Part II: Pricing Custom Work

The late 1980s were a difficult time for former jeweler David Geller. He declared bankruptcy on his Atlanta, Ga.-based store, had a lien on his house, and owed creditors $300,000 for a business that generated $800,0000 annually. "I was pricing my products the same way other jewelers do—keeping prices the same or less than those of competitors," he says.

But with some help from a friend—a watchmaker and accountant—Geller got back on track. He withdrew the bankruptcy proceedings and set up a payment plan with the Internal Revenue Service, and his friend taught him how to price custom work and repairs, which accounted for three-quarters of his business. Time studies of Geller's bench jewelers also helped: "By studying exactly how much time it takes to perform various procedures, I was able to document and assign prices to 1,850 different duties performed by bench jewelers," he says.

Today Geller sells books and cassettes explaining his pricing practices. He became so busy as an industry educator that he sold his $2 million store several years ago.

Geller's research into labor and fees is loosely based on a $30-an-hour labor charge. Geller also figures that bench jewelers working on commission could earn an average of $50,000 annually with his pricing procedures. "That's well above the average bench worker's salary [$35,000 for men and $30,000 for women] according to JCK's Annual Salary Survey," he notes.

In Chapter 7 of his book, JewelerProfit, Geller cites three cost factors in pricing hand-carved waxes: labor (based on intricacy of design; ring resizing and polishing are included in this fee), metal, and stone setting. A detailed karat-gold woman's ring set with five stones serves as one example of his pricing method:

Wax carving—$475, based on a $30-per-hour labor fee as determined by Geller's time studies.

7 pennyweights of 18k gold—$385, based on a gold price of "up to $350 per ounce" or $55 per dwt.

5 15-pt. G VS ₁ round diamonds—$1,950, based on $26 per point, as recommended by the Stuller catalog for that quality of stone. (15 x $26 = $390 per stone x 5 = $1,950.)

Stone setting—$100, based on $20 per stone.

Total—$2,910.

Geller's pricing formula varies depending on the job. Every task performed by a jeweler has an assigned fee, and current metal prices are considered. To order Geller's book or cassettes, JewelerProfit call (888) 255-9848 or visit www.jewelerprofit.com.

Other methods. In the nearly four decades that the Baker family has been in business, owner George Baker of Baker's Fine Jewelry in Virginia Beach, Va., has learned a valuable lesson about pricing custom-designed jewelry: "Keystone isn't enough."

He recommends a pricing method that covers expenses (including time spent during the design process) plus a profit. His formula: Gold cost times four, platinum by three to three-and-a-half, diamonds by two, colored stones by three, plus an hourly labor rate averaging $100.

For Carl Liebermann, owner of Liebermann's in Joliet, Ill., a sliding scale of fees works best to price his custom-designed jewelry. "For findings (all metal work), I always multiply cost by two-and-a-half," he says. But the mark-up on stones varies according to price. "A two-and-a-half-times markup on a 2-ct. diamond would be too expensive," he explains.

Liebermann's pricing formula: Metal costs times two-and-a-half, and $100 per hour for labor. Stones valued at $100 or less are triple keystone, those priced between $101 and $1,000 are keystone, and stones exceeding $1,000 are priced below keystone.