[Jewelry making - Article 00419] - Re: [Orchid] Rising costs of precious metals

[Melissa Veres]

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>     What is the proper way to determine the selling price in lieu of
>     the current rise in the market? 

    Back in the days of rapidly fluctuating metals markets, many
    manufacturers resorted to a factor system. They assigned each item
    of inventory with a number, which reflected in some arbitrary way the
    cost of metal in proportion to the total cost of the item. Then they
    provided a chart with several columns laid out with the market cost
    of gold. So, in a simplified example, if your item cost $50 at at
    base gold cost of $400, and the item carried a factor of 1.0, you
    would look at the gold market for that day, (say $500), check the
    column for $500 gold, see that at $500 gold, you needed to multiply
    the item's factor number by.25 (the difference between $400 gold, and
    $500 gold). So you multiplied the item factor number (1.0) by the
    gold factor (.25), and added the difference to your item cost. (1.0
    x.25 =..25) Therefore, your item cost would be $50.25 at $500 gold. 

    This system was very unwieldy, and as the markets stabilized, the
    manufacturers and retailers were very happy to drop it. Because each
    item required a factor number, it took a long time to set up, and
    was confusing to use, but it was a way of dealing with the rapid
    changes the market was making daily. It was next to impossible to
    give accurate price quotes on even simple basics like wedding bands
    because the customer may come in on a day when gold was $550, and the
    order processed several days later when gold was $650. The system set
    up a way of making more accurate assessments of costs. 

    You might try a similar method in re-pricing your items. If you have
    cast the items, your gold costs should be relatively simple to
    calculate. Compare your cost per dwt. at the time of casting with
    the current cost per dwt., and increase accordingly. If the item was
    fabricated, or used purchased components, try to recalculate the
    cost of metal accordingly. While the item cost you less to make it
    originally than it will cost you to replace it, it is the
    replacement costs that should determine your retail price. 

Melissa Veres, Engraver
mveres AT fast.net


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