EVER CONSIDER PUTTING your jewelers on commission? It could mean increased productivity and higher profits. But in order to be successful, these three things must be true:
- Your jeweler (or jewelers) must have more work than they can complete in a day.
- They have to be, for the most part, uninterrupted. I’d suggest at least 85% of their day, they should be able to work at the bench.
- The commission system must be adhered to even if your store doesn’t charge correctly up front. The jewelers must be paid correctly. It’s only fair.
A commission system for jewelers (some people call it “piece work”) comes with its own administrative duties. Someone has to oversee it. In my store, we used a three-inch square, two-part ticket to keep track of commissions. I never let the jewelers figure their own tickets — to keep them honest, yes, but also because I just didn’t want them to waste any of their valuable time calculating tickets.
Let’s start with a simple job: “size ring smaller and two tips.” My book recommends charging $28 to size the ring smaller, $23 for the first tip and $13 for the second one. All three would be listed on the “Jewelers Worksheet” and stapled to the back of the envelope. The jeweler gets their commission (26%) from the retail price. The ticket stays on the envelope. After the job is done, the jeweler removes the ticket and keeps it until pay day. Then the bookkeeper is given the top copy and payroll is figured.
Again, do not let the jeweler fill in the ticket. First, it takes away from productive bench time. But also, what if the jeweler decides the ring “needs more work?” What if the jeweler does all six tips and adds four more to the job to boost their pay?
Why would a jeweler do such a thing? He or she may say, “Hey, the tips were needed; the sales staff should have caught that. I saved the company from not having to maybe pay for a lost diamond in a few weeks.”
Bad procedure. Instead, the jeweler needs to come to management and show you that the ring needs more tips. Then, you can call the customer and maybe get her to okay more tips. That gives the company more income as well as the jeweler. But if the jeweler just fills it in, you lose. That’s why you should always have a shop foreman or administrative person fill in the jeweler’s ticket.
As for keeping up your side of the bargain, you should ensure that virtually any job a jeweler does has this ticket. If you don’t give them one, they have a right to withhold giving completed work back to the sales staff.
How did I set it up?
First thing is to put together your “Jeweler’s Worksheet.” Or if you’d rather just purchase it, I’ve already designed the form. You can buy them at Impact products, www.isiprint.com/product.htm or call (800) 543-4264.
Geller’s Blue Book to Jewelry Repair has the commission system already built into it. But many jewelers have either devised their own commission system, or in some cases the jeweler is a subcontractor and has his own list.
So how much commission should you pay? A 50/50 split on repair revenue is not wise. Why? Because if you charge $10 and the jeweler gets $5, you lose because of matching taxes, vacation pay, etc.
If you pay a jeweler $5, the matching FICA/Medicare is about another 35 cents, then there’s workers comp, paid vacation, sick leave, holiday pay, health insurance and such. The $5 could easily end up costing you another $1.25 (25% more) that you didn’t count on.
So if you want a certain markup and you figure that each employee has an additional cost of 25% added to their paycheck, you’d pay the jeweler the following percentages:
- 4x markup = 20%
- 3x markup = 26%
- 2x markup = 40%
Personally, I used the three-time markup and paid the jeweler 26% — this worked well for us.
With a commission system, you should see productivity go up. A good working jeweler should make more money, your closing ratio will stay about the same, and the bottom line will grow.
This story is from the November 2006 edition of INSTORE.