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David Geller

David Geller: Shank Talk

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David Geller says you’re looking at your repair department all wrong. Here’s how to fix it.

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[h3]Shank Talk[/h3]

[dropcap cap=M]any a jeweler has told me: “Thanks, David, for helping our industry — you’re dragging us to better profits while kicking and screaming all the way!”[/dropcap]

When raising your prices on shop work, whether it’s repairs or custom design, the person who complains the loudest is never the customer. It’s the store owner and sales staff. Customers will pay and the proof is right there in your store. Virtually no matter what you say to a customer in pricing repairs over 90% of them will say “OK, proceed.”

You have no idea how many people I speak to who haven’t raised their repair prices in five years or more, yet they raise their products in the case every time a package arrives. Think about this:

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[inset side=right]Maybe some buy lower-priced items, but they want the jewelry.[/inset]Five years ago, on September 1, gold was $277 an ounce. Today, gold is over $440. That’s a 38% increase. In 2000, a wedding band may have cost you $200 and you either keystoned it or even triple-keyed it, but let’s use keystone — you sold it for $400.

In 2005, that $200 wedding band now costs you almost $274. So, did you keep the price at $450, fearing no one would pay? Or did you just simply keystone it to $549— a dramatic $149 increase from a few years ago? Did you call your competition to see what they charged on a wedding band? I doubt it, you just went ahead and “keystoned” it to $549.

And what happened? Customers still buy, don’t they? Maybe some buy lower-priced items, but they want the jewelry. Some need it. Repair is also a need.

Jewelry repair has the same gold parts that are in the jewelry you sell. Why would you sell a half-shank for the same price you did five years ago? The gold shank is 60% of the shank price itself and gold has gone up 38% in five years. So should the shank.

Customers will pay, all you have to do is ask. I’m not asking you to gouge, just keep up with your costs.

I want to share the pricing on just one item in my repair price book and that’s a half-shank. Typical across the America are low and high prices. I see a lot of $65; $85; $90 prices for a 1/2 shank. We were charging $95 way back in 1994. Ten years ago! So let’s examine a half shank. There are two components.

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A. The markup on the gold itself.
B. The labor to install and shape.

What do you think a half-shank weighs on an engagement ring? Let’s use 1.5 pennyweights. Sizing stock cost about $18 per dwt. So the shank will cost you $27. Here’s the question: “If you bought a pair of gold earrings that cost $27, what would they retail for?” Most jewelers triple-key a small item. Shanks should be too, agreed?

So we will sell the shank portion for $81 ($18 per dwt x 1.5 dwts x 3 time markup).

Now the labor. When you size a ring smaller, don’t you cut it at 6:00 (bottom of shank); bring it together, and solder it?  

Isn’t putting on a shank the same thing but at 9:00? And don’t you do that again at 3:00? That’s the same labor as sizing two rings smaller, agreed? But you have to shape it, or else the piece you soldered on looks dumb. I figured shaping was the same labor as half of what we charge to size a ring smaller.

Many jewelers across America charge $18-$28 on the average to size a ring smaller. But let’s be conservative and just use $20 to size a ring smaller.

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To put on a new half-shank, we calculate the labor as being that for 2.5 sizings. If we charge $20 to size and price labor at 2.5 times that, installation sells for $50.
So, to get the price for the addition of a new shank:

Retail price of the shank: $81.
Installation of the new shank: $50.
Suggested price to install a new half shank: $131.

It’s $125 in our current price book.

And when quoting “$125 for a new half shank” well over 90 percent of customers say: “OK.”

That’s how I got our price. How did you get yours?

David Geller is an author and consultant to jewelry-store owners on store management and profitability. E-mail him at [email protected].

[span class=note]This story is from the October 2005 edition of INSTORE[/span]

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