Lessons From Gasoline Pricing

The run-up of precious- metals prices and the subsequent falloff cause no end of trouble for jewelry businesses. Most manufacturers have models to adjust prices as the price of gold fluctuates, but the retail world doesn’t move so fast. In contrast, the hated producers and refiners of oil know there is great value in adjusting prices quickly. During the last dramatic rise in the world price of gold, many manufacturers and retailers learned painful pricing lessons. As my grandmother said, “Experience keeps a dear school, but fools will learn in no other.” In 1980 the price of gold soared to $800 an ounce and over the next couple of years fell back to $400–$500. I was running the Kurt Gutmann jewelry business at the time and was one of those taught in the “experience school.” As the price of gold fell, our pricing system didn’t work well. Margins fell through the floor. Of
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