Wholesale -retail cost of gems

When I buy a stone at wholesale, how much of a markup should there
be on the stone itself when put in a setting? My son-in-law picked up
some emeralds in his home country of Venezuela and asked me to set
and sell them. We’d split the profit. I don’t have a clue how much to
mark up the stone for his cost to cover all bases. Any help would be
appreciated. Spring has sprung in New York State Lisa

 When I buy a stone at wholesale, how much of a markup should
there be on the stone itself when put in a setting? 

A simple question that doesn’t have a simple answer. As a general
rule, the higher the cost of a stone, the less the markup. IE if
you paid $5.00 for a stone, you might be able to ask $20.00 for it.
However, If you paid $5,000.00 for the stone, you might only ask
$7,500 for it. This assumes that you bought “right”. IE you didn’t
pay to much for the stone. In the last example, if you paid close
to $7000.00 for the stone, it might still only be worth $7500.00
retail. What you need to do is establish what a similar stone will
retail for and then set your price, regardless of what you paid for
it. If you price it to high, people will happily go somewhere else
to make their purchase. If you price it too low, people tend to
think that there is something wrong with it and will also tend to go
somewhere else. Finding the “grove” is the real challenge and that
will require a lot of research on your part. There is no “proven”
formula to decide the price of a stone.


Dear Lisa, you should learn the market by checking stone suppliers
and retailers in you area. Starting with his cost of the stones and
your cost of mounts and labor you have your minimum price. Then
inspecting the market can give you an idea of current pricing.
Sam Patania, Tucson

There has been quite a bit of discussion as to how much markup on
should take in pricing their creations. I believe this is going at
the problem from the wrong direction.

One must start at the consumer end when pricing a product. This
could be it jewelry, books or tires. Look at what can one reasonably
expect the customer pay for what you want to sell. This amount can
often surprise you. Very few people expected the public to pay $3.00
for a cup of coffee. Starbucks proved them wrong. Then you have to
look at all the levels in the sales chain taking into account how
much people you are selling to will need to earn to feel good about
the transaction. This too can vary a great deal. Look how the
airlines have reduced the commissions paid to the travel agents.

After you have figured how much everyone else will take you finally
get to how much you can ask for the things you have made. The next
step is to source your materials and labor. The more you drive down
your cost the greater margin you can make between your cost and your
sales price. In the end it is this margin that will determine whether
or not you make a profit or not. A note of caution do all you can
within your means to keep your overhead (all those other expense you
will incur) to a minimum. If you are not careful they will eat you
up. Best wishes, etienne@etienne.com

You’ll find this to be semi-typical for jewelers across the country
as a markup above your cost.

Markup itself is important but more important is your “turn”. That’s
how many times in a year you sell an item. Buy it in January and sell
it buy December. The jewelry industry is typical for a turn of “1” at
these numbers.

You can sell it for a lower markup if you can have a higher turn.

To find your turn take last years cost of your merchandise sold and
divide it by your year end inventory level.

Actual Dollar Cost	Net Markup Needed
0.00 - 50.00			3.00
50.01 - 100.00			2.50
100.01 - 500.00		2.25
500.01 - 3000.00		2.00
3000.01 - 5000.00		1.69
5000.01 and up		1.60

I have an excellent book on turn and markup, it’s "How to Start &
Run a profitable Retail Business by Jim Dion. It’s $19.95 plus
shipping. If you’re interested, let me know and I’ll send you more
info and an order form by either email or fax.

David Geller