Margins are falling everywhere except here.
This article originally appeared in the September 2015 edition of INSTORE.
For sure it’s a different world today in our business. About 20 percent of all jewelry is sold online. The price of gold has wiped out most $500 to $700 impulse buys, with silver picking up the slack but at half the average sale.
Bridal continues to be a mainstay for many jewelers. The typical thought is, “We’ll make smaller margins on the center diamond and make it up on the mounting.” This is true, but prices for many branded bridal lines can be shopped on the Internet (meaning lower margins for you).
Shoppers will come into the store with reams of notes from the Web on a diamond they want to buy and may have an idea of the type of mounting to put it in. Here’s your chance, by promising to make a ring unlike any that her friends might own, while you enjoy a better-than-keystone markup.
“Custom” can mean having an outside vendor make the ring for you or creating it in house. With today’s technology for designing and making jewelry you can razzle-dazzle your customer right there in the showroom. Once you get them interested in the “made just for you” design, it’s smooth sailing. And it’s a lot easier than you’d think. Here’s how:
Pricing and selling the design:
Typical bridal sales today are about $5,400 or more. But don’t underestimate the buying power of people in their late 20s; they know of credit cards to get cheap rates for the first year. I suggest breaking down the pricing of the custom bridal sale into three groupings:
➤ The diamond itself
➤ The custom ring-labor to make/create/set stones
➤ The custom ring-materials: metal and side stones
We’ll assume you have nailed down the price on the center stone. When pricing the custom ring, draw up two columns: one for labor and one for material and then total them up separately. Now draw an arrow down to the total price (see graphic). Why do it this way? In case you have to negotiate to get to a price to suit the young man’s budget.
If you need to discount the ring mounting you wouldn’t give a price break on the whole $2,925 ring. Instead you’d say:
“As you know, we can’t discount labor but I can help you some on the materials.” If you gave 15 percent off the $2,950 ring that would be surrendering $438.75. But a 15 percent discount on only the $1,150 of materials is $172.50.
Also, the chart allows us to see the power of turn. If you bought a ring for the case that cost you $500 and it sold for $1,150 at Christmas (the same price as the material in “Mary’s ring”), it means you’ve made $650 in profit in 12 months.
But with custom’s faster turn, if you buy the material to make the ring on Jan. 5 and deliver the ring on Jan. 31, you have generated $650 of profit in one month. And if you can do that every month, it means $7,800 of profit a year from the same original investment.
Also, because of the power of turn you can give a discount on material. But you can’t increase turn on labor unless you lower the jeweler’s pay or make the jeweler work twice as fast.
It’ll never happen.
So advertise custom bridal to your market.
There’s big money in bridal again!
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David Geller is a consultant to jewelers on store management. Email him at dgellerbellsouth.net.