Just what does “Turn” mean anyway?

By David Geller


Jewelers across the country are all trying to get the highest markup on their products. You can make more money selling it for less as long as you sell it more often.

Many a storeowner has thought “I’ll buy it and they will come.” You stocking it does not mean they will buy it. Think of your inventory as “ice”. There is sits, valuable inventory ready to make you some money, but losing value every minute as it melts. Ever notice how ice is more expensive that water? If you don’t sell the ice within 24 hours all you’ll have is water and you’ll have a hard time getting the same price for a bag of water as you would for a bag of ice.Monetarily jewelry turns to water after one year.

Here’s what turn will do for you. Let’s say you buy a bracelet for $100 on January 1st 1999 and sell it for $250.00 at Christmas. You’ll make a gross profit of $150.00 and you will also have a turn of “one”. You sold it once in 12 months (one year).

You should be happy. Now let’s look at the profit over 3 years. If you sell it in 1999 for $250 you’ll make $150 profit and have $100 to buy another bracelet. Sell that bracelet in 2000 and you make another $150. In 3 years you will have made $450 profit from your $100 investment.

But let’s look at most retailers. You buy it in January 1999 and it doesn’t sell that year. Not does it sell in 2000 and it finally sells in 2001 for the $250. How much money did you finally make? $150? Wrong! You lost $300!Why? Because in 3 years it should have made $450 therefore you came up short. So in 3 years you took in total profits of only $150 rather than $450.

If you had sold it at 40% off in the beginning of the second year you owned it and gotten out of a “bad buy” you’d be better off. Then you could put the original $100 into a different product or even a different priced product. Let’s see.

Buy it for $100 and 15 months later in year 2 sell it for $150 (40% off). Then buy a “good product” and sell it for $250 in year three you’d be better off. Here’s the numbers for three years:

Gross profit year 1 = zero
Gross profit year 2 = $50.00
Gross profit year 3 = $150.00

Total Gross profit in 3 years = $200.00

Under the first scenario of keeping it for full price for 3 years you made only $150 in 3 years. But in this scenario you made 25% more profit by getting rid of it sooner. Now think of how much inventory you have that is 4 or 5 years old or more? WOW!

Ever wonder how warehouse companies sell for so little money? Turn! Costco (like Sam’s club) will take a product off the shelf if it doesn’t have a turn of “24”: sells out every 2 weeks.

If you buy a bracelet for $100 and mark it up 250% to $250 and sell it once you’ll make $150 in profits.

If Costco buys an item for $100 and just marks it up 20% to $120, they’ll make only $20. But with a turn of “24”, they’ll sell it 24 times and make 24 x $20 =$480.00 in a year while we struggle to sell it only once and make $150.00.

To find your turn, divide last years cost of goods from showcase sales only (no findings and special orders) and divide it by your ending inventory level for last year and you’ll get a number like “1.0” (one) or “.60” which is less than a year.

If you get a number like “.60” you might ask “what does that mean?” There are365 days in a year. Divide 365 by your turn (Ex: “.60) and you’ll get a number like “608”. That means when you buy something it will sit in your case for 608 days before it sells (almost 20 months).

Buying right, sales training and getting rid of dogs “before they melt” will make you more money.