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.

Best Jewelry Gifts for $125 and Less!

Apples of Gold has selected its best 15 jewelry gift ideas ranging in price from $65 to $125. Free FedEx shipping is included.

1. Diamond Harmony Cross Pendant in 14K White Gold, Price: $125

The elegant, architectural, polished lines of this cross embody balance and harmony. One diamond set in the center symbolizes the light and love of God.

2. Love Knot Earrings in 14K Yellow Gold, Price: $85

Elegant, beautifully polished love knot earrings symbolize eterntal love in 14k yellow gold. Also available in 14k white gold.

3. Beveled Globe Smoky Quartz Ring in Sterling Silver, Price: $95

This simple nickel-free sterling silver ring brandishes a majestic, genuine bevel-cut 12mm smoky quartz gemstone.

4. 14K Rose Gold Hoop Earrings, Price: $115

14K Rose Gold is the newest trend in hoop earrings. Measuring 1 1/8″ in diameter and 2.75mm in thickness.

5. Tinkerbell Pendant in 14K Solid Gold, Price: $99

Official Disney Fine Jewelry. Also Check Out Mickey, Pooh, Cinderella, and more Disney Jewelry.

6. Men’s Titanium Cross Pendant, Price: $65

One of our most popular men’s crosses. Made with pure titanium in a brushed finish with polished beveled edges.

7. Garnet Gemstone Stud Earrings set in 14K White Gold, Price: $125

Also available in amethyst, emerald, sapphire, ruby, tanzanite, and more gemstone stud earrings (prices may vary for different gemstones).

8. Sterling Silver Spinner “Love” Ring, Price: $95

A hand-crafted nickel-free sterling silver band surrounded by a spinning ring, engraved with the word, “Love”.

9. “The Arca” Men’s Titanium Bracelet, Price: $125

Forza Tesori has created an awesome, two-toned air craft grade titanium bracelet for guys who know a solid investment when they see one. The bracelet has a brilliant finish with shiny accents and smooth lines that are comfortable in any setting.

10. Bible Pendant in 14K Gold (Bible Opens), Price: $125

Our 14k gold Holy Bible Pendant Opens with numerous pages to reveal the Lord’s Prayer in the beautiful King James Version.

11. Two-Toned Dual Hoop Earrings in 14K Gold. Price: $95

Uniquely made and finely crafted in 14k two-tone gold, our dual hoop earrings are a perfect fit. Measures approx. 3/4″ in size and is light and extremely comfortable on the ears.

12. Heart Hoop Earrings in 14K Gold, Price: $65

These cute 1/2″ heart earrings make the perfect gift. Light and comfortable to wear. Also available in white gold.

13. Sapphire and Diamond Drop Pendant, Price: $124

A deep 0.60 carat sapphire center stone set in 10k white gold with accent diamonds. White gold chain included.

14. Classic 14K Gold Crucifix Pendant, Price: $115

This is our best selling crucifix pendant. Classic, traditional, elegant. Measures approx. 1 1/2″ tall.

15. Three Stone Diamond Earrings in 14K White Gold, Price: $119

A Trinity is symbolic of many things, including God, perfection, and unity. Nothing expresses this than the purity of diamonds and white gold.

10% Off All Jewelry through November 30th!

(COUPON CODE: APPLES10PT) – Enjoy 10% OFF UP TO $50 on all jewelry from Apples of Gold, now through November 30, 2008!

Choose from our high-end gold jewelry, wedding rings, gemstone jewelry, diamond jewelry, personalized jewelry, or any item from our store!

Coupon max. value: $50 per order. May be used on any number of orders through expiration date.

Use coupon code: APPLES10PT during Check Out on any regular item from our store!

Check below also for more coupons, including our year-end sale of 40% on Von Dutch Watches!

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.