SHOULD YOU DO repair work for other retail jewelers if things at your shop are a bit slow? Many of the jewelers I’ve talked to say they do already or are planning to as a way to supplement their own shop. The idea is to bring in more dollars when there’s not enough work to keep the jewelers busy.
Unless you’re paying a few dollars over minimum wage, it’s always a bad idea. You will be virtually doing all of that work for no profit for the store.
Yes, the jeweler will get paid the same salary and be kept busy and Stuller and other vendors will also get a piece of the pie. But you won’t.
Have you ever seen the T-shirt that reads: “Can I pay my Visa with my MasterCard?”
Same idea: You’re taking the money in with the left hand and dishing it all out with the right. Let’s examine some of the numbers and we’ll use the prices in my price book.
Sizing an engagement ring smaller is $28 retail. Trade shops typically charge $6-$10, with $7-$9 being typical.
If you triple key their costs you’d charge $21 to $27.
So if you charge retail $21 to $27, what do you think it costs you to size the ring smaller in your own shop?
When I had a store, we paid the jewelers on commission and they’d get paid $7.28 for the $28 sizing. Let’s assume you’re better at this than I and figure your cost at $5.50.
So if you’re going to do wholesale work, what would you charge your fellow retailer to go smaller?
Let’s say you get $8.
You pay $5.50 to get $8. But wait! How about Uncle Sam? Remember you match the FICA and Medicare. You have to figure jewelers cost you 25 percent more than what they get paid. Therefore a $5.50 cost to size a ring smaller really costs you $6.87, just to get $8. Wow, you’re making big bucks now — $1.12. And we haven’t figured in:
- Cost of solder, flux, gas, oxygen, emery paper, ultrasonic fluid
- Someone in your company will handle the envelope as it comes in and goes out.
- You will not get paid when it’s delivered.
- You probably will drive out and deliver the job.
- Heaven forbid you have a comeback.
All for $1.12.
To make money at trade work you have to either do that ring sizing faster than doing it for your own customer base, or the jeweler will have to get a reduction in pay.
You now have to do three sizings to make the same money as doing one sizing retail.
I helped one store that had eight jewelers get out of trade work. The store ended up letting go of 60 percent of its staff. The owners’ upset tummies went away immediately, and life was better. But know what the best was? In more than 25 years in business, the year the store went full retail with no trade work, it made more profit in that one year than all 10 years previously combined. In addition the store paid off everyone in January and had more than $100,000 left in the checkbook.
So before you go pay your Visa with your MasterCard, try marketing to your current customer list and the public and let them know what you do, how well you do it and how you guarantee your work. Don’t worry about price. Repairs are not price-sensitive, they are trust-sensitive.
[inset side=right]Forget free sizings and batteries. You’re not just looking for traffic; you want folks to come in with the knowledge that you’re a skilled craftsman.[/inset]Send out cards or mailers to your customer list to get customers to bring in their cherished items for a free inspection. Forget free sizings and batteries. You’re not just looking for traffic; you want folks to come in with the knowledge that you’re a skilled craftsman.
Offer to clean and inspect their jewelry at no charge. These events bring in thousands of dollars of repair income and if you’re good at suggesting, you can get a lot of custom design sales as well. Mention that fact in your mailer.
We used the customer’s gold and stones to make things. You might not use the gold but rather buy it and sell new. That’s fine. But think about this sales technique:
“Hey customer of Smith Jewelers. Do you have old cherished things lying in a drawer, not being worn? Did you know here at Smith’s Jewelers we can take your old cherished jewelry and redesign it into something exciting, fashionable and fun to wear? You can have something that’s worth thousands of dollars and have it remade for only hundreds!”
Many jewelers have also done well with offering to photograph the customers jewelry and place the pictures on a CD for the customer’s safety deposit box. While you’re photographing the jewelry, this is a good time to look at the prongs and other worn areas, right?
Your average repair sale will be three to eight times higher than a trade shop, and the custom design can easily be 10 to 20 times higher than a repair sale.
So market your shop, bring in more traffic as well as more profitable dollars.
This story is from the June 2007 edition of INSTORE.