Pricing Gold Jewelry, An Insider’s POV

Keystone Pricing

Keystone pricing is taking the wholesale cost of a piece of jewelry and marking it up 100%.

Information site, About.Com, takes this a step further. They advise entrepreneurs:

“A simple formula when pricing for wholesale is to add up your costs (this includes labor, overhead, and supplies) and multiply by 2. For retail, do the same, but multiply by 2.5 to 3.”

In other words, they advise taking not only the cost of the jewelry into account, but also other variable business expenses to determine the net cost of jewelry and then to multiply by 2 to obtain a wholesale cost or 2.5  to 3 times to obtain a retail price.

Keystone refers to doubling the cost of jewelry, whereas triple keystone is tripling the cost of jewelry to determine the retail value (A staggering 300% Mark Up)!

This is not uncommon in the jewelry industry and some jewelers mark up jewelry even higher.

Apples of Gold Pricing Methodology

Where Apples of Gold Jewelry differs significantly from standard jewelry industry pricing is that at best we mark up our jewelry an average of 30% from the cost of the actual merchandise. On select designer pieces, we may mark up select items 40% – 50% (you can call this half-keystone, if you will).

Compare this to 100% to 300% markup of the traditional jeweler, and you will see why customers often call us to ask us how we are able to sell jewelry for so low.

This is where we stand apart from most traditional jewelers and even online jewelers. When comparing Apples of Gold to traditional jewelers we are usually 50% below retail and when comparing to online stores, Apples of Gold Jewelry is an average of 30% lower than most online jewelry competitors.

This leads us to our value-based pricing methodology.

Value Based Pricing

Apples of Gold strives to determine its jewelry prices based on the value that a piece of jewelry creates for our customers. We believe that this is more profitable for us in the long term–as we serve our customers and provide an affordable, quality product.

By selling with greater volume nationally across all U.S. States and internationally across Europe, Asia, Canada, and other parts of the globe, and by limiting overhead, and very significantly not having the huge burden of stocking every jewelry item in-house, we are able to sell at vastly lower prices than most jewelers, while providing a fair valuation of our gold jewelry.

Additionally, we combine our value-based pricing with a “fair pricing” method. “Sometimes it simply doesn’t matter what the value of the product is, even if you don’t have any direct competition. There is simply a limit to what consumers perceive as ‘fair’. If it’s obvious that your product only cost $20 to manufacture, even if it delivered $10,000 in value, you’d have a hard time charging two or three thousand dollars for it — people would just feel like they were being gouged” (entrepreneurs.about.com).

The Bottom Line

Most jewelers have to charge anywhere from 100-300% to maintain a profitable business. With large overhead, shifting gold and metals prices, employee costs, and most costly–expensive inventory–they cannot survive on smaller than keystone margins.

The difference with online jewelers–and especially those who have deep and mutually beneficial relationships with manufacturers and wholesalers, the markup on jewelry will be significantly less, usually not breaching 30%-50%.

At Apples of Gold, we recently were in talks with one of our major suppliers to get lower prices to obtain a 40-50% margin on products that they supply us, and the idea was quickly dismissed–because both we and our suppliers understood that to be competitive in the online environment, such a mark-up is difficult to achieve. We finally settled on a 29.5% margin on items that we purchase from them. So an item that cost us $300, we are selling for about $385.00. A traditional jeweler would normally sell an item obtained at wholesale for $300 for $600 (keystone), or possibly $900 (triple keystone).

That is why Apples of Gold rightly advertises our products are approx. 50% below standard retail (and that is a conservative estimate).

Learn more about Apples of Gold Jewelry and our value-based pricing methodology.

Featured Products in this Post

Men’s 14K Gold Angular Link Bracelet

Sea-Foam Green Amethyst and Diamond Ring

Art Deco 1/4 Carat Diamond Ring

Caedmon Celtic Wedding Band

Featured on ApplesofGold.Com.

Pricing Gold Chains Like Jewelers

Gold chains are by far the simplest types of gold jewelry to price. Learn how to price gold chains like professional jewelers!

The most important thing to look for is the gram weight of the gold chain in question. Once you have determined the gram weight, you are equipped for price comparisons.

Of course, keep in mind that price alone is not always the sole factor. Purchase jewelry only from reputable jewelry stores, and make sure they have a strong return policy, an established reputation, and excellent customer service.

Pricing Basics

Let’s use a 3mm gold rope chain for our pricing model. If a gold rope chain costs $450.00 and weighs 14.0 grams, you can do the math and realize that you are being charged $32.14 per gram of gold that is in that chain.

Quick Formula: Price of Gold Chain / by Gram Weight = Price per Gram.

You find another 3mm gold rope chain priced at $500.00. This chain appears to be $50 more expensive. Upon closer examination, the chain weighs 16.5 grams.  Using the above simple formula:

$500 divided by 16.5 = $30.30 per gram.

The second chain is actually the better deal when you consider the gold content ($30.30 per gram of gold vs. $32.14).

This is hypothetical of course and prices can vary significantly from store to store. We have found that most online jewelers charge an average of 30% more for the same gold chain as Apples of Gold Jewelry.

This is why we are not afraid to disclose what many other jewelers fear to share.

Watch out for jewelers who do not disclose gram weights

Jewelers to stay far, far away from are ones who do not disclose the gram weight of their chains or who use a wide range to list the gram weight–such as, “Chain weighs between 16 – 23 grams”.

There should not be more than a maximum of a 10% variance in the gram weight of a gold chain or substantial piece of gold jewelry. So if a gold chain is advertised at 10.0 grams, it should weigh somewhere in the 9 – 11 gram range (and that is being liberal).

Reputable jewelers will also honor the gram weights of their chains by adjusting the price of a gold chain if the chain turns out to contain a significantly less gram weight than advertised.

There’s Always an Exception to the Rule

There are always a few exceptions. It is often not customary to advertise gram weights of wedding bands, diamond rings, and gemstone rings (although if asked, jewelers should always disclose the weight if available).

The reason being that items such as wedding bands or diamond rings, for example, are not solely based on the precious metals content. Much larger factors come into play, such as design, the labor of love and time it takes to create such rings, and in the case of gemstones and diamonds: the quality and rarity of the stones weigh far greatly than the few grams of gold such rings often contain.

These types of fine jewelry are often sold by the piece, rather than by the gram (don’t be surprised if a jeweler takes it personally when the mistake is made of evaluating such items based on gram weight alone. Just hang your head in shame at this point and swiftly apologize).

Price Matching

Jewelers who want your business will do their best to price match or beat other advertised prices. Of course, keep cool and reasonable. Don’t expect a quality jeweler to match the price of a gold chain you found at a shoddy looking jewelry website whose prices haven’t been updated for 5 years and who don’t provide a customer service phone #. Identify and compare with jewelers’ real competitors to get a better price.

Gold Volatility

Lastly, keep in mind that gold prices can be volatile and the gold chain that you saw advertised at $300 today may soon hit $350 if gold prices continue to rise, as historical gold prices have indicated over the last several years.

Likewise, with a significant downturn in the price of gold, you should expect gold chain prices to decrease over time.

Keep in mind that other factors such as inflation, increased business expense, and the struggle for many businesses to survive in tough economic times, may play a role in determining whether to increase or decrease the price of gold jewelry.

The price of gold is a large determinant of the price of gold jewelry, but it is also often a guideline–not a stringent policy.

Jewelry Hot List

Last was the year of new jewelry for Apples of Gold, with the addition of over 600 new, unique jewelry pieces. Below are some of the “hot seller” highlights from our newest fine jewelry pieces:

Black Diamond Rings became a hit for Apples of Gold with our Art Deco Black Diamond Ring and so we added several new designer pieces to our popular black diamond jewelry collection, including a Benchmark Black and White Diamond Eternity Band, 1 Carat Black and White Diamond Cross Pendant, as well as our all black diamond solid gold cross pendant for men.

Of course, we love our blue diamond jewelry too!

By far, our best selling blue diamond ring was our 0.93 Carat Blue and White Diamond Swirl Ring. Our popular blue diamond jewelry pieces was expanded to include our best selling 0.93 Carat blue and white diamond swirl ring. We added many other blue diamond rings to our blue diamond jewelry collection as well that turned quite a few heads.

Wedding Bands have always been at the heart of our jewelry line and Paisley Wedding Bands have always been at the top of our list. Our Paisley Collection was expanded with a new deeply engraved paisley wedding band in 14k white gold, 14k yellow gold, and our most popular paisley release: the 14k rose gold paisley wedding band.

It was our goal to added many new unique personalized jewelry pieces to our collection, and we met our initial goals!   The most popular being our Personalized Gemstone Circle Pendant, the Engravable Boy Gemstone Pendant and Engravable Girl Gemstone Pendant, our Personalized Gemstone Baby Shoe Pendant, and Personalized Gemstone Heart Pendant.

We also introduced a new line of Personalized Disney Jewelry, and new gold name pendants.

Benchmark Wedding Bands - A high-end wedding ring brand which includes a Lifetime Warranty and Lifetime Re-Sizing Policy. We plan on adding many new Benchmark styles in 2009.

Official Disney Jewelry – featuring popular Disney characters such as Tinkerbell Jewelry, Mickey Mouse Jewelry, Winnie the Pooh Jewelry, and more! Our Personalized Disney Jewelry collection also proved very popular and all very affordable!

Read more about our Disney Jewelry line: Disney Jewelry for an Imaginative Holiday, A Man Named Walt, and our official Disney Jewelry Release.

We plan on adding more popular Disney characters in 2009.

Apples of Gold’s most popular cross, The Polished Solid Gold Cross Pendant also saw a new addition, including: 18K Gold Cross Pendant, an 18K White Gold Cross Pendant,  and a Men’s Platinum Cross Pendant.

This cross is fully solid gold and finished on both sides (not hollow), measuring approx. 1 1/4″ tall x 1″ across and 2.5mm thick. Although originally crafted for men, both men and women enjoy this beautiful, expression of Christian faith.

This amazing cross was followed by the release of our 18K Gold Onyx Cross Pendant.

What is better than your own writing or the handwriting of your beloved, engraved onto a wedding band? Apples of Gold Jewelry created the concept of engraving your own writing onto a gold band with our new Personalized Handwritten Wedding Bands in 14k gold yellow, 14k white gold, and 14k rose gold.

Simply scan your handwriting onto your computer and email it to us! We’ll do the rest!

Our unique Victorian-Style Three Stone Diamond Ring became a hot seller in 2008 and as platinum prices dropped, we decided it was the perfect time to offer a Victorian-Style 1 Carat Three Stone Diamond Ring in Platinum also. Also available as a three stone 1 carat diamond engagement ring in 14k white gold or a 1/2 Carat Platinum Three Stone Diamond Engagement Ring.

We look forward to 2009 as we expect to add more items than we did in 2008! We expect to double our production in 2009, with 500 new jewelry pieces being added in the 1st Quarter alone. Yes, we plan on keeping the Apples of Gold Jewelry elves very busy through 2009!

Bling in the New Year

New Year’s Eve is a fun, festive holiday filled with sparkle and shine. From glittered hats and twinkling lights to party confetti and crystal décor, it’s impossible to ignore New Year’s inherent bling. Don’t try to fight it – embrace the sparkle and light up your own New Year’s ensemble with beautiful accessories. When choosing jewelry for a big night out, remember that it is a delicate balance between just right and overdone. Here are a few guidelines for putting on the ritz this New Year’s Eve:

Bring Out the Big Guns

For most women it’s a rare day when we get to doll ourselves up from head to toe. Take advantage of the fact that it is New Year’s – pull out your favorite fancy cocktail dress that you never get to wear, or use it as an excuse to buy a new fabulous ensemble. Once you have the perfect outfit, the real fun begins: it’s time to accessorize.

‘Tis not the season to hold back the bling; those who have it should flaunt it. Pull out your favorite and most fabulous pieces of jewelry. Pay special attention to items that can make an outfit like gorgeous dangle earrings, beautiful diamond bracelets, and sparkly cocktail rings. Any piece that is large or sparkly will do just the trick.

If you do not have any statement jewelry, consider investing in a few good pieces that you can keep and wear for decades. As long as the jewelry you buy is real gold, there is no reason that it can’t be worn for the rest of your life. Here are a few great options that would suit a New Year’s or other formal party perfectly:

• Round Diamond Dangle Earrings (above)

• White Gold and Diamond Twist Earrings (below)

• A Whopping 7 Carat Emerald Cut Pink Topaz Cocktail Ring (above)

Choose Wisely

Once you have your jewelry out, you have to make some tough decisions. It might be the season for bling, but it’s never appropriate to look gaudy. A good rule of thumb is to choose two pieces max. This means that if you are wearing a great pair of dangly earrings, skip the necklace and go for another piece of jewelry on your hand; a bracelet or cocktail ring would be a lovely compliment.

Generally, choose one piece of statement jewelry above the waist (earrings or a necklace) and one below (on the wrist or hand). Of course, if your jewelry is dainty or diminutive in size, it looks perfectly fine to wear earrings and a necklace. Big, sparkly pieces should definitely only be worn one at a time.

Now that you are perfectly accessorized in your best bling, enjoy looking like a million bucks while you ring in the New Year! Enjoy yourselves, be safe, and as always, be fabulous.

Must-Read Tips for Buying Jewelry Online

In today’s increasingly busy world, consumers want to find exactly what they are looking for as quickly as possible. For many, online stores are the perfect shopping solution – search engines find what you’re looking for in an instant, and stores are open 24 hours a day. In mere minutes you can check out three different stores and find the perfect pair of sapphire earrings for your holiday party. But with the click of a mouse, we are also revealing our payment information to an unknown source – an act that requires a great amount of trust. How do we know who to trust in the faceless world of webpages? Simply follow our top two tips for online jewelry buying, and feel secure making your beautiful new purchase:

1. Only Buy From Reputable Online Jewelers

How does one determine if an online jewel is reputable? Look for the following:

Better Business Bureau Standing:

All established online retailers should be in good standing with the Better Business Bureau.  If the website does not disclose this, visit the Better Business Bureau website and search for the company. Many online retailers have numerous complaints filed against them, so always check before making a costly mistake.

Involvement with Trade Organizations:

Jewelers who are committed to their business are involved in their industry and usually belong to trade organizations. Preferably they are members of a well-recognized organization such as the Manufacturing and Jewelry Suppliers of America (MJSA).

Number of Years in Business:

The longer the jewelry store has been in business, the better. Unreputable business cannot survive online; they will eventually fail or be shut down. Successful online business thrive due to word of mouth, repeat customers, and great products.

2. Only Buy From Online Jewelers with Great Customer Service

Successful businesses value the customer, and quality customer service is a surefire way to guarantee a great jewelry buying experience. Make sure the online jeweler provides:

Contact Information:

There should be an email address as well as a phone number listed. Otherwise, there is no one to contact if you do not receive your purchase or if there is something wrong with it.

A 100% Jewelry Guarantee & Stellar Return Policy:

Online jewelry retailers should give customers a minimum of two weeks to return jewelry for a full refund, though thirty days is even better. Be careful of some online jewelers who only give store credit for returns, and always read the jeweler’s return policy before your purchase.

As long as you follow these simple guidelines, buying your jewelry online is a wonderful way to find the perfect piece at a great price. And remember, Apples of Gold meets and exceeds all of the criteria above to create the best possible shopping experience for their customers.