For those of you who are thinking about selling gold jewelry, it is crucial that you understand fully how to determine the price for gold jewelry. Not only this can help you to tell a good deal from a bad one, it also helps to analyze your competitors and understand the market better before you make any investment.
Gold price
The most important part of wholesale gold jewelry trading is to understand the breakdown of the cost of a piece of gold jewelry. Let‘s say the current good price is $500 per ounce. To calculate the cost of gold for a piece of 14 karat gold jewelry that weighs 3 gram without any stones, we first divide the price per ounce by 31.5, to get the price per gram, which is $15.87. This is the price of pure gold. To convert this to 14K gold, knowing that there are 24 karats in pure gold, we divide $15.87 by 24 and multiply the result by 14. The price per gram for 14k gold is roughly $9.26. Therefore, the total cost of the gold for a 3 gram ring would be $27.78.
Labor Cost
Another major part of the cost for a piece of gold jewelry is the cost for labor, especially for pieces set with precious stones. Gold jewelry generally requires some filing and polishing after it is cast out of the mold. The labor cost can sometime be as high as $2 per gram, depending on the origin of the jewelry and the style. In addition, the cost of setting any stones on a gold jewelry can be over one dollar per stone. Certain advanced setting such as channel set and invisible set cost even more because of the high level of craftsmanship required.
Markup of Competito r s
A good way to analyze if a ce r tain style of gold jewel r y is p r ofitable and beneficial fo r a business is to unde r stand you r competito r s’ p r ices. Since you al r eady know how to calculate r oughly the cost of a piece of jewel r y, and the r efo r e the p r ice that you can get it, buy looking at the ma r kups of you r competito r s, you may get an idea of how seve r e the competition is. Fo r instance, if the competito r s a r e ma r king up the jewel r y th r ee times of the cost, the competitiveness of that style is not r eally that high. On the othe r , if eve r yone has the same p r icing and the ma r kup is 50% above the cost, the style might have al r eady satu r ated the ma r ket.
Volume trading
Another angle of looking at the pricing issue is that when the competitors are marking up at a low margin, the item is probably accepted by a lot of consumers. The justification behind it is that when the profit per piece is low, and people are trading them actively, there probably is a high demand for it. On short, the higher the profit margin, the low the volume of sales and the low the profit margin, the higher could be the volume of sales. Another point that is worth noting is that the volume theory also applies to jewelry vendors. If you buy in large quantity, pricing should go down automatically. Therefore, running a successfully business involves getting the balance between all the factors within the resources and infrastructure you have such as employees and capital.
Closeout Jewelry
Since jewelry business is highly time-sensitive, styles that were once popular several months ago may not sell at all couple months later. Therefore, when buying gold jewelry wholesale, you should estimate the monthly sales and stock according to the sale volume. For example, you may want to stock a certain style for two months worth of stock and restock it when it runs out in order to minimize the closeout items in the inventory, which is sometimes referred to as inventory shrinkage.
By unde r standing the ma r ket and you r competitors before buy wholesale gold jewelry, you can r educe the mistakes du r ing you r ent r ep r eneu r ial endeavo r , thus inc r ease the chance of succeeding t r emendously.
Scott Murff got his MBA from MIT business school and currently is the ma r keting manager in that specializes in.
Disclaimer: All information on this site is provided for informational purposes only! By no means is any
information presented herein intended to substitute for the advice provided to you by any health care or other professional
or organization.
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