WHEN GOLD CREEPS close to the magic $3,000 mark, it’s not just an investment stat or talking point; it’s a direct impact on your bottom line. If you aren’t adjusting accordingly, you’re absorbing costs that are cutting into your margins.
Reprice Everything
We had a saying in the military about packing your rucksack: Ounces turn to pounds, and pounds turn to pain. The meaning? Consider every little thing you pack, because once it’s been on your back for a couple of hours, you’ll feel it add up.
From a simple lobster claw to the millimeters of sizing stock for a ring, everything you use costs significantly more than it did last year. Is your shop pricing accordingly? If you’re still quoting based on yesterday’s prices, you’re giving away your expertise at a discount.
Once your staff is comfortable charging more, you don’t have to go back down, even if the market does. Responding to the market can mean an investment in your future margins.
Scrap Your Dead Stock
Where gold costs strain your repairs, they create a new opportunity for your dead stock. The piece that’s been sitting in your case since 2019 (and I know you have some) might be worth more as scrap than finished. After a year, that ring owes you money, and cash flow now beats profit. Cash in your old dogs and get fast turners back in your cases.
This also means it’s a great time to buy over the counter if you don’t already. Just like you, your customers have jewelry collecting dust. If they keep an eye on the market, they’re likely more motivated to sell than ever. That means more weight for your next shipment to the refinery.
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Train Your Staff
A well-trained representative of your business interacting with a customer beats any marketing material you can dream up. Here are the training obstacles you need to cover.
Special orders: Say you have a ring that you bought last year, tagged at $1,500. A customer wants to place an order off it, and the vendor tells you it’ll cost you 30% more. By the time you mark it up, that’s a massive difference at retail. This is a pretty simple concept to explain, but don’t let your team be caught off guard — they don’t all know the market like you do.
Repairs: Existing customers may be dismayed if you’re raising your repair prices in response to the market (and you should be). Remember that you’re the expert, and repairs aren’t price-sensitive, they’re trust-sensitive. Does your staff know how much gold is used to size a ring? The weight of a clasp relative to the price of a dwt of gold? Project expertise, and you’ll put your customers at ease.
Treat rising gold prices as an opportunity. Adjust your pricing where necessary, educate your team on material costs, and take a hard look at your inventory. The jewelers who stay proactive will not only protect their margins but also position themselves as experts in guiding customers through the realities of today’s market.
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