How were the prices figured in your book?
I owned a jewelry store in Atlanta for over 25 years. The last year I owned it (1999) we did almost $2,000,000.00 (2 million dollars) in sales and 75% of it came from the shop - Repairs & Custom Design.
In the late 80's we went from an hourly pay scale for the 5 jewelers to 100% commission. To figure out the pay scale on commisison we did a massive time study. Each jeweler had a time clock and clocked in and out for every job. We now knew how long it took to do a job, "on the average".
Then we added in 25% more time for downtime:
- Rolling emery paper
- Bathroom breaks
- Helping sales people
So a job we thought took 1 hour actually took 1 1/4 hours! Then in 1988 we figured a jeweler should earn at least $30,000.00 per year. That's $15 per hour. But again, we added in extra cost for:
- Our matching Fica, Medicare, Workers Comp Insurance
- 2 weeks paid vacation
- 1 week sick leave
That added another 25% to our costs. So a $15 per hour jeweler REALLY cost $18.75 per hour.
We used the time study and the pay scale and put them together to find our true cost of labor and to pay well.
Then we marked up the jeweler just like it he/she was a piece of jewelry. THREE TIMES! Triple Key.
Then we found the cost for the fidnings, sizing stock, shanks and marked them up 3 times too.
Then we added it together for the retail price and later made it into Geller's Blue Book exclusively for our sales staff. (I didn't make this book to sell, just to help my staff.)
The newest edition is based upon paying a bench jeweler in the low $40's to the mid $50's per year, with a 4 time markup on their wages. Once you add in the matching taxes and such, you end up with a 3 time markup.
The material in the book is absed upon $400 Gold and $840 Platinum. Plus some "self insuarnce" for loss.
If I raise my repair prices won't that run off customers?
The answer is NO!
In my own store and helping thousands of jewelers, here the cold hard facts:
- Right now when you wait on repair customers, 9 out of 10 will leave the repair.
- When you raise your prices you will still find that 9 out of ten will still leave the repair.
- The reason for this high closing ratio is because REPAIRS ARE NOT PRICE SENSITIVE, THEY ARE TRUST SENSITIVE!
You should be more concerned with your closing ratio for product. Many stores find that if they wait on 10 people for product inquiries only , that out of 10 customer, 3 will buy. You should be more concerned about the 7 who wlak without buying and leaving you with hundreds of thousands of dollars of unsold inventory, rather than the 1 or 2 who walk on a repair.
If I raise my repair prices higher won't my customers think everything is expensive in the store?
Again, repairs are not price sensitive, they are trust sensitive. Ask yourself, out of 10 people, how many leave the repair?
Usually 9 out of 10. Some stores say 8 out of 10. Still great numbers.
Stores that raise their prices or use my book find that they consistantly keep the same clsoing ratio or at worst drop just by the number "1" (used to clsoe 8, now 7).
No one holds a gun to their heads. No one ver said selling anything in a jewelry store would be so easy that ALL CUSTOMERS, when you tell them the price, will say "Is that all? O.K., I'll take it".
Even ins elling jewelry and diamonds you have price objection.
And still 3 out of 10 (O.K., maybe 4 or 5 out of 10) buy, still most of them walking. Why do they walk?
Maybe your prices are too high? Maybe your selection is poor. But if they liked it but said "Thanks, we might be back", all that means is "I'm being polite. I'mm looking some more for a better deal."
Jewelry is price sensitive.
But back to repairs. You'll get some whining by customers but still 90% will pay. Why?
Because repairs are trust sensitive!
Lastly, you know who complains the msot about higher prices in a jewelry store?
- The owner
- The sale staff
It's hardly ever the customers. O.K., 10% of the time.