What Should Shop Numbers Be?

Many jewelers get confused on Making money and having money.

It’s easy to make money selling jewelry-charge way more than it cost you. Jewelers then cry “I’m not making any money, I can’t pay my bills.”

That's not a profit problem it’s a “too much inventory problem.”

The shop on the other hand is the exact opposite of the showroom. IT’s ALL ABOUT PROFIT AND NOTHING TO DO WITH INVENTORY.

With selling from the showcase life is a bit easier-you know your cost, just double it (or some similar equation). But when it comes to shop pricing for most jewelers how much to charge is a guess and they have little clues about the shops profitability.

So I’m going to make it easy enough for you to understand. Here’s some shop numbers for you. Let’s take the store that has one jeweler (just multiply these numbers if you have 2 or more jewelers on staff). We’ll use these stats; I’ll expand if you don’t match up to these 3 things:

1.       Jeweler works a 40 hour work week

2.       Has more than enough work that he/she can complete in a day

3.       Is mostly uninterrupted about 80% of the day.

Assuming these numbers with a jeweler doing a lot of repair and a fair amount of custom work a jeweler and the workbench should produce in a calendar year:

·         Between $190,000 to $300,000 a year in shop sales.

If you have the jeweler mentioned above and all 3 things apply to your store and you don’t reach these numbers you’re not charging enough.

By the way the sales figures mentioned above exclude the sale of center diamond for bridal. If you custom make an engagement ring covered in melee and also sell a center 1 carat princess cut the center diamond, the diamond  is not a custom designed sale. It’s a special order or stock sale and gets applied to showcase sales. The jeweler made the ring, set the stones and the shop bought and sold the metal and melee diamonds. But don’t give a $6000 diamond sale to the shop, it takes away from your GMROI in diamond sales and skews shop sales and shop profits. So sell it on two lines on the invoice and when it goes into your accounting program:

1.       Make a beautiful 14kt white gold engagement ring          $2500.00              Shop Sales

2.       Center 1ct princess cut diamond                                               $6000.00              Showcase Sale

3.       Total sale                                                                                            $8500.00

Where did the shop sales of $190,000 to $300,000 come from? Two areas:

1.       That's what my store did years ago. Actually our 5 bench jewelers DID a little over $250,000 per bench per year over 15 years ago.

2.       I see it today with my consulting.

3.       From the following numbers you’ll see how yours should be as well.

·         Jewelers are paid between $40,000 to $55,000 a year or more and are employees not a 1099 employee.

·         Your findings and material cost per month ranges from $2000 to $4000 a month.

·         You spend about $5000 a year on miscellaneous tools and shop supplies.

·         You’re looking for a 3 time markup but with problems and redo’s expect a 2.5 time markup.

So let’s look at how that adds up.

A jeweler is an employee and with such are added costs. If you pay someone $10 an hour you’re also paying the company share of social security, workman’s compensation, vacation/sick time and maybe other benefits like insurance & retirement. You should figure every employee costs an additional 25%. So a $10 an hour employee really cost $12.50 an hour. We figured an additional 40% in our store.

$40,000 a year (about $20 an hour) adding in 25% for added employee costs really means a jeweler cost $50,000 a year.

A $55,000 a year jeweler then really costs $69,000 a year.

$2000 a month for findings means you spend $36,000 a year on parts.

$4000 a month for shop findings equals $60,000 a year on parts.

Add in $5000 for shop supplies.

Why the difference in higher and lower numbers? How much custom you do in relation to total shop sales and what's your average repair sale. Your shop sales could be lower if all day long you’re sizing rings, tips/prongs/clasps. We did a lot of intricate repair, shanks, new heads, and restoration.

If you have lower skilled jewelers who can only do simpler repairs their pay would be lower  but if you have a fine jeweler who can do almost anything they should be paid higher wages as I have mentioned. You’d be surprised that I have spoken to many store owners paying in the $60,000 to $70,000 a year range for a bench jeweler. Mostly because they can’t find any and that comes from store owners across America not paying a good enough wage. This is a big reason for a shortage of bench jewelers. Heck, 25 years ago a Cartier store offered a watchmaker friend of mine $91,000 a year to work at one of their stores.

Most jewelers are being productive. Training the sales staff to sell shop sales better (I have videos on my website for that) reduces jewelers interruptions. But the biggest culprit to gaining the numbers I posted if yours are lower is to raise your repair & custom prices. Plain and simple. It will work and you’ll keep the majority of your repair and custom customers because:

Repairs are not price sensitive, they are TRUSTS SENSITIVE.

·         Most repairs have a 90% closing ratio no matter what price they charge.

·         Custom design has a 70-80% closing ratio.

Meanwhile selling from the inventory laden showcase has a 25% to 50% closing ratio. Typically closer to 30%.

David Geller

Director of Shop Profits