheaper at
someplace like Blue Nile. So now I am in the position that if I
accept the job I am making no profit on the stone, but taking on a
certain liability when I set it. 

And so, since there is an added liability, so too there is an added
fee.

It seems like this is the way things are going to be very often
from now on, so how do we deal with it? 

Charge more to set stones and tell the customers that, since you
didn’t supply the stone, you will not be responsible for it if,
after the due care you always take with any stone, it breaks.


#18
IF you are charging "setting insurance", and IF you damage a
$300,000 stone, you are saying that you are going to buy a $300,000
stone to replace it? 

Good Point. Taking in repairs is an art and science. We would not
guarantee EVERYTHING. No hundred dollar insurance pays for $300,000
stone. On many occasions we would stamp the envelope “No guarantee,
customer risk”

I remember once we installed an adjustable shank ($500, 15 years
ago) on a $30,000 emerald cut diamond. Told the customer we normally
warranty our work but can’t guarantee a $30,000 stone loss for $500
work.

“Do you have homeowners insurance?”

Because it will cover it for loss.

You have to be selective.

On the subject of SAYING the $250 is “Setting insurance”, I’d never
say that, never.

Most jewelers don’t out enough credence into their craft. Our 6
prong, white gold, tiffany 1 ct head & set is $262. $30 insurance is
in the $262. The rest of the $232 is nothing more than markup on the
head, labor to set, labor to solder.

David Geller
www.JewelerProfit.com


#19
This would never happen but wouldn't it be great if every jeweler
stopped working on the cheap crap from the internet and discount
stores. Make them repair their own stuff no more sizing qvc rings
it just might put a stop to the online sales. 

I see so many jewelers across the country NOT want to fix or work on
customers jewelry if bought from “their competitor.” Or from places
where quality is an issue.

LONG before the internet we made our living off of fixing jewelry
from customers where they bought it else where. There has always been
"someplace else to buy this stuff."

We charge $28 to size a ring. We charge more if its difficult. We
will tell the customer is will cost MORE if we anticipate problems
and we tell you this now because we do. We will tell a customer we
anticipate lots of problems and we will either charge more because we
can anticipate fixing the problems and feel like we know how the
problems will occur OR we will tell the customer we anticipate LOST
of problems and if it blows up we will stop and hand you back the
pieces and in THAT instance we always suggest going back to store
bought as they should 100% warranty what they sell. If its old and
can’t go back to original store and we see this huge problem, we
give the customer the choice as just mentioned. Why? Because we know
what we are doing and many customer have such sentimental values to
it, we try as best we can.

We always had this motto

“The only thing we can’t fix is the crack of dawn and a broken
heart”

David Geller
www.JewelerProfit.com


#20
Our business has one of the biggest profit margins in the free
world. 

I’m not at all sure where you’re coming up with this statement from.
While the jewelry business may use some high markups on certain
items, the issue of profit is not nearly so clear. Profit (unlike
markup) is what you end up with after you’ve paid all your expenses
(including your own salary) and that you have left to reinvest with,
or pay out to stockholders. When you look at all the expenses
involved in actually selling our product, I don’t think we have a
profit margin any larger than any other industry out there.
Certainly I don’t run into very many jeweler millionaires (not sure
I’ve actually met any, although if I ever meet David Yurman I could
probably change that statement), but look at how many Google (or
other internet company) employees are millionaires. If we truly had
one of the biggest profit margins out there, no one on this list
would ever be complaining about business or money. It just ain’t so,
I’m afraid.

Daniel R. Spirer, G.G.
Daniel R. Spirer Jewelers, LLC
1780 Massachusetts Ave.
Cambridge, MA 02140
www.spirerjewelers.com