[Jewelry making - Article 00399] - Re: [Orchid] The cost of holding out

[Daniel R. Spirer]

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    Since we seem to be discussing David Geller's regular postings here,
    I have some thoughts that I would like to pass on.  Some of these I
    have discussed with David off list and we seem to have respectfully
    disagreed on them, however since he is regularly posting threads
    about his methods, I would like to offer some of my own opinions. 

    First, I would like to say that his theories on pricing repairs are,
    generally speaking, right on the money.  We, as jewelers, tend to
    consistently under value our talents and the value of our
    experience.  This, of course, is assuming that you ARE actually a
    talented jewelry repair person.  Just because you call yourself a
    jeweler doesn't make you an expert in all areas.  You need to take
    this into consideration when pricing out your work.  Someone who just
    started on the bench cannot ask the big bucks that someone with years
    of experience can.  Competition should only crop up as a problem if
    your work is subpar. 

    I do, however, take issue with David's one size fits all inventory
    formulas. While I fully appreciate and understand that a larger than
    necessary inventory can be a drag on profits there are times when it
    is not only necessary, but critical, to the growth of an operation,
    that your inventory is larger than his formulas allow.  This, I
    think, is particularly true for those of us on list who are actually
    making our own jewelry.  I think it is less so for those who just buy
    and resell jewelry. 

    Let's take the following example (admittedly based on some of my own
    experiences). Let's say that you have just started your own business
    and your average price point is about $100.  Your sales are doing
    well, your inventory turn is high, you're working 80 hours a week to
    make all that jewelry and to keep the business running.  But you read
    the writing on the wall and realize that if you ONLY produce $100
    pieces you will always be working like this.   So you decide that you
    want to push your average price point up to $1000.  What do you do? 
    You can't just throw out all of your old inventory, replace it all
    with new, more expensive, goods and hope that everything will sell. 
    You have to begin to add inventory that will boost the price point. 
    You have to bring your customers up the ladder with you, or over a
    period of time, develop new ones that will replace the lower end
    ones.  Unfortunately the REALITY of the marketplace is that until
    the bulk of your merchandise is in the new price point range, the
    customers will not REGULARLY purchase the higher end pieces from you.
     While some customers may be able to walk into a store filled with
    $100 items and place an order for a $1000 piece, the bulk of them
    will want to see similarly priced work in the store before making a
    commitment like that to you. 

    So here's the dilemma.  If you follow the inventory turn formula,
    you will be stuck in the same marketplace you start with as you won't
    be able to turn the new, more expensive merchandise fast enough (as a
    matter of fact, according to David's formula you will be forced to
    continually mark down the expensive pieces until they do sell fast
    enough, thereby ruining your goal of boosting the price point).  I
    truly believe that the inventory formulas David recommends will only
    work in a business that has already grown into what it wants to be. 
    For you newbies, I think you are going to have to bite the bullet and
    live inventory poor for awhile until you can get yourselves up to
    where you want to be.  Once you get there, then go use the formula. 

Daniel R. Spirer, GG
Spirer Somes Jewelers
1794 Massachusetts Ave
Cambridge, MA 02140
617-491-6000
spirersomes AT earthlink.net
www.spirersomes.com



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