REPAIRS AND CUSTOM DESIGN are looked upon by jewelry store owners as a necessary evil. An evil that are merely provided as a “service” to our customers. Yes, we all want to make a profit on repairs and custom work, but if someone told you, “You don’t have to do repairs anymore,” many a store owner would cry out “Hallelujah, amen!” But not me. And neither should you.
There is so much money to be made from the shop and most jewelers just don’t believe it can be done. The reason it can be done is simple:
While products are price sensitive, repairs are trust sensitive. I can prove it right now. If 10 people walk into your store and all 10 are interested in buying something from the case (no repair) how many out of 10 do you sell? Most people tell me three out of 10. Maybe you do four, five or six, but three is typical.
Now what if 10 people waltz into your store and all 10 say “Can you fix this?” or maybe “How much to repair this?” How many give you the job?
I’m told nine out of 10 or 10 out of 10.
Doesn’t matter what you charge, nearly 100 percent of people leave a repair with you. That’s because repairs are not price-driven, they are trust driven.
So what to do to maximize repair income? Simple: Raise your prices! You know what will happen when you do? You will still sell nine out of 10 and your income will increase. (If you want an easy way to do that get my Geller’s Blue Book to Repairs. It’s all done for you.) You’ll be surprised at how easy it is to get the extra money.
A few paragraphs ago I told you there’s a lot of money to be made from repairs. It’s a two-sided coin and both sides are great. One side is “Profit” and the other side is “Investment.”
On the “profit” side of the coin is this. You should be able to achieve a three-time markup from repairs and the shop. Unlike product sales which overall give you a keystone markup, correctly priced repairs will give you triple keystone. Does it take more expertise to do this? Sure, but you’re a professional, remember?
Now let’s look at “investment.” Let’s use an example of a “semi-typical” jewelry store. Let’s say this store does $800,000 in total sales and those sales are split 50/50. Half of the sales are from product sales from the showcase and the other half come from a busy shop. Got it so far? So the shop does $400,000 per year as well as the showroom.
So look at the showroom sales of $400,000. If you have a gross profit margin in product sales of 50 percent, you’d probably have $200,000 in inventory sitting in the case (or more). So to be able to sell $400,000 in jewelry you have to invest in $200,000 in jewelry at your cost and you also have to have a sales staff on salary willing and able to sell it. Your investment is $200,000 plus staff salaries.
Now let’s look at the shop. It also does $400,000 in income for the year. What do you have to have in inventory to do that much business? Virtually nothing! That’s right. Yes, you have jeweler’s salaries but to sell inventory you have sales staff salaries plus $200,000 in inventory in the showroom.
Raise your prices on diamonds and more customers just might walk. (Seven out of 10 walk now!) Raise your prices in the shop and no more will walk than do now.
You need the money, just ask for it.
P.S. Want an example? Narrow engagement ring-sizing prices in the United States currently range from as low as $7 to as high as $120. You read that correctly! That’s regular service, not rush. See you next month, hopefully a lot richer.
This story is from the March 2003 edition of INSTORE