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Your Jeweler is a BIG, FAT LIAR!

Have I offended you yet? If so, tell your friends!

Why in the world would I even suggest this? Because many jewelers/owners are trying to figure out if they make any money on a job envelope. Are you one of the people having the jeweler write their time on a job envelope, along with the cost of parts trying to figure your costs? It’s a waste of time.

(There is a better way, more in a moment…)
Why a waste of time?

  1. Your jeweler is a big, fat liar.
  2. Your supposedly good numbers from the big fat liar may correctly represent the selling price of a repair but besides the cost being wrong you haven’t calculated all of the freebies he/she did or redo’s. Your costs are wrong.
  3. You haven’t added in costs associated with what it takes to do the job-supplies.
The Big Fat Liar:

Try as they may jewelers have no conception of time and are afraid to report to you that this job took much longer than it should have.When I did the time study for the Geller’s Blue Book to Jewelry Repair what I found was
  1. A jeweler was paid for an 8 hour day.
  2. The actual amount of time a jeweler worked and produced income was 5.5 hours a day.
The end result was if a jeweler said “This job took me an hour”, it really took 1.25 hours. Why?
  • a. Interruptions from the staff
  • b. Finding lost stones on the floor.
  • c. Rolling emery paper.
  • d. Cleaning the ultrasonic tank
  • e. Smoke breaks
  • f. Assisting customers with technical questions.
You have to charge for the down time even though there was no work being performed if you want to find the true cost of labor.

Speaking of “cost of labor”, the jeweler costs a lot more than the hourly wage. If you pay someone $20 an hour, once you add in the matching Fica/Medicare/Vacation/Sick Leave and any other benefits it easily adds 25% to the hourly cost.

A $20 an hour jeweler actually costs you $25 an hour.
So now let’s look at the differences:
  • Job took 1 hour
  • We pay $20 an hour
  • Job labor cost = $20
  • Markup on repairs=3 times
  • Selling Price: $20 x 3 = $60 Retail (or so you thought!)
AFTER FIGURING OUT THE JEWELER IS A BIG, FAT LIAR:
  • 1 hour job really took 1.25 hours
  • $20 an hour jeweler really costs $25 an hour
  • True labor cost: 1.25 hours x $25 an hour = $31.25
  • Selling Price: $31.25 x 3 time markup = $93.75 Retail.
Hey Charlie, you didn’t know it but you were undercharging for your work by 36%!

This is a more accurate idea of your cost to do THAT job. The problem is freebies and redo’s.

So the only way to see if your shop is profitable, is to stop calculating the cost of jobs that you only CHARGE For FROM A SALE and find out the cost of jobs/the shop whether you charged or not.

Start thinking of the shops costs not as “per job” but as “per month”. This evens out the weeks and also includes freebies. Besides your jeweler is a Big, Fat liar! So who or what can you believe in? “The Jewelers Paycheck.”

So make your two buckets for the month:
SHOP INCOME BUCKET
  1. Jewelry Repairs
  2. Custom Design
  3. Watch Repairs & Batteries
SHOP COST BUCKET
  1. Jewelers paycheck
  2. The matching taxes you pay and any benefits.
  3. All findings you bought for the month, supplies for the shop, casting grain, mountings for custom design.
  4. Outside trade shop bills, i.e. Watchmaker, casting bills.
  5. Lease payment on the laser.
The Income bucket has everything you charged for during the month. The Shop Cost Bucket has the costs for jobs you charged for as well as jobs you didn’t charge for! Your goal? With freebies and such, Shop Income Bucket should be about double that of Shop Cost Bucket. If it’s not it just means:
  1. Your repair prices need to be increased.
  2. You give away WAY too many freebies.
  3. The sales staff doesn’t charge for everything that the jeweler does. Like:
  • a. Check & tightening stones
  • b. Rhodium Plating
Now isn’t that easier and more accurate than getting inaccurate information from the Big, Fat Jeweler?


David Geller
Director of Profit
www.JewelerProfit.com
JewelerProfit
510 Sutters Point
Atlanta GA 30328
404-255-9565
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