Pricing Custom Work

Gary Gordon, president of Samuel Gordon Jewelers in Oklahoma City, Okla., relies on a classic cost accounting principle to determine the prices of custom pieces made by his in-house designer and goldsmith, Robert Waite. Waite, who works by appointment only for special orders, asks customers to meet with him three times: first, to discuss design ideas; second, to scrutinize a wax model; and finally, to pick up the finished product. Below and on the facing page are three examples of pricing custom-made pieces, with costs calculated using Gordon's price formula, which considers materials, labor, and overhead. "Those are the three elements of cost," says Gordon, who entered the family jewelry business immediately after receiving his CPA license. The jeweler charges 15% markup on his cost for metal but doesn't mark up gemstones because he'd "price himself out of the market." Labor charges a
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