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.

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!

Important Jewelry Shopping Tips

When you are in the market for a new piece of jewelry, it’s important to be aware of a few key factors. First and foremost, getting beautiful jewelry at a great price requires knowledge. But what knowledge, exactly? In a nutshell, always do research on the item you are looking for before buying. We’ll delve into the kind of research you need to accomplish, as well as other critical jewelry shopping tips all consumers should be aware of. Simply read on, and consider yourself a jewelry shopping pro.

Doing Your Research

Though many shoppers would agree that research is important, they often don’t even know where to begin. Here are the three main things you need to know before purchasing jewelry:

1. Price:

Price comparisons are easy to do. Go online and type in the name of the item you are looking for. Then, visit a few different websites to get a good idea of what constitutes a reasonable price range for the jewelry you are interested in purchasing. Heading to a few local jewelers can also help gauge what the item is retailing for, though it takes much more time than a simple online search.

2. Details:

Now that you have a good idea of the price range, examine the exact details of the jewelry you are considering. Though one price may seem much lower than another, it’s not necessarily a bargain – with jewelry, you usually get what you pay for. Always pay attention to the exact weight of gold, the karat of the gold, and the quality of the stones if there are gemstones. The price of a gold ring, for example, can vary greatly depending on the weight of the ring. This is something that isn’t easily determined by the naked eye, but will make a big difference in the quality and worth of the ring. Keep in mind that:

- Gold and platinum jewelry prices are based on the weight of the item, and the current market prices. You are likely to get a better deal on the same ring online when gold and platinum prices are low, since they adjust pricing quicker to stay competitive. At regular retailers, the only price cuts you will receive are during sales or liquidations. Even then, check pricing to ensure that the 50% discount they are offering actually brings the price of the jewelry below market.

- Gold is not created equal, and purity of gold is measured in karats. The higher the karat, the more pure the gold and the more expensive the jewelry should be.

- With diamonds, always consider the 4 C’s (cut, clarity, color, carat), which combine to determine the value of a diamond. You might be able to buy a large diamond of poor clarity for the same amount as a small diamond that is near-flawless, so don‘t get drawn in by size alone. Many other types of gemstones have a preferred shade or color; take the color of the gems you are comparing into consideration when evaluating prices.

3. Quality & Craftsmanship:

Quality and craftsmanship is the most intangible factor in jewelry buying, but it’s no less important than price comparisons and paying attention to details. Shoppers can determine quality by paying attention to the way the jewelry is crafted – make sure there aren’t any flaws or ridges in gold pieces of jewelry. If the jewelry has a design on it, make sure that the design is seamless and doesn’t begin and end awkwardly or misaligned.

If possible, find ratings and feedback on the jeweler you are buying from. Find out who is actually making the jewelry they are selling, and ensure that it is coming from a reputable jeweler. A quick Google search can give incredible insight about past consumer experience with a particular jeweler, and is worth the five minutes it takes.

As always, Apples of Gold jewelry meets and exceeds the factors necessary for quality jewelry at an incredible value. Prices are adjusted quickly to reflect the market, allowing buyers to get much better deals than in stores. We also work with customers to create special custom pieces, and have a proven track record of customer satisfaction. Finally, our beautiful jewelry is backed by a 100% guarantee and stellar return policy to allow our clients to rest easy.