STARTING OUT, MANY jewelry store owners serve as their own bench jewelers. (And some of those continue in that role throughout the life of their stores.) It’s a common path, which makes sense. After all, doing repairs and the occasional custom design is an easy way to start a business at a low cost, differentiate yourself from the large chains, and to build lasting relationships with your customers. (Customers love being helped by the person who actually does the work.)
As the business grows as well as your showcase sales, so does the income generated by your shop. But many store owners find they don’t have enough retail shop work to keep their jewelers busy at the bench for a full 40 hours per week. So they try to find ways to keep the bench jeweler busy — busy means money, right?
For many jewelers, the solution is to knock on the doors of other jewelry stores and the chains and see if they can pick up some extra work by doing wholesale trade repairs. Is there any money in such an endeavor? I’ll let you decide as I walk you through the numbers.
Most jewelers pay an hourly wage. When I had my store, we paid 100% commission, which allowed us to know exactly what it cost to size a ring, set a stone, or finish up a casting. I know the exact cost. If you’re paying hourly wage, you’re guessing. But let’s guess anyway. The average jeweler is paid $38,000 a year, with salaries ranging from the low $20’s to high $50’s a year. So let’s estimate a salary of $40,000 a year — as that’s about $20 per hour.
The typical wholesale price in America to size a ring smaller wholesale is $6. It ranges from $4.50 to $8 but $6-$7 is very typical.
The retail price for sizing a ring smaller varies widely — from $15 to $35, with prices in the $20 range being “semi-typical.” In my previous price book, the price for this service was $22 and in the new one, it’s $28.
So here you are: sizing a ring down to a size 6 for Mrs. Smith for $22. You finish, and then the next envelope you pick up is from a chain store. This job also requires sizing a ring down to a size 6. But this time, you get only $6. Mrs. Smith pays you as soon as she picks her ring up. And the chain store pays for their ring a full 30 days after they get it, if you’re lucky. Is it worth it?
Clearly, the answer would seem to be no. But let’s not give up yet.
The jeweler makes $20 per hour. How many rings can he/she size in an hour? Including opening the envelope, sizing, finishing, polishing, cleaning and putting back in the envelope? Let’s estimate a total of six per hour.
Six such jobs at retail prices would bring you $132, while six at wholesale would bring you only $36.
Your jeweler makes $20 an hour, right? But remember, he actually costs you more. There’s matching FICA; Medicare; worker’s comp; two weeks paid vacation; one week sick leave; and maybe even some health insurance. And of course, there’s the cost, low as it is, of solder, emery paper and polishing compounds. I always add 25% to a jeweler’s wages to cover all these different expenses. And that’s being conservative.
So your jeweler now costs you $25 per hour.
You charged $22 to size a ring smaller retail. A jeweler costing $25 per hour and doing six sizings in that time means that each sizing cost you only $3.66. And you sold each for $22. Big score!
For the wholesale job, each piece still costs you $3.66. But you bring in only $6. Yep, that’s a measly $2.34 in profit. And don’t forget all the extra work required to get a repair job to and from a customer. For wholesale jobs, there’s the person who either goes and picks up the work or opens a box shipped to you. Then there’s the person who logs the item in and hands it to the jeweler.
Then, after the jeweler has performed his magic, someone else has to inspect it, write up the invoice and then box it for shipping or deliver it to the original customer. And heaven forbid the ring comes back with a problem from the store! Or even worse, that you break an item while sizing it or a stone falls out in the ultrasonic.
When you charge $22 and your costs are under $5, you can afford the occasional mishap. But you can’t afford any when you’re only making two bucks.
In my opinion, most of the retail jewelers who take trade jobs to fill out their work schedule are doing nothing more than trading dollars.
Very large trade shops that make money do so by paying wages that are about 25% less than those paid by a retail store. In retail shops, what is needed is an all-around jeweler. Trade shops look for sizers, setters, etc. I know of one large trade shop that has a room filled only with sizers. They are paid $8-$12 typically per hour. And all they do all day is size rings. Some of those sizers only size rings up. Others size only down. Such a shop can get away with charging $6 to size a ring smaller. But you can’t. And, if you try, all you’re doing is buying yourself a low-paying job. At least if you dug ditches, you’d get some good exercise.
Don’t have enough work to keep a full-time jeweler busy? You’d be better off investing some of your “trading dollars” to advertise the fact that you do repairs and custom design to your retail customers. Four times a year, send direct mail to your customer database reminding them of your services.
That’s the best way to stop trading dollars and get yourself a real job!
This story is from the July 2005 edition of INSTORE.