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“Improve just one thing in the shop and NET profits for the store by $44,375.00!”


Almost every store has shop sales. Over 60% of all store traffic has to do with SERVICE whether you charge or not. You might have 75% of store DOLLARS come from selling product but service brings them into the store.

When I was a teenager in the 1960’s and worked for my father’s trade shop after school he also sold jewelry and did repairs to the public. Just come up to the 2nd floor and he’d serve you. At that time, to sell a 2 carat diamond and get keystone to triple key was like falling out of bed.

In the early 70’s I worked as a jeweler for Neiman Marcus. They sold a $100,000 emerald cut diamond engagement ring and made triple key.


But not anymore!

When you made triple key on diamonds (even keystone) you could afford to do two things:

  1. Over buy inventory
  2. Give away repairs for free as a service.
With margins being so low today you can no longer afford to over buy nor can you afford to give away the shop.

Just like a car dealership, we have to contend with lower margins on product sales and make up for it with greater turn and inventory management. Then the service department has to stand on its own two legs and be a separate profit unit.


Try this one thing and add over $43,000 to the bottom line


When you take in a 10 diamond wedding band or fashion ring for sizing smaller, do you charge the same as if it had no diamonds or just a few? You must!

Let’s talk money. If its takes 15 minutes to size and polish a ring smaller, how much longer would it take if half of the channel stones got loose and you had to

  1. Tighten them with a tool.
  2. Smooth the roughed up area where we tightened them
  3. Repolish that area.
It could take half to the full amount of time to tighten the stones as it did to size the ring. We should get about the same amount of money to tighten as we did to size the ring.


You might say :
“I checked the stones. They were tight when it came it, tight after sizing
and left the store tight. So no reason to charge extra for nothing I did.”

You could be right but if the stone fell out a month later and the customer came back in complaining:

“Listen you young whipper snapper. I had this ring 8 years and never had a problem.
I bring it to you and a month later a diamond falls out!”



Would you replace the diamond at no charge? Most stores would. You didn’t charge extra for tightening because you didn’t expend any additional time tightening.


You should charge extra even if you didn’t have to tighten the stones but because you’re responsible for stone loss.


In our pricing guide, we don’t charge extra to check, tighten and warranty for a year the first 4 stones. It’s included in the price. But when a ring has over 5 stone then if the ring has 5-20 stones in the ring we charge an additional $25 in addition to the sizing for checking, tightening and warranting stone loss for a year. Even if the stones aren’t loose, there’s the charge.

What more proof why you should? Let’s say an 8 point diamond falls out and your replacement cost is $52 ($650 a carat). You may want to shoot the jeweler if you had to pay $52, but it gets worse. The question isn’t how much does the stone cost to buy, the question is:

How much in sales will I have to do to have $52 LEFT OVER and be able to buy a $52 diamond? The typical jewelry store makes a bottom line, net profit of 6% of sales. You’ll have to sell an additional $866.66 to have left over after expenses $52!

The typical jewelry store makes a bottom line, net profit of 6% of sales. You’ll have to sell an additional $866.66 to have left over after expenses $52!


So how do you get $866 in additional income if you don’t charge enough for the repair? By charging almost everyone an additional $25 to check/tighten/warranty their ring. Here’s the numbers if you take in an average of 15 jobs a day (3900 jobs a year).

  1. With most stores 65% of the jobs have 5 or more stones in them.
  2. That’s 2535 jobs that you will offer the $25 to check/tighten and guarantee stone loss.
  3. When offered typically 30% say “no thank you” and you write on the job envelope “No guarantee on stone loss.”
  4. 70% will gladly pay. 70% of 2535 jobs = 1775 people will say yes.
  5. 1775 pay $25 each, you’ll receive $44,375.00! That will pay for

    a.     The cost of lost stones, including an occasional big stone.
    b. The labor to install it.
    c. You’ll even make a profit on lost stones.

  6. The staff won’t have to ask you if we will replace the customer’s stone. They can replace it with a smile and keep the customer happy.
  7. The typical jewelry store spends $5000 a year replacing lost stones. I just gave you $44,375.00.
  8. For you to have $44,375.00 hit the bottom line of the profit and loss statement, you’d have to sell an additional $739,583.33 in product (at a 6% net profit.)
Better yet, don’t “offer” it. Charge it and then deduct it from the envelope only if they refuse. Offer it this way. Let’s assume you charge $30 to size a ring smaller and $25 to check & tighten:

“Mrs. Jones. We will size your ring smaller to fit your finger perfectly. In addition our jeweler will check and tighten each and every stone and makes sure they’re tight when they leave out store. If they get loose for a year we’ll tighten them at no charge and if any fall out we’ll replace them at no charge. In addition we’ll refinish the ring like brand new; it’ll look like the day your husband gave it to you. Its only $55 to do all of this and we’ll do it right here in our store. It’ll be ready on the 24th and if you’ll be so kind as to fill in your contact information on the job envelope for me please, I’ll give you your receipt and take it from here.”


When offered, 70% of customer will say yes.


Sincerely,
David Geller
Director of profits
www.jewelerprofit.com