PRICING JEWELRY bought over the counter (from the street) for retail sale can be tricky, but also very profitable. Most jewelers I know don’t have a pricing strategy in place to give them the competitive advantage they need.
With the average retail jewelry store margin in steady decline (now less than 45 percent nationally) and decreasing further due to the never-ending onslaught of discount internet sellers, it is imperative that you sell items purchased over the counter at a higher margin. Gone forever are the days of triple keystone markups and limited choices for your customers. You can, however, recapture some of those old healthy margins by adapting an aggressive pricing strategy for those goods bought secondhand.
Here are some strategies you can use to maximize your profits on these unique transactions.
- Never price this merchandise based on your actual cost. Your retail comparisons should be based on similar items you already have in stock. For example, if you purchase a diamond ring over the counter for $300, and you have a similar ring in stock for $1,500, use that as your starting price.
- Make sure all of your staff are able to differentiate these special items from your regular inventory. (We use different color tags and codes.) All of your sales staff should know that these items can be aggressively discounted if necessary, and they should receive a bonus above and beyond their normal commission.
- If the items are too unique or distinctive to sell as is, they can be repurposed into other salable pieces as long as you follow the same high margin philosophy. Your goal after all related expenses (e.g., commissions, credit card fees, sizing, polishing, etc.) should be a triple keystone margin.
Since these special transactions happen infrequently, it is important that you hit a gross margin home run when you have the chance. Remember, if you don’t sell your margins short, this pricing-for-profits strategy will work for your store.