[Jewelry making - Article 00164] - [Orchid] Costs, margins, and goldsmiths

[David Keeling]

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    Remaining competitive in the jewellery market requires constant
    research, skill upgrading, cost management, and a host of other
    "hands on" efforts. We have all watched as companies competing
    within our market areas have undercut standard margin structures in
    order to attract and win sales, sometimes putting themselves out of
    business in the process. 

    To an outsider looking in, this can't possibly be a bad thing. This
    sort of competition is present in every business environment, and is
    a major part of every manufacturer and retailer's strategy. 

    Where the jewellery industry fails miserably in it's cutthroat
    competition is clearly illustrated in the following anecdote. 

    A woman whom I have worked with in the trade called me yesterday to
    get a quote on a handmade, custom platinum mounting for 3 diamonds
    which she had sold to a client of hers. The centre is a 3.00 ct VVS1
    D, the other two are matching .50 ct. VVS1 D, all princess cuts.
    Nice sale! The total price for the diamonds is in the vicinity of
    $68,000.00 Canadian. 

    I thought about the time which would be spent making the model, the
    cost of the platinum casting, the time which would be required to
    properly surface the platinum, fabricate the settings, assemble the
    ring, and set the stones flawlessly. 

    I gave her the quote, and she couldn't quite grasp why it might cost
    up to $3000.00. I explained the details, but I wasn't really getting
    through to her. 

    The irony in her reaction may not be immediately apparent, so I'll
    expand on it's presence here. 

    When the diamonds are purchased in Canada, federal excise tax is
    immediately payable. At 10%, the tax on this particular sale might
    be $5700.00, based on diamond wholesale cost. Revenue Canada is paid
    immediately, and they don't do a thing to facilitate the sale. 

    The wholesaler who represents the diamond industry takes a profit of
    at least 10% on flipping the stones, and he or she didn't cut or
    polish them. That amount might work out to $5000.00. 

    The craftsmen or women who are blessed with the task of making these
    precious diamonds wearable are expected to feel damned lucky to even
    handle them. It is indeed a privilege, we are supposed to
    understand....and, "My gosh why is it so much?" 

    After my material costs and labour costs are removed from my charge,
    I stand to make about $1500.00 for my professional services....if
    I'm lucky. 

    And, to the proud members of our trade who are successful in making
    sales such as this one, that sort of profit on my services is simply
    unacceptable. 

    I am constantly in awe of the wisdom which is present in retail. 

David Keeling


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