what is a decent overhead these days?

[Arkteia]

Wholesale prices are not a secret, but overhead varies significantly. In these days and age, and given the economy, what is considered decent overhead?

 

[morecarats]

Are you sure you want to know about "overhead"? In commerce the concept of overhead refers to the ongoing expense of operating a business. I''m not sure what this has to do with wholesale prices.

By the way, you say that wholesale prices are not a secet, but I''m not sure there is such a thing as "the wholesale price" for a particular kind of gemstone. Gems can pass through many hands from the mine to the consumer, so there are often many transactions involving a particular piece of material. Given those many transactions, which of those prices is the wholesale price?

 

[LD]

Do you mean mark up on each gemstone? If so, it varies. There''s no blanket $X per carat that Vendors apply. With diamonds there''s a more stable $X per carat and it''s easier to judge but in the coloured gemstone world there are many more variables.

Some prices for coloured gemstones are more stable, for example 1ct of Tanzanite (for sale to the public) is around $350-400 for excellent quality. Much less if not.

Other gemstone prices vary considerably. For example you can pick up Spinels for $30 but you can also buy them for $800. The price per carat depends solely on colour, clarity, carat weight, cut etc. A top colour Sapphire will command a far higher price per carat than a nicely coloured one.

So in answer to your question? It''s impossible to state X%.

 

[chrono]

I wonder if you mean a true overhead (cost of building, shipping, markup as it passes through various hands, etc) or just markup of each gemstone that is sold? This varies from vendor to vendor, depending on how much or how little a vendor gets it for and the profit margin he/she wants to make. Also, the more hands it passes through, the higher the markup. A more upscale place is also going to charge a higher markup. If the vendor has very good contacts, the vendor is probably going to be able to get better material at a lower cost. Now whether the vendor passes that “savings” on to the customer is another story.

 

[Arkteia]

I meant "markup" but my question is probably not reasonlable since some stones are very rare and may have immense markup and some are reasonably cheap. And I understand that vendors on this forum may obtain stones at much lower price than collectors. What surprizes me though is that people here are able to buy gems off ebay at lower price than I do. I do not know if it has to do with my poor knowledge of resources available or difficulty reading the photographs. I think the latter.

 

[chrono]

Are the stones purchased off eBay of comparable quality that you are comparing to?

 

[Arkteia]

No! Much worse than from our vendors, except for sun_sam's stones. They, however, came LARGER than stated - I am thankful for his generosity but could not use them in my project. Very nice, though. Other stones, except for the one from aaa87, I actually gave as gifts to the kids I see. (Some of them are future collectors). Except for blue lapis but it is suspiciously cheap or else I do not know the price of lapis. The vendor promised I'd "come for more" - I would if I were sure it's real.

 

[chrono]

If the eBay stones are much worse than the favoured PS vendors’ stones, then I’d say their pricing is fair, is that not? Size isn’t everything but colour is. A large stone of bad colour can go for pennies while a small gem with fine colour can cost thousands of dollars. Even if you do find a very nicely coloured stone on eBay, it isn’t going to be inexpensive.

 

[Harriet]

crasru,
I''m curious -- what makes you say that "wholesale prices are not a secret?" I know that the AGTA, for one, is particular about its members honouring the wholesale-retail differential.

 

[Arkteia]

If you search long enough for a certain stone, you'll definitely come across a website mentioning wholesale prices, or saying that "four years ago, a price for a fine...over 2 carats was $ 50.00 but since that time it has quadrupled!" Also, some books publish approximate prices per carat. I bought a book from Amazon which gives you the range of prices (it is not a book ON prices, but there is a table in the appendix). No one talks about the markup and I totally understand that a very fine stone may cost way more or cost a jeweler more but in my search for alexes, I came to understand what prices to expect. I can see that the asking price for 3-ct Indian alexandrite in multicolour.com is fair provided the color shift iAnd I also need to buy a new car.

For an AGTA member to tell me the prices means cutting off his own hand.

 

[DistinctionJewelry]

I don''t think you''ll find many in the jewelry trade who will openly discuss their markups. I certainly don''t. My suppliers will only sometimes allude (if they''re feeling trusting on a given day) to the fact that they "bought well" or "paid too much."

I will say that I don''t have a set in stone amount. If I feel like a stone isn''t that great and perhaps I overpaid for it, I''m going to give it a low markup. If I get a super-awesome deal on something great, I may give myself a little higher markup than usual on it.

 

[LD]

Date: 2/4/2010 1:38:16 PM
Author: crasru
If you search long enough for a certain stone, you'll definitely come across a website mentioning wholesale prices, or saying that 'four years ago, a price for a fine...over 2 carats was $ 50.00 but since that time it has quadrupled!' Also, some books publish approximate prices per carat. I bought a book from Amazon which gives you the range of prices (it is not a book ON prices, but there is a table in the appendix). No one talks about the markup and I totally understand that a very fine stone may cost way more or cost a jeweler more but in my search for alexes, I came to understand what prices to expect. I can see that the asking price for 3-ct Indian alexandrite in multicolour.com is fair provided the color shift iAnd I also need to buy a new car.

For an AGTA member to tell me the prices means cutting off his own hand.

This is all marketing and rubbish in all honesty. The only true wholesale price is what the man at the mine sells the gem to the supplier for. This then gets sold to somebody else, who then cuts it, sells it to somebody else etc etc etc - so where's the wholesale price? By the time the gem gets to you it may have gone through as little as 2 or 3 hands or many many more. Of course there is a range per carat for each gemstone but how is that relevant for the consumer because unless we start buying in bulk we won't benefit. Take everything you read with a pinch of salt and only pay what YOU feel is correct for a gem.

If you take your example of a 3ct Indian Alex - you can pay the same as a small car. You can also pay the same as a luxury car and you can pay the same as a fleet of cars for the same carat weight. However, the colour change and clarity will determine the asking price so how can you say that each Alex will be $X to buy per carat and then has a markup of the same percentage? So what's the mark up for each of these? Different because it depends on each gemstone. Interestingly, appraisers in the UK use a range per carat for each gemstone but even then will value over and above if they see an exceptional gemstone.

 

[DistinctionJewelry]

Agreed on the "wholesale prices" as marketing tactic. Heck, even if you go to the mine and buy rough, the price you are going to get depends on your bargaining skills, purchasing power, and status with the locals. Then there is going to be the variable of how much you spend on cutting, what your yield is on the rough, etc. So one local wholesale buyer's cost and another's might be totally different.

There is also at each level of sale, the matter of bargaining and of how much the vendor needs money. I buy every six months or so from a dealer who travels to Brazil, buys cut stones by the parcel, and travels around my region selling. Last time I saw him, he offered me certain stones at a price per carat that I passed on. His room was filled with buyers waiting to look at his wares, including a couple of retail customers who happened to wander in.

This time, I was the only one there (another buyer came in just as I was leaving). He pulled out (among other things) those same parcels of stones. His price was half of the previous quote on several parcels, and about a third less on the others. The only difference was a different day, different crowd, and possibly he remembered I wouldn't pay what he asked for them last time.

Granted, these were not collector's stones - they were the type you can buy by the parcel. There probably wouldn't have been that much wiggle room in a single top gem, but it's still instructive.

 

[Michael_E]

Date: 2/4/2010 2:01:32 PM
Author: LovingDiamonds
Date: 2/4/2010 1:38:16 PM


This is all marketing and rubbish in all honesty. The only true wholesale price is what the man at the mine sells the gem to the supplier for. This then gets sold to somebody else, who then cuts it, sells it to somebody else etc etc etc - so where's the wholesale price?

The wholesale price is what the guy you bought a stone from paid for it. A secret ? Yeah, they sure are. No one in the trade will reveal what they paid for gems unless they are talking to a friend, also generally in the trade. Yapping about what you paid for something, particularly online, is a good way to alienate other people in the trade and it wouldn't serve any purpose. It certainly wouldn't do the end consumer any good, since stones which are NICE are generally rare enough that they can't be treated as commodities. You might be able to convince yourself that you can find comparable things on E-Bay at lower prices, but my experience is that this is only true when comparing E-bay to those retailers who are NOT selling precision cut gems and those selling lower tier goods.

Margins ? It all depends on circumstances. If I've been holding a stone a long time, market conditions change or I can use the stone to sell a custom setting for it, then that stone may end up having a negative margin, sometimes so much so that the stone is essentially free. On stones which are exceptionally expensive or where I may be selling from someone else's inventory, say Pala Gems for instance, the margins will be VERY low since I'll either get a custom setting project from that sale or will only be touching the stone for long enough to assure that it's what it's supposed to be, (not much point in trying to make a killing from 10 minutes of work). Margins vary for everyone and depend upon their costs , overhead, location, etc, etc.

 

[RevolutionGems]

Another consideration: If I am in the gem business and I purchase a gem for x dollars with the intent to resell it, would you actually expect me to sell it to you (knowing this is how I make my living) for what I paid for it? Of course not.

If I told you that I was selling it to you for what I paid or less, you would think I was either lying to you or was an incredibly bad businessman.

By definition, wholesale pricing is given to vendors. Vendors then mark up the product and sell it to you at retail pricing. Anyone who tells you different is either lying to you or is an incredibly bad businessman.

 

[smitcompton]

Hi All,

I have always heard the markup on diamonds is 2x the wholesale price, which I regard as the point of sale to the retailer.

On colored gemstones I have been told that the mark=up is 4x the price paid by the retailer. Of course a fine stone will be sold for more.

It seems on this site many people are discussing fine gems. I think the average Person is just looking for a pretty gemstone in a color that they like. E-bay is a place where you can find a nice stone for not too much money. I have purchased several stones on ebay which are not first class stones but are acceptable as pretty gemstones. When I mentioned this (several yrs ago the experts said they couldn''t be good. I was unsure of myself, as your are, and so put them aside.

I finally had some stones set and asked the jeweler about the questionable stones. He told me I would be crazy to not set them. People would kill for the color of these. But they are included and there is an inclusion on the top of the table.
It looks beautiful in a ring.
I gave one of these as a gift. The woman had it appraised(in a ring) for over $1000.00 I won''t even say what I pd for these stones because i would get the same response. Couldn''t be good. They are not good but are nice.

Getting back to your question. I think Ed Bristle who comes on here and sells on ebay. always say, "You make your money when you buy". I think this is true.

Thanks

 

[DistinctionJewelry]

Date: 2/4/2010 3:47:41 PM
Author: smitcompton
Hi All,

On colored gemstones I have been told that the mark=up is 4x the price paid by the retailer. Of course a fine stone will be sold for more.
Thanks

You'll get different amounts depending on who you talk to. And really it depends on the situation. If you buy a hundred small treated topazes for a few dollars each, you wouldn't be out of line to charge 4x the price - heck, you'd have to in order to profit more than a couple of dollars. If helping a customer find a high-end stone for a ring you're going to make for them, It'd be nuts to find a gem online at a common site and quadruple the price. A small percentage of the cost of the stone would be more like it.

And in between that are a million other factors.

 

[LD]

Shopping on Ebay is risky. There were (especially about 5 years ago) some very very nice deals to be had. Unfortunately it''s now littered with gemstones masquerading as others, highly treated undisclosed gemstones, very very badly cut specimens and it''s now much more difficult (especially with photoshopping being so prevalent) to truly know what you''re buying. You only have to look at the prices that these gemstones sell for to know that they must be purchased for peanuts. Once the seller has deducted Ebay and Paypal fees you do wonder how they''ve sold the gem at the price they have!

Are there still deals to be had? Yes but they''re few and far between.

 

[T L]

It also depends on the dealer''s buying power. Some dealers will buy a whole parcel of fine rough, get a discount, and the stone will end up being at a lower cost to the end consumer than the dealer that had to pay a great deal for a much smaller parcel of stones.

 

[Harriet]

Crasru,
May I ask why you posed this question?

Does anyone else think that it is unprofessional for a vendor to post 'wholesale' prices, even or especially if they are from the Guide? From a buyer's perspective, the 'wholesale' prices are unhelpful because there are too many variables in assessing a stone. Also, it seems unfair to retailers.

 

[Largosmom]

You get what you pay for...each vendor''s overhead will depend on what it takes for them to stay in business and make enough profit to feed themselves and their family, buy equipment, pay others for services (website hosting, accounting, taxes, etc.). If they live or work in an expensive location, their overhead will be higher.

I hope to learn enough by reading and visiting here to be able to spot a good deal, but I don''t expect to pay wholesale prices on a regular basis.

Laura

 

[Arkteia]

Date: 2/4/2010 5:55:12 PM
Author: Harriet
Crasru,

May I ask why you posed this question?


Does anyone else think that it is unprofessional for a vendor to post ''wholesale'' prices, even or especially if they are from the Guide? From a buyer''s perspective, the ''wholesale'' prices are unhelpful because there are too many variables in assessing a stone. Also, it seems unfair to retailers.

Easy!

A little bit over a year ago I started looking for...let''s say, a stone (not my alex). I did not know much about the prices, all I wanted was certain size, color and origin. I did not know retail or any prices at all. The only book I have read said that "fine" stones of this type command up to 10 K per carat. So when the first jeweler I dealt with told me what was my limit I happily named this figure. BECAUSE HOW DO YOU KNOW WHAT TO SAY? I could not find any vendors websites except for one and that one had much smaller stones. I know I can not buy anything for $ 200, I know the prices for the finest one, and since it is my first purchase and the year was good... Well, I got a nice, and what is important, absolutely unheated stone. But now I am browsing vendors'' websites and seeing that nice stones of similar size (well, less, but I would be happy with these sizes) cost MUCH less.

Hence the question. It doesn''t have to do much with overhead as such, rather than bought a very nice one, but since it was my first experience with buying, I am now wondering whether I overpaid, or I am looking at much worse stones, or...what happened?

I am a little bit puzzled. I prefer to look at stones but if after I see all vendors'' websites I talk to a retailer and tell him, match such and such price, most likely I am going to end up with a bad stone. Buying off the websites th

 

[DistinctionJewelry]

Well - not knowing what size exactly or stone (and I''m not asking you to reveal it!), what I can say is that many gems rise exponentially in cost with increased size. It''s possible you overpaid, but it''s also possible that the increased size added a significant amount to the cost of the gem, especially if all you can find online are smaller ones. Also in fine gems, the slightest difference in color can mean a price difference in the thousands.

 

[Arkteia]

Date: 2/4/2010 5:55:12 PM
Author: Harriet
Crasru,

May I ask why you posed this question?


Does anyone else think that it is unprofessional for a vendor to post ''wholesale'' prices, even or especially if they are from the Guide? From a buyer''s perspective, the ''wholesale'' prices are unhelpful because there are too many variables in assessing a stone. Also, it seems unfair to retailers.

Harriet, so far things that have happened have been unfair to me and only to me!

A little bit over a year ago I started looking for...let''s say, a stone (not my alex). I did not know much about the prices, all I wanted was certain size, color and origin. I did not know retail or any prices at all. The only book I have read said that "fine" stones of this type command up to 10 K per carat. So when the first jeweler I dealt with asked me about the budget I happily named this figure. BECAUSE I WANTED THE BEST ONE. BECAUSE HOW DO YOU KNOW WHAT TO SAY? I could not find any vendor websites except for one and that one had much smaller stones. I know I can not buy anything for $ 200, I know the prices for the finest one, and since it is my first purchase and the year was good... Well, I got a nice, and what is important, absolutely unheated stone. But now I am browsing vendors'' websites and seeing that nice stones of similar size (well, less, but I would be happy with these sizes) cost MUCH less.

Hence the question. It doesn''t have to do much with overhead as such, rather than bought a very nice one, but since it was my first experience with buying, I am now wondering whether I overpaid, or I am looking at much worse stones, or it was my poor luck that I did not discover these websites earlier?

I prefer to see the stones but if after I see all vendors'' websites I talk to a retailer and tell him, match such and such price, most likely I am going to end up with a worse stone and a matched price. Buying off the websites that I had no experience with concerns me because as I have found out returns may not be so easy. Ebay is almost out of question especially since I want to buy nicer stones. Starting with cheaper stones gaining experience with certain websites may not be so easy because I prefer to set all of them and at the end of the day I''ll end up spending more on the settings. I am not going to sell unused things on ebay. Also, I can not keep a huge collection of small things at my house.

I have seen brides showing me their rings and telling how lucky they were to get the diamonds at such a bargain. Well, these were bargain diamonds. And while I understand that the principle "you get what you pay for" totally applies to purchasing nice stones, I do not want to get what I overpay for. Now I am almost certain that I overpaid for my alex but it was only my fault because I had a choice of ten, narrowed it down to two and only at the very last moment was "pushed" to buy this one. Now listening to you I understand that I could have rejected all of them and sent the jeweler searching for another one. But I feel bad because the cut irritates me to the extreme, to a degree that I want to have it recut, with all the loss of weight and money. (I know it is a bad idea but I always want to recut bad cuts).

So that is my dilemma. I feel that I overpaid, and I am not happy with some purchases I made online, too. And since I am looking for a nice stone again, I just don''t want to be taken advantage of. Hence my question, what is a decent markup? But as see now, it is a pointless question because I am aiming at better stones and they may have very high markup.

And BTW till I joined PS I never knew that all the costs for setting have to be signed on paper. And not a single retailer offered this to me. Is there any code of ethics made in writing for the jewelers? Shouldn''t they have offered me one? They didn''t know me at all, but I later recommended them to some friends. Now I know I should not make a verbal contract without a written one.

BTW I do not know what the Guide is - but see how easy it is to get information?

 

[Arkteia]

Correction.

I did not OVERPAY for my alex. I PAID market price for wrong alex.

 

[Lady_Disdain]

The actual % of markup has little meaning, as other posters have said. It depends on way too many factors. One of them, which hasn''t been mentioned yet, is how long inventory is going to sit. For example, I can take $10,000 and buy 100 gems or 1 very fine stone. The $100 gems will sell much more quickly, which allows me to buy another lot of gems and so on. The $10,000 stone may take many years to sell and I need to eat, pay rent and utilities during those years. How much the seller is earning on the stone doesn''t really matter to you - it depends on how he runs his business.

However, you are worried if you are paying the right price for your stone. I think that, when buying very fine stones, you can check if it is in a reasonable range. However, it is nearly impossible to have a standard price to compare (as you can do with most diamonds).

I think (and I may be way off) that you need to review how you are buying. If cut is that important to you (and I understand that), then don''t be pressured into buying a stone you don''t appreciate (even if the trade and experts say that colour irules, it doesn''t for you). I don''t think it is, necessarily, a case of being taken advantage of.

 

[LD]

Ok - a key mistake you made is to tell a retailer how much you were willing to pay for the stone. You should have asked him what he thought you might have to pay. If you give somebody a top budget, they will then NEARLY ALWAYS go up to that limit and beyond - even if the stone isn''t worth it. For them this is a great sale! It also shows (if the amount you have stated is too high) that you don''t actually know much about it which is a dangerous position for you to be in. Now, I must stress that a decent vendor wouldn''t do this. They would say something like "ok, but for that money I can get you the best the world has to offer, how about if I look for something around the $x mark for you?". So on that basis, I most certainly wouldn''t use that particular jeweller again.

When you''re next looking for a gemstone, do some online shopping. Use the vendors listed in this forum and compare their prices. This will give you a general "feel" for what is the expected amount. There will always be one that has a top of the range gemstone so you can see what a fine specimen will command. Even if they don''t have a stone in they can always source one for you and they''re much more likely to give you an indication of cost as well.

Also, if you get somebody to source in stones for you DON''T BUY UNLESS YOU LOVE IT. Most of our online vendors will source a stone for you and let you see it and accept refunds if the stone isn''t for you. The way you''re buying at the moment is much more risky for you (and limiting).

 

[chrono]

Crasru,
This is my personal experience and observation: almost all B&M stores will not be able to get you the finest gemstone. And if they can source it, the price will be very high because they probably jumped through hoops to get it. When shopping on your own, it is up to the consumer to do their own research on quality, their requirement and price. Most people do their own research and price comparison when buying expensive appliances and electronic items, correct? Also, when you say you are browsing online and see similar sized stones for less, are they of like quality? Slight differences in colour can mean huge price differences for certain variety of gemstones. More importantly, never tell the vendor your upper limit or what you are willing to pay for a particular stone. Let him source it, look at the stone, know roughly what that quality is going for elsewhere, then negotiate or accept/reject as you see fit. If you don’t want to overpay, and really, who does, then do your homework. Educate yourself about the stone and everything related to it. NEVER feel bad about rejecting a stone as the vendor has to earn the sale. If even the best native cut irritates you, then be upfront with the vendor about this at the start of your search. Perhaps, you’ll only be happy with the very best precision cutting, which most B&M places are not able to get. Do NOT keep a stone that you are unhappy with. It is far better to pay the return shipping than be out anywhere from several hundred to several thousand keeping a stone that you’ll never set or want to see again.

 

[Harriet]

Crasru,

I am sorry that you feel you overpaid for your alexandrite. I too hate overpaying. Now, if I understand what you have said correctly, you are looking for fine fine gems. As that could mean a substantial outlay, I would do a lot of homework first. Unfortunately, one buying guide is insufficient. Prices may have changed by the time the book was published, for instance. Where are you located? Try to see as many stones as possible and talk to different vendors to get a sense of the market for a particular stone. Go to museums and gem shows. Alternatively, as a wise man taught me, if you don''t know what you''re buying, know who you''re buying from. It will take time and luck to find a dealer whom you trust. Also, you may have to pay for his expertise. But, it is worth it. Incidentally, the Guide is a trade only publication that gives a range of prices for different categories of different stones. And, no, it is not easy to obtain. I have never been able to look at one. Good luck!

 

[chrono]

To add to Harriet’s advice, even knowing the guide isn’t helpful if one is unable to categorize the stone in hand to the rating in the Guide. How does a layperson know if it falls into the average, fine, very fine quality range? How does a layperson know if the stone is yG5/3, syG5/4, G4/4 and all the little nuances in between in order to use the Guide correctly?