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David Geller

David Geller: Your Jeweler is Lying to You

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But you’re to blame for not knowing the true cost of repairs.

[dropcap cap=Y]our jeweler is a big, fat liar! Have I offended you yet? Why in the world would I even suggest this?[/dropcap]

Try as they may, jewelers have no concept of time and are afraid to report to you that this job took much longer than it should have. When I did the time study for Geller’s Blue Book to Jewelry Repair, what I found was:

Try as they may, jewelers have no concept of time and are afraid to report to you that this job took much longer than it should have. When I did the time study for Geller’s Blue Book to Jewelry Repair, what I found was:

• A jeweler was paid for an eighthour day.
• The actual amount of time a jeweler worked and produced income was 5.5 hours a day.
• The end result was if a jeweler said, “This job took me an hour,” it really took 1.25 hours.

HERE’S WHY:
• Interruptions from the staff
• Finding lost stones on the floor
• Rolling emery paper
• Cleaning the ultrasonic tank
• Smoke breaks or coffee breaks
• Assisting customers with technical questions

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You have to charge for the down time, even though there was no work being performed if you want to find the true cost of labor.

Speaking of cost of labor, the jeweler costs a lot more than his hourly wage. If you pay someone $20 an hour, once you add in the matching FICA/Medicare/vacation/sick leave and any other benefits it easily adds 25 percent to the hourly cost. A $20-an-hour jeweler actually costs you $25 an hour.

So now, let’s look at the differences:

• Job took one hour
• You pay $20 an hour
• Job labor cost: $20
• Markup on repairs: Three times
• Selling price: $20 x 3 = $60

Or so you thought!

After figuring out your jeweler is a big, fat liar:

• One-hour job really took 1.25 hours
• $20-an-hour jeweler really costs $25 an hour
• True job labor cost: 1.25 hours x $25 an hour = $31.25
• Markup on repairs: Three times
• Selling price: $31.25 x 3 = $93.75

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Hey, Charlie, you were undercharging for your work by 36 percent! Problem is, this doesn’t take into account freebies and redos. To factor those in, starting thinking of the shop not “per job” but “per month.” This evens out the weeks and also includes freebies. To do that make two “buckets” for the month:

SHOP INCOME BUCKET
• Jewelry repairs
• Custom design
• Watch repairs and batteries

SHOP COST BUCKET
• Jeweler’s paycheck
• The matching taxes you pay and any benefits
• All findings you bought for the month, supplies for the shop, casting grain, mountings for custom design.
• Outside trade shop bills (watchmaker, casting bills, etc.)
• Lease payment on the laser or other equipment

The Shop Income Bucket has everything you charged for during the month. The Shop Cost Bucket has the expenses of jobs you charged for as well as jobs you didn’t charge for! Your goal? With freebies and such, the Shop Income Bucket should be about double that of Shop Cost Bucket. If it’s not, it just means:
• You need to raise your repair prices.
• You give away way too many freebies.
• The sales staff doesn’t charge for everything that the jeweler does (checking and tightening stones, rhodium plating, etc)

Now, isn’t that easier and more accurate than getting inaccurate information from that big, fat liar of a jeweler?


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

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[span class=note]This story is from the October 2011 edition of INSTORE[/span]

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