OK Greg, I’ll bite. I am interested in how others price custom.
I was strictly wholesale for 27 years and have been primarily retail
for the last 2 years. We have retail, fine jewelry stores. I’ve been
goldsmithing full time, sole support of my family, since 1978. We
focus on gold/pd/pt, diamond, engagement and wedding jewelry.
Pricing custom is tricky business. Our situation is a larger shop
that usually will have three or four people working on each custom
job, one sketches, one carves or mills the wax and casts, one sets
it up and finishes it and one polishes it. I think that most of
those steps are undervalued by the outside world because they don’t
understand them. As an example, when we create a model on Matrix and
then mill it with Revo, we don’t charge a whole lot more than we do
when we carve a wax by hand. But in checking what our wholesale
costs would be if we jobbed out the CAD CAM work, we found that they
would be $250-$400 just to create the wax! I have a friend that has
a little retail operation and he charges $1300 retail, before the
stones or metals are factored in, for any custom job that is created
using a CAD CAM system. He takes the time to help the client
understand.
When you make something in house, from scratch, you absolutely can
not compete the the prices of mass produced overseas merchandise.
Goldsmiths are a limited resource, they only work 8 hours a day.
When we tie them up all day on one job we need to be charging enough
to compensate ourselves for the loss of that resource. I like to
compare that to buying merchandise for the cases. When buying that
merchandise you are only limited by your line of credit, you can buy
as much as you can afford. But when custom making merchandise, it
doesn’t matter how much money you have, we can only make as many
pieces as we have hours in the day…its a supply and demand thing.
We have a few different ways of arriving at our custom prices. I
have been doing this so long I will look at a job and think, that’s
about a $300 piece without the diamonds (wholesale), or that one is
worth $650 plus the stones (wholesale). Then I calculate the cost of
the stones and add 20%. I will add the stones and the ring together
and that is my wholesale. I multiply, using a sliding scale from 2.8
to 1.7, and I have my retail. That probably sounds like seat of the
pants pricing but we can check it and we do.
A more simple method that gets us to about the same place is this.
First you need to calculate your cost, and that has three
components. Material cost (findings, metals, solder, stones), Labor
cost (time the job takes multiplied by an average hourly wage) and
Overhead costs (you really need to figure that out, it may be $10 to
$30 per hour, you can get yourself into trouble if you don’t
consider overhead accurately).
Once you have your cost calculated you can mark it up. For wholesale
we multiply by 1.6 to 1.8 depending on difficulty.
Retail mark ups can be done as follows;
Cost x 3 for low difficulty (fitted wedding bands, no stones for
example).
Cost x 3.5 for moderate difficulty (diamond fitted wedding bands for
example).
Cost x 4 for difficult (prongs and channels, compound curves for
example).
Cost x 4.5 for very difficult (two tone, pave, hand engraved for
example).
This method works just fine as long as people can accurately project
costs (not that easy to do).
Here is an example;
A 14k yg diamond wedding band with 7 =.18ct tw. channel set
diamonds.
.18ct x 500 p/ct = $90 (diamonds)
2.5 dwt. x $24 = $60 (gold)
4.5 hours x $45 per hour (labor and overhead) = $203
Total cost $353
$353 x 1.6 = $565 (wholesale)
$353 x 3.5 = $1236 (retail)
I guess it’s possible that this may seem like a large mark-up to
some, but you need to consider all of the down-time, mistakes,
chipped melee and days when absolutely everything goes wrong. I have
been doing it like this for years and it never seems like enough to
me.
Mark
