Typical Markup at Local Jeweler

[kypo1411]

I've begun my search for an engagement ring and have done a lot of research online over the past month or so. Today I went to one of several local jewelers that I plan on checking out. This was my first visit to a brick and mortar establishment and I found the jeweler to be incredibly helpful. While he didn't have exactly the diamond I was looking for in stock, he encouraged me to check out the inventory online, which he said showed the stock of their primary supplier. The prices seemed higher than I had previously seen from various online retailers, which I fully expected. However, when I went to compare the actual price differences I found that the markup was (what I would consider) quite large. For example, one diamond that I was looking at was listed in the BM's online search for $11,724.04. I was able to find the identical diamond (same GIA report number) on Price Scope listed for $9,670. That equates to a 17.5% markup. I really had planned (hoped) to by from a local jeweler, but that's a big chunk of change to shell out for the benefits of dealing locally. Is this typical?

Thanks for the help!

 

[teobdl]

It really depends on the jeweler. For the most part, your experience is pretty consistent what I've seen, but there are a few jewelers who do have competitive pricing with some online inventories, especially slightly more expensive ones like GOG, BGD, WF, and HPD. Not many can match the prices of blue nile or B2C though, and the selection of good stuff tends to be much less in local jewelry stores unless you find a real cut nut.

 

[kypo1411]

FYI not sure if it matters much, but this is the link I found on PS:

http://www.jamesallen.com/loose-diamonds/pear-shaped/1.21-carat-e-color-vvs2-clarity-sku-242453

 

[kenny]

... one diamond that I was looking at was listed in the BM's online search for $11,724.04. I was able to find the identical diamond (same GIA report number) on Price Scope listed for $9,670. That equates to a 17.5% markup.

Markup is the difference between what a retailer pays and gets paid for a diamond.

You are describing the difference between the retail prices of two retailers.

 

[distracts]

That seems pretty usual for the differences in price I've seen between online retailers and brick and mortar stores. The price difference is even bigger between online specialty/branded cuts and the same type of thing in brick and mortar stores.

 

[kypo1411]

... one diamond that I was looking at was listed in the BM's online search for $11,724.04. I was able to find the identical diamond (same GIA report number) on Price Scope listed for $9,670. That equates to a 17.5% markup.

Markup is the difference between what a retailer pays and gets paid for a diamond.

You are describing the difference between the retail prices of two retailers.

Ah my mistake, thanks for the info.

I was also incorrect in my percentage (tired last night, my bad). It's actually over 21%. Is it really reasonable to be paying over $2000 more for the same diamond that could be bought elsewhere? I fully expected to pay more at a local store but I guess I didn't expect the difference to be that substantial. I more or less assumed there would be something like a finder's fee associated with getting the diamond. I guess what throws me off is that it seems to me (and maybe I'm missing something here) that the same work would be required for them to obtain and set a cheaper diamond. Why is there such a premium to paid for that same work when the diamond is more expensive?

 

[TC1987]

There's a thread on here that concluded that brick and mortar stores try for at least a 30% markup over wholesale and probably need 38% or 40% om most items to stay in business. (eta: That is what you can negotiate them down to, but their asking price may be much higher.)

And the PS vendors are perhaps 10% - 15% on the unmounted diamonds.

Settings are another matter. It's also been discussed on PS that diamond prices may be intentionally held down with low markups, but vendors are trying to make money with high markups on settings. People feel that settings prices have increased more than just the costs of manufacturing them have increased. Diamonds increased at wholesale but mostly the diamond price increases reflect only whole increases, not the wholesale increase + some additional deliberate markup.

That's just what I recall from memory. I could be wrong. lol

 

[cookies]

Once upon a time, there was a PS vendor whose assistant accidentally sent me a wholesale price list for some colored stones, along with the pictures I requested. I did purchase one stone from that list btw, but oh my, it was an eye-opening experience, in terms of the mark-up percentage. I had similar incidents with non-jewelry related purchases as well. Anyway, nowadays, whenever I hear someone saying how low their markup is, I just smile and say nothing.

 

[kenny]

Once upon a time, there was a PS vendor whose assistant accidentally sent me a wholesale price list for some colored stones, along with the pictures I requested. I did purchase one stone from that list btw, but oh my, it was an eye-opening experience, in terms of the mark-up percentage. I had similar incidents with non-jewelry related purchases as well. Anyway, nowadays, whenever I hear someone saying how low their markup is, I just smile and say nothing.

Without revealing the vendor's name what was the percentage of markup?

 

[Rockdiamond]

Kypo, As an online jeweler, it's clear in which basket we place our eggs
BUT- when considering a purchase of this size, there's still a fair percentage of folks that want a walk in local presence - and that costs ....a lot.
It's really up to each buyer what feels right.
IN the case of diamonds that may seem identical based on GIA report- there can be large differences in value.
But of course we find cases where the buyer is offered the very same stone ( based on GIA report #) at different prices.


Best of luck!

 

[HappyNewLife]

I recently went to Robbins Bros to see about upgrading my diamond. They tried to sell me an IGI certified, HORRIBLY cut F/SI2 1.85 carat (that faced up around the dimensions of what an 1.65 should be) for $15,895. Um yeah, decided to just sell my ring on ebay and use the $ towards a much nicer diamond online.

 

[HappyNewLife]

oh, and plus tax of course. Online = no tax.

 

[cookies]

Once upon a time, there was a PS vendor whose assistant accidentally sent me a wholesale price list for some colored stones, along with the pictures I requested. I did purchase one stone from that list btw, but oh my, it was an eye-opening experience, in terms of the mark-up percentage. I had similar incidents with non-jewelry related purchases as well. Anyway, nowadays, whenever I hear someone saying how low their markup is, I just smile and say nothing.

Without revealing the vendor's name what was the percentage of markup?

For that particular stone I purchased a few years ago, the markup was 120% exact before any discount. It's not that shocking once I take a good look at the resale value of stones and jewelry in general.

 

[Rockdiamond]

Once upon a time, there was a PS vendor whose assistant accidentally sent me a wholesale price list for some colored stones, along with the pictures I requested. I did purchase one stone from that list btw, but oh my, it was an eye-opening experience, in terms of the mark-up percentage. I had similar incidents with non-jewelry related purchases as well. Anyway, nowadays, whenever I hear someone saying how low their markup is, I just smile and say nothing.

Without revealing the vendor's name what was the percentage of markup?

For that particular stone I purchased a few years ago, the markup was 120% exact before any discount. It's not that shocking once I take a good look at the resale value of stones and jewelry in general.

Darn!!
Just to make sure the math is correct- a hypothetical $100 cost item was offered at $220?
Or $100 cost was $120 sell?

 

[cookies]

Once upon a time, there was a PS vendor whose assistant accidentally sent me a wholesale price list for some colored stones, along with the pictures I requested. I did purchase one stone from that list btw, but oh my, it was an eye-opening experience, in terms of the mark-up percentage. I had similar incidents with non-jewelry related purchases as well. Anyway, nowadays, whenever I hear someone saying how low their markup is, I just smile and say nothing.

Without revealing the vendor's name what was the percentage of markup?

For that particular stone I purchased a few years ago, the markup was 120% exact before any discount. It's not that shocking once I take a good look at the resale value of stones and jewelry in general.

Darn!!
Just to make sure the math is correct- a hypothetical $100 cost item was offered at $220?
Or $100 cost was $120 sell?

$100 cost and $220 sale. It was not a diamond, btw. Now I probably look very stupid to you guys.

 

[distracts]

Whether it's reasonable or not really depends on your definition of reasonable and what you want from your jewelry-buying experience. Is it worth that money to you to see everything in person before you put your money down? Is it worth it to have the jeweler where you bought your ring be local to you, knowing that routine repairs and cleaning can be done at most any jeweler for a very low cost? For some it is, for some it isn't. I buy both from brick and mortar stores and online, depending on the purchase, uniqueness, price differences, etc. I tend to buy individual elements - diamonds, colored stones, settings - online because in my experience the online vendors are more responsive to requests for information and are better at listening to what I want. I get repairs/alterations done locally and buy completed pieces and stock settings locally - though for settings I try to find out the price online so I know what if any differences between other vendors I am paying. The jeweler I go to is reasonably priced - many local jewelers I have scouted were not.

 

[kypo1411]

Whether it's reasonable or not really depends on your definition of reasonable and what you want from your jewelry-buying experience. Is it worth that money to you to see everything in person before you put your money down? Is it worth it to have the jeweler where you bought your ring be local to you, knowing that routine repairs and cleaning can be done at most any jeweler for a very low cost? For some it is, for some it isn't. I buy both from brick and mortar stores and online, depending on the purchase, uniqueness, price differences, etc. I tend to buy individual elements - diamonds, colored stones, settings - online because in my experience the online vendors are more responsive to requests for information and are better at listening to what I want. I get repairs/alterations done locally and buy completed pieces and stock settings locally - though for settings I try to find out the price online so I know what if any differences between other vendors I am paying. The jeweler I go to is reasonably priced - many local jewelers I have scouted were not.

Thanks for the info. Are BM jewelers typically willing to design/set a stone even if you may have purchased it elsewhere (online) or are they against doing that because maybe you hurt their business? How does the online buying process work. It looks like I've seen some that say you don't pay until delivery. Does that give you the option to look at it and send it back if it's not up "up to your standards" without paying? Or will you be charged and then refunded upon receipt of the return? One benefit I could see of buying locally would be having them bring in multiple stones to look at side-by-side. Obviously one could do that purchasing online as well by ordering several. However, if a full payment is required for each, that can get limiting when talking about 8-10k (for me at least).

Thanks everyone for the help!

 

[Rockdiamond]

Whether it's reasonable or not really depends on your definition of reasonable and what you want from your jewelry-buying experience. Is it worth that money to you to see everything in person before you put your money down? Is it worth it to have the jeweler where you bought your ring be local to you, knowing that routine repairs and cleaning can be done at most any jeweler for a very low cost? For some it is, for some it isn't. I buy both from brick and mortar stores and online, depending on the purchase, uniqueness, price differences, etc. I tend to buy individual elements - diamonds, colored stones, settings - online because in my experience the online vendors are more responsive to requests for information and are better at listening to what I want. I get repairs/alterations done locally and buy completed pieces and stock settings locally - though for settings I try to find out the price online so I know what if any differences between other vendors I am paying. The jeweler I go to is reasonably priced - many local jewelers I have scouted were not.

Thanks for the info. Are BM jewelers typically willing to design/set a stone even if you may have purchased it elsewhere (online) or are they against doing that because maybe you hurt their business? How does the online buying process work. It looks like I've seen some that say you don't pay until delivery. Does that give you the option to look at it and send it back if it's not up "up to your standards" without paying? Or will you be charged and then refunded upon receipt of the return? One benefit I could see of buying locally would be having them bring in multiple stones to look at side-by-side. Obviously one could do that purchasing online as well by ordering several. However, if a full payment is required for each, that can get limiting when talking about 8-10k (for me at least).

Thanks everyone for the help!

Many stores will be happy to set a diamond you've purchased elsewhere, others not.
My advice would be to make sure you can see actual rings before committing to someone to make a ring.

Online- most sellers will require payment in full before shipping that is customary.
Make sure you get a money back guarantee.

 

[WinkHPD]

... one diamond that I was looking at was listed in the BM's online search for $11,724.04. I was able to find the identical diamond (same GIA report number) on Price Scope listed for $9,670. That equates to a 17.5% markup.

Markup is the difference between what a retailer pays and gets paid for a diamond.

You are describing the difference between the retail prices of two retailers.

Ah my mistake, thanks for the info.

I was also incorrect in my percentage (tired last night, my bad). It's actually over 21%. Is it really reasonable to be paying over $2000 more for the same diamond that could be bought elsewhere? I fully expected to pay more at a local store but I guess I didn't expect the difference to be that substantial. I more or less assumed there would be something like a finder's fee associated with getting the diamond. I guess what throws me off is that it seems to me (and maybe I'm missing something here) that the same work would be required for them to obtain and set a cheaper diamond. Why is there such a premium to paid for that same work when the diamond is more expensive?

It can be, depending on how much you want to deal locally and have someone there to assist you with any upgrades etc.

However, the price you were quoted is the asking price. You are totally allowed to print off the material that you found on line and take it with you to the jeweler. The smart ones may cringe inside but will be polite in negotiating a better price with you in order to keep the sale.

Please keep in mind though that most internet vendors, Blue Nile included, will never see the majority of the diamonds that they sell. The biggest, like BN sell hundreds of millions of dollars per year worth of diamonds and do it on margins that would put your local jeweler in the poor house most quickly. Your local jeweler may not need the full margin that he is asking for, but he does need more than BN.

If approached respectfully your local jeweler may well negotiate a better price with you. If not, you are free to buy where ever you like, but do not expect that he will then joyfully take the commission for the ring. Some will but many will not. Even the giants like BN make bigger margins on the jewelry than on the diamonds, but consider this too. A ten percent profit on a diamond costing $10,000 is $1,000. (Selling for $11,000) A 100% profit on a ring costing $400 is $400. (Selling for $800) Yes, the margin is much larger, but the net to the jeweler is actually smaller in many cases than the sale of the much more expensive diamond.

These numbers are by way of illustration. I am not privy to the markup of BN on anything but knowing approximately what their markup is and seeing the reported average gross margin being much higher leads me to believe that they get more for their mountings.

Your local jeweler will have much higher costs per sale than an internet juggernaut like BN. Just the cost of hiring and training qualified sales people and then actually keeping the good ones is HUGE. Many of the chain stores will have people who were selling ladies shoes last week trying to explain why you should buy their branded crystallized carbon and neither knowing or caring why it is a lifeless lump the second you exit the extreme lighting layout of the store. To deal with someone who has worked for many years to learn and acquire the knowledge necessary to analyze the cut of a diamond rather than just getting stuck with the GIA XXX that may be great or horrible is surely worth something.

Dang, rambling again. Sorry.

Short version. Hey, ask your jeweler if he will meet you somewhere South of his asking price, while still allowing him a little something North of the BN price.

Wink

 

[kypo1411]

Blue Nile has been mentioned in several replies. However, the link I posted was actually James Allen. Maybe they are the same, or maybe the same logic still applies. Sorry about the ignorance, but I'm not really sure what James Allen is. In fact I'm new to this whole buying a diamond thing in general.

Thanks for the help!

 

[MarionC]

If this has already been mentioned here, forgive me.

As if the lower markup online were not enough incentive...
will a B&M give you time to evaluate and return your diamond,
and do you get a lifetime upgrade?

I feel that our online vendors are more in tune with the reality of what makes a great diamond and are more responsible for backing up their words. I feel so much more confident buying diamonds online. It's not that B&M stores are necessarily dishonest, but can be uninformed and also can have higher prices because they need to pay their rent and because the general public does not know about PS : )

I did however find my Ritani setting at a local Ritani dealer that my online sources could not pricematch.


PS.
I've bought three wonderful diamonds with the help of PSers and learned a lot in the process. You can count on being steered in the right direction here.

 

[distracts]

Thanks for the info. Are BM jewelers typically willing to design/set a stone even if you may have purchased it elsewhere (online) or are they against doing that because maybe you hurt their business?

Depends on the jeweler. Some are, some aren't.

How does the online buying process work. It looks like I've seen some that say you don't pay until delivery.

I have actually never seen any that don't have you pay until delivery. I would not ever order from somewhere without a return policy though. When my brother purchased from Good Old Gold (a vendor often recommended on here) he paid the entire amount upfront. For all stone purchases, I have paid the amount upfront, and for setting purchases, I usually pay half upon commission and half upon completion, with the item sent to me once the final payment is received.

One benefit I could see of buying locally would be having them bring in multiple stones to look at side-by-side. Obviously one could do that purchasing online as well by ordering several.

This is only a benefit if you trust your jeweler to be able to sort through the stones to bring in a few that meet your specifications. If you care a lot about light performance, as most on this forum do, you can't necessarily guarantee that since most jewelers don't seem to care one whit about it or even know anything about it. If you are comparing a bunch of mediocre stones, your only options will be mediocre stones. If you look at fifty mediocre stones, even if you select the best, it's still mediocre, you know? The jewelers recommended often on here either are trusted to search through and find the best for you, or are like James Allen with enough information that you can do it on your own and get confirmation via ASET imagery.

For me, for a diamond, hands-down I would purchase online. It's too much money for me to risk on someone who has not been vetted by people more thorough than I am, and it's too big of a purchase for me to make from someone who when I talk to seems to know less about cut quality than I do.

RE: James Allen vs Blue Nile, BN was probably mentioned just because it has a ton of diamonds and very low markup. JA also has a ton of diamonds and reasonably low markup, but also offers a LOT more information on the diamonds so is preferred on this forum usually.

 

[kypo1411]

Thanks for this, lots of good information here.

 

[MelisendeDiamonds]

Even the giants like BN make bigger margins on the jewelry than on the diamonds, but consider this too. A ten percent profit on a diamond costing $10,000 is $1,000. (Selling for $11,000) A 100% profit on a ring costing $400 is $400. (Selling for $800) Yes, the margin is much larger, but the net to the jeweler is actually smaller in many cases than the sale of the much more expensive diamond.

Bluenile made a gross margin of 18.6% in 2013. http://investor.bluenile.com/annuals.cfm. That includes the higher margin jewelry so engagement was probably closer to 10 - 15%.

There net margin is only 2.4% though. No wonder B&M stores with higher overhead can't compete.