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Jewelry Times
             
Repairs: Out of this world!

I received this email from a long term client who’s been with us for probably 10 years using our book and also consulting with QuickBooks. They are considering getting the updated books as they are presently using the book at $1050 gold and $1350 platinum (a little old, wouldn’t you say?)

The new books are at $1500 gold and $1850 Platinum and because it’s been a few years, I increased the labor prices some.


They wrote to me and said:

“David,
My staff and I are having a difficult time totally justifying the purchase of the new 5.0 version; for fear that clients will REALLY run from the extremely increased repair prices. Would you do me a favor and email me a few samples of sizing and soldering prices in the new version we are considering?”

Of course, it’s easy to send a few pages.

Many times I tend to be a smarty-pants with my answers as some people think repair money and repair profits come from a different planet than merchandise profits.

But this time I investigated the whole universe and what I’ve found is this:
  1. Everyone in the Milky Way galaxy has a cost for something and in return sells it for more. Every one in our solar system wants and needs to make a profit.
  2. People from Saturn told me to make a profit; you charge a good bit more than your costs.
  3. Neptunian’s told me some “costs” are intangible. Some you can touch, others you can’t. They described it as “lakjasdolping”. (Neptunian for labor costs)
So Universal Law #1 is “Sell a product or service for an amount greater than it cost you.”

O.K. got it.

So I came back to Earth and thought about this one line in this email. “For fear that clients will REALLY run from the extremely increased repair prices.”

My question is “Don’t clients run already because gold wedding bands, gold earrings and 4mm rope chains are just as high as a kite?”

Question: “What do jewelers do when a gold chain, band or earrings go up 50% in cost?”

Just so happened I visited Mars and spoke to a Martian jeweler and he told me that when their precious metals increase in price, so do their products prices, and thus they charge more to their customer. Marvin the Martian said:

“I keystone everything. If it cost me $100 I sell it for $200. So when it’s sold, I take $100 and send it to our vendor on Mercury and order another one for our stock. That leaves us $100 in profit. I happen to know that the bookkeeper splits that check amongst

  • a. Advertising
  • b. Salaries
  • c. Rent
  • d. Utilities
  • e. And other expenses
When he’s done there’s $12 left over. We need to have at least $88 after buying another one to pay overhead and overhead on Mars is expensive”

Marvin went on to tell me that if a new one came in and cost them $135.00 and they sold it for the same $200 they only have $65 to pay Martian overhead and at last count they needed $88 and they would be $23 short in crackividts (their word for dollars).

“If we don’t have enough crackividts then we have to borrow crackividts! So we double the new costs or at times might do “almost double”, keeping in mind the $88 in overhead we need,”

So remembering my email I asked “But hey, won’t you lose customers at the higher price?”

Marvin responded with “I started this business in 1974 when gold was $65 an ounce. 5 years later it went to $75 and 4 years later it had DOUBLED, yes sir it doubled, all the way to $150 and I thought Mars would come to an end. Do you know what I found out? If people want it, they’ll buy. If they don’t, fine. We can buy lower end products that might interest them. When I was your age sonny a new flying jalopy (aka car) was $3000 and now they are $25,000+. Who back then would have thought anyone would pay $25,000 for a jalopy?

When I was 18 years old, a nice 1 carat diamond was $1850, now over $5,000! Stuff goes up and people pay. Get over it! Jewelry is universal and forever!.”

So then I told Marvin about my client who was considering not getting our current price book, as if it was my fault that repair prices went up. Marvin said:

“Looky here, if 14kt gold goes up and your costs go up you can’t be selective on which product you increase your price. You can’t say “I’ll go up on lightweight earrings but not on heavier wedding bands. Crackividts is crackividts. So what’s the difference if an engagement ring goes up in price or the bottom of the ring goes up? You know-the half shank.”

I’m now sitting back in my chair, Marvin is getting yellow faced (Martians don’t have red blood, so he can’t get red-faced).

“So Marvin, why are you so adamant about raising prices on repairs when others here on Earth are worried about losing customers on higher repairing prices?”

Now even more yellow faced, Marvin stands up and points the longest of his 9 fingers right in my face. “You Earthlings are such wimps! Repairs aren’t price sensitive they are TRUST SENSITIVE! Besides, you can buy silver & gold earrings to have a lower price point but you can’t install a silver half shank on a gold ring. You’ve got to have the right finding for the job. Sheesh, that’s why we haven’t invaded your planet.”

“You guys worry about repair pricing, the best return on investment you have. Yet when 10 people come into the store with a repair, it’s traditionally about 9 people that will say ‘go ahead and fix it’. But nooooooo you guys worry about 1 or 2 people walking out. You yell:’ the sky is falling …one person left. OMGOTS!’ (In Martian that stands for “Oh My God Of The Sun”) our business will collapse, 1 or 2 people out of 10 left! Bunch of cry babies”

I was taken aback, I didn’t want to make Marvin mad, and I mean at 9”7’, he’s a big guy (I think he’s a guy). He continued with his rant.

“Yet 10 people come in and look at the showcase and how many buy? Two? Three?, four tops? And when that customer leaves without buying you say ‘oh, they’ll be back’. Like that’ll happen, they probably went to Jupiter. When they do leave, they’ve left you with close to a million crackividts of unsold inventory meanwhile the shop has about five grand in inventory. You earthlings, you’ll go extinct by the work of your own hand. Meanwhile here on Mars we turn inventory in a year and when a repair customer comes in and is worried about the price to repair their rings, we sell a repair like we sell jewelry: with sincerity, conviction and professionalism.”

So I thanked Marvin for his time and before shaking his 9 fingered hand good-bye, I asked him this one question:

“So Marvin, let me get this straight. You treat the cost of repairs that have gone up just like selling higher priced inventory? Costs go up so retail repair prices go up, right?”

“Yep! If a customer squeals, we sell our jeweler’s ability, the workmanship and our guarantee. If we have to discount occasionally we’ll give away 15%. But we’re not going to discount everyone or lower all of our prices because a few people squawk. Just because they squawk doesn’t mean they won’t buy. Repair customers squawk, it’s their nature. Showcase sale customers who don’t buy don’t squawk. They just say ‘I’ll be back’. It’s their nature’

“So Marvin,” I asked reaching out to shake his hand, “you also said you turn inventory in a year. If Martians don’t buy it within a year how do you dump it?”

“Well you know, our planet is farther out from the sun as yours. So one year for us is 14 of your Earth months. So if its still here in 14 months we will do whatever it takes to get rid of it before the 15th month starts and our two moons form a horizontal pattern.”

“So Marvin, how do you get rid of it then?”

He smiled with his 3 lips and said:

“Easy, we send our old inventory to your earthlings. You’ll buy anything.”

Reporting live from Mars, the 4th rock from the sun.


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


 
 
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