We are having a debate in our retail store about triple keystoning
the price for, lets say, chains, or any finished jewelry items that
we may purchase from let’s say, Stuller. Do most people keystone?
Would this be one way to lower prices to move inventory quicker? and
therefore make profits via greater number of sales? How about
it…what do you Orchidians say? and David Geller what are your
thoughts? Thanks in advance.
Mary Ann Archer
For over 14 years as a retail jeweler as well as a custom design
jeweler I have adhered to the triple keystone standard. For one, if
you look at your counter catalogs from Rio, Stuller, Quality Gold and
just about any other major jewelry supplier and read the details in
those catalogs you will find that they are priced at triple keystone.
(Silver is 4X in some) I have found it very convenient to illustrate
comparable prices for comparable jewelry from a variety of suppliers.
I have strongly resisted the temptation to offer items for less than
what is offered in the variety of catalogs or “keystone” for numerous
reasons. One of those being that I don’t want to send the message of
being a “discount” or “discounting” jeweler. In my opinion,
“discount” jeweler and “fine” jeweler are two completely different
things.
The consumer has become SO inundated with discounting that a
majority of them have misconceived concepts about two concepts;
“Quality merchandise for a good value” and “70% OFF OF ALL INVENTORY”
(for example). I often would like an answer to the question “70% off
of what”? Did that ring they paid $2500 at a 50% sale price ever
actually ever sell to anyone for $5000? In my opinion marking up
jewelry to 6X just to be able to offer it at a 50 to 70% “sale” price
is truly doing a dishonor to those like myself that offer “Truth in
pricing” good value jewelry, service after the sale and many other
things involved in being personable and personal jeweler.
I knew of a “basement jeweler” many years ago who then opened a
retail location and used just keystone as his standard. He also was a
custom jeweler. He had most of the wholesale work in town in the bag
and had a booming retail business as well. He also had “NO LIFE” or
time to enjoy his life.
I believe that triple key is a fair pricing strategy, considering
that if you are a retail jeweler you can’t “make it up” some other
place in your business like the meat department or children’s
clothing department. Now, that is not to say that I don’t judiciously
and selectively offer a better deal to select customers and long time
clients than triple key. I do. I just do so carefully. I prefer to be
in the fine jeweler category.
Remember when **** Motor Company started the trend of “get your car
at dealer cost”? Once you buy your first car under those alleged
saving why would you pay a less than discounted price for a car
again? Once one starts discounting to a less than the standard price
for something I think it is difficult to go back the other way. Kind
of sends a mixed message to the customer and personally, I don’t want
a confused customer. In the sales training that I have been in, I was
taught that “A confused mind says no”
Keystone also allows one even less room for commission, sales
incentives, bonuses, overhead etc…
Discounting to move inventory that is not turning is a completely
different matter…
I also will be interested to see what Mr. Geller has to say…
My two cents…
Keith Hible
In today’s market gold items are quite price sensitive. You’ll
price yourself out of a sale
Show the customer, on just gold items you’re high as a kite.
A rope chain 2 years ago was $120, now its $400 but their income
didn’t go up. They can do w/out.
Now on your end.
Buy it in January for $100 and charge $300. You show it to one
customer each month and FINALLY sell it to someone in December for
$300 (11 people didn’t buy). You made $200. Turned it once a year.
Now charge $200. Show it to one person a month. Someone buys it in
May, make $100, buy another, sell it in September, make another $100.
So far you’ve made the same amount of money ($200) but you didn’t
tick off as many people, made the same amount of money and have now
TWO customers in your database instead of one.
Buy it in October and sell still another one at xmas, make $300 for
the year. (hopefully).
This is the better way, especially in today’s market.
David
www.JewelerProfit.com
A good point of sale program will show this to you in a flash.!!!
Keith’s posts about getting Triple Key has an interesting twist.
if you are getting triple on almost everything, have very good cash
flow, pay your bills on time and pay yourself an excellent salary,
then it works for you.
But many folks I know with large mark ups (I didn’t say it was
bad)use the money to get over inventoried.
Having larger margins does make it easier to pay your bills.
It’s a trial and error for most folks and a fine line to see how
well it would work vs a higher turn.
David Geller
For those of us less “initiated” could you please talk about
"keystone" and what this means?
Thanks!
John
Indiana
Keystone means to double your cost.
Triple keystone is 3 times your cost.
Keystone means offering something for sale for twice what you paid
for it. An item costs you $30, you offer it for sale for $60.
Triple keystone means offering something for sale for three times
what you paid for it. An item costs you $30, you offer it for sale
for $90.
The same principle applies to your hard working bench jewellers. Pay
them more and markup 2x instead of 3x. The bench jeweller will get a
bigger cut, the customer won’t see any difference, and 2x a big
outlay is roughly the same as 3x a small outlay.
Depends on who you really need. I agree the customer is vital for
retail jewellers and retail jewellers are the interface with a lot
of investment in dollars and trust.
I believe the workhorses in the back room are under-valued. Maybe
the workhorses are not dollar wise and are happy to accept a trusty
salary, but they are essential and need to wise up.
Alastair
Keystone means to double your cost.
Triple keystone is 3 times your cost.
Thanks to you all and David Geller for your recent comments.
What you say makes good sense, and I’m willing to give it a try, but
what about metal price increases? What about shipping costs?
Let’s say you buy a chain for $10., add shipping.50. ( a part of
your total bill), sell it for $21.00, selling it at keystone.
Customer walks in the door, recalls the $10 chain and decides to
purchase it. You’ve sold it, have to re-order it and now it costs
$11.00. In addition, the chain is the only thing you need to order
that day and she wants it right away, (remember she came back to get
it). Shipping costs from, lets say Stuller, $13.30. Now your chain
costs 24.30 and she know the price she saw was $21.00. Now this chain
is costing me to sell it to her!
This was the dilemma I was first speaking about.
Mary Ann Archer
When I’m faced with a similar dilemma, I mention that I get no
discounts on shipping, gasoline, milk, etc.: Prices rise. In spite
of propaganda and outright lies to the contrary, we here in America
are experiencing inflation, and the price of the chain will likely be
higher next month.
Hi Mary Ann,
There is an old saying that I think applies to your customer, “Poor
prior planning on your part does not constitute an emergency on my
part.”
I understand exactly what you are talking about and where you’re
coming from. Your post indicates that it wouldn’t even cross your
mind that Stuller might give you an old price and ship it for free
just because that’s what you paid before (they won’t, so don’t even
ask). Why would you consider even for a moment offering that to your
customer? The increase in your cost should be passed on, including
the shipping, if she really needs it that soon. If the customer needs
the chain for an occasion “tomorrow” and doesn’t want to pay an extra
$13.30 for shipping (I’d probably keystone that too, btw), she should
have bought it when she first saw it.
I would tell her that I sold the one she saw, gold is higher now
than it was when I bought the first one, and that if she can wait
until next week, I’ll be glad to get it for her at the current gold
market price (might be higher, might be lower) in my next order and
not charge her for the shipping. If she has to have it tomorrow, she
will have to pay the shipping. I would then wait for her to speak.
And gently but firmly hold my ground. (I’d love to hear what Neil’s
friend Ralph would have said)
If she decides to have me order it today, I will keystone the
shipping. It’s only fair, it’s not going to order itself, and a
single item order adds at least $13 to my scheduling and bookkeeping
costs. Even if it does come with a Butterscotch Dum Dum that I don’t
have to share.
Now on the other hand, if you made her pendant, and charged $3000
for it, forget everything I just said. Order it for morning delivery
and smile big when she comes in to get it, and then give her your Dum
Dum. It’s all relative, you have to look at the big picture too.
In addition to the very sound reasons others have put forth, triple
keystone on everything under $500 or so also makes it easier to
handle these situations. It gives you a little cushion that you can
use to make yourself a hero from time to time and not really hurt
yourself too badly. If you had marked it at $31.50, even if you have
to order it at $11 and eat the shipping, you’re still $7.20 to the
good.
My hat’s off to you for asking, Mary Ann.
Dave Phelps
When I worked retail we were very honest with our customers. If they
wanted it asap, they would have to pay the shipping. If they could
wait two weeks until we made our restocking order, they wouldn’t pay
any shipping.
Amery Carriere Designs
www.amerycarriere.com
You may not know this but gas at the pump goes up before you see oil
by the barrel go up! The gas stations see oil going up, they raise
their price in advance to make sure
They make a profit THIS week, and
They have EXTRA money to buy higher priced fuel next week.
Your email is fine. ERASE “Customer walks in the door, recalls the
$10 chain and decides to purchase it. You’ve sold it”
Price it like YOU reordered it for stock, not for her. It costs $1
MORE so it musts sell for $2 more.
If normally shipping is fifty cents and now shipping is $13, well
that’s exactly your profit. So AT LEAST charge her cost for shipping
plus keystone on the new chain cost.
It happens in almost all industries. You must charge enough to make
a profit this week and have enough money to buy a higher priced
object next week and not steal from this weeks cash flow to do it.
Feel bad about it?
Tough. 
David Geller
www.JewelerProfit.com
Hello David, In my last reply in this topic I referred to the
"workhorse bench jewellers"…weeel, that’s not completely true. Some
are lazy and I can be one of them. You on the other hand are devoted
and hard-working! Wising-up is to read what you say with interest.
Regards, Alastair