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Bench Repair Jobs: What Price Is Right?

Workbench
By Simon Applebaum
This story appears in the September 2000 issue of JCK magazine
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Setting the right price for a jewelry repair job may be the toughest part of bench repair. The reason: many jewelers don't have a clue how to do it.

"I speak to hundreds of jewelers on repairs," says David Geller of Jewelry Artisans Inc. in Atlanta. "I'll ask, for example, `What do you charge to size a ring smaller?' The answers will range from $7 to $25-and this is retail! They just pull the prices out of the air or call another jeweler who doesn't know how to price any better than the next guy. And most will add, `That's the most I can get.' "

There's no national list of prices for the many jobs a bench jeweler does, though Geller has developed a guide that lists 900 prices for repairs and custom work. The book is based on a time study Geller performed in which participating jewelers used a time clock to track the amount of time spent on each job envelope-"to give me an idea of how long a job really took," Geller says.

Cost and comparison. Many jewelers use one of two common methods to set repair prices. They base prices either on the cost of doing specific types of jobs (for example, stone setting or ring sizing) or on what other jewelers in town charge for the same work. Our experts reject both methods.

Cost-based pricing is the "pricing floor, the absolute minimum you can charge without losing money," says Bradney W. Simon, founder of B.W. Simon, Spartanburg, S.C., who provides instruction to bench jewelers. The method ignores other important factors, too, such as profit margins, turnaround time, overhead, job costs, and the bench jeweler's professional skills, says Mark Mann, Jewelers of America's director of certification for its Bench Jewelers Certification program.

And charging the same prices for your repair work as some other store is "ridiculous," says Simon. "Just as someone else's eyeglass prescription isn't effective for your eyes, you can't use someone else's price list, no matter how effective it is for them, and expect it to be effective in your store," he says.

Mann agrees that repair prices should be based on a store's needs and on its market, not on national averages or what someone else charges. The factors a store must consider "will be different in different locations," he notes.

Pricing guidelines. Still, there are some guidelines that jewelers can follow in setting repair work prices, say Simon, Geller, and Mann.

  • Cost out each type of repair. Examples include ring sizing up and down, stone setting, and chain repair. Include the cost of labor (taxes, benefits, and salaries), cost of materials, and shop overhead (tools, shop supplies, etc.).

  • Refine your analysis. An important tip, adds Geller, is that the average bench jeweler "produces for only 5 hours a day out of 8 hours, because of talking, helping the staff, and doing other duties." When pricing, take those other three hours into consideration. Geller explains how: "If a jeweler makes $20 per hour, your true cost, with matching Social Security taxes and similar costs, is $25 per hour. If you wanted to triple his cost, you'd bill your labor at $75 per hour. In 8 hours, you would collect $600. But since he only works and produces money for 5 hours, divide 5 into $600 and you'll get $120. So, you'd have to charge $120 per hour knowing that he only works 5 hours, but that would give you $600 for the day."

In analyzing costs, be sure to add your normal store markup to cover advertising, rent, insurance, and other expenses. Geller based the prices in his guide on a $30,000 annual salary for a bench jeweler, added 25% for benefits and taxes, and marked that up four times. The cost of findings was marked up three times and included in the final selling price to the customer.

  • Know your place in the industry hierarchy. "Are you the Timex of the repair industry, the Rolex, or somewhere in between?" asks Simon. "Look at your quality of repair work, turnaround time, the types of repairs you perform, and how they compare with others in your market and the industry. For example, a poor ring sizing may cost just as much as an exceptional one, but that does not mean that it should be priced the same. An exceptional job should be priced higher than a marginal one."

  • Know what your customers are willing to pay for the services you offer. "Often they are willing to pay more for our repairs than we charge," says Simon. "Knowing how much you can raise your prices will allow you to maximize your profits in the shop." Charge too little, and you won't make a profit. "You might even lose business because clients will think there's something wrong with your work," Simon notes. Charge too much, and "you will likely be turned down for work, and clients probably will not tell you why," he says.

  • Find out what other service providers in your market charge. "When you go to the plumber, landscaper, or automobile dealer for repairs or servicing, check their hourly rates," says Mann. "This is an area where jewelers sometimes fall down [in pricing their repair work]. They forget they are professionals, too, doing jobs for customers that require a level of skill."

Once you've figured your per-job costs, defined your position in the industry hierarchy, and determined the value of your work to your customers, you can set your prices properly and avoid charging too much or too little. "By doing so, you will maximize the revenues on each repair, and workflow will increase from additional customers bringing repairs to you because your prices are set fairly," says Simon. "And the result is a more profitable store."

JCK Snapshot: Bench Jewelers in America*

We asked members of our retail panel some questions about bench jewelers. Here are the results of our poll:

Do you employ one or more bench jewelers?

  • Yes 77%

  • No 23%

What is their average amount of experience?

  • 16 years.

What is their average total annual compensation?

  • $36,000

How is most of your bench jewelers' time spent?

  • Repairing jewelry (60% of the workday),

  • Designing/making jewelry (20%),

  • Restoring vintage jewelry (5%),

  • Cleaning (5%),

  • Repairing watches (5%),

  • Changing watch batteries, straps (5%)

What are the top three complaints by customers about work done by your bench jewelers?

  • Time required to return an item (50%)

  • Quality of work (10%)

  • Cost of work (10%)

Besides standard benefits like sick leave and vacation, what nontraditional "perks" do you offer to your bench jewelers?

  • Bonuses (99%),

  • Continuing education (81%),

  • Profit sharing (47%),

  • Payment of association membership dues (43%),

  • Share of revenues generated by the backroom (23%),

  • Health insurance (12%).

* Source: April 2000 JCK Retail Panel

Tips for a Profitable Repair Department

A repair shop can be a profit center instead of a headache maker. The repair department of veteran Atlanta jeweler and bench expert David Geller, for example, accounts for half of his $1.8 million in annual business. An efficient operation will improve the profit margin, but there are some specific profit-building tips, too.

  • Do a time study of your bench work. It will affect how much you charge and may surprise you. "One reason jewelers are losing money is that they have no idea how long it takes to do a job," says Geller. Determine how long each type of job takes and also determine how many hours bench jewelers actually spend doing repairs.

  • Check for additional repair needs. Repairs of ring shanks, prongs, and chains represent 65% to 75% of all repair and reconstruction jobs at the service counter. But many jewelers fail to check for those or other potential or pending repairs when customers bring jewelry in for repair, says Mark Mann, Jewelers of America's director of certification for its Bench Jewelers Certification program. "It's like going to the dentist for a teeth cleaning, and he discovers a couple other problems, like cavities," Mann says.

  • Set up the repair shop as a separate department. That includes giving the repair department its own accounting systems and profit goals. Track job activity, cost of materials, and all expenses related to labor, such as taxes. This will give you a better idea of the department's strengths and weaknesses in terms of jobs and earnings and help you revise its pricing structure.

  • Charge customers to check and tighten stones. Geller says this is "a big moneymaker" for his store. He adds that, since tightening loose stones in a ring can take the same amount of time as sizing the ring, a $20 sizing should have an additional $20 tacked on for tightening.

  • Sell "upgrades" in repairs at take-in. "Don't just `clerk' repairs," advises Geller. For example, if a shank is thin, offer a new shank as an alternative to sizing. People with larger knuckles should be shown one of the many `arthritic shanks.' Two out of 10 will buy one, and those who don't will understand that the ring will twist and turn-and therefore not complain later about the "wrong" size.

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