Where jewelers make their profit and becoming a better consumer

[paulsiu]

My recent experience with Robbins has lead to wonder about where Jeweler make their profits. This is actually a question so I can become a better consumer. For example, suppose I run a business and I want a particular service, I should find a vendor that serves my niche of the market. If I pick a vendor that''s use to serving clients much larger than me, they''ll ignore me because there isn''t enough profit in it. If I pick a vendor that is too small, they won''t be able to supply my needs.

It obvious to me that many vendors make most of their profit through the stones and not a lot through their settings. Are there firms that are more specialize in setting stones for example? I am thinking for example that if you bring a stone to a place that usually sells stones, you may not get the service that you need.

Paul

 

[strmrdr]

Right now there is more profit percentage in settings than diamonds is what iv heard.
Especially for internet vendors who are on very tight margins on the diamonds.

 

[diamondseeker2006]

That''s how it appears to me as well. Prices of diamonds in jewelry stores near here are much higher, but the settings are priced in the same range as the internet vendors. So it can work out just fine to buy a diamond online and buy a setting locally so you can have the normall services of cleaning, sizing, etc. more convenient.

 

[TheDoctor]

Definately, the diamonds yeild the highest profit. Not by percentage, but the difference in numbers is staggering.
A company may sell $1,000,000 in loose diamonds for a profit of 10%, leaving them $100,000.00 in profit.
They don''t make the diamonds. There are shipping and insurance costs, but I don''t think that those costs come out of their profit.

If they are making and selling mountings, their margins on the mountings might be as much as triple their "cost", a figure taking into account all of the salary costs of those who do the benchwork, the mechanical and material overhead of the shop, etc.
By the time the bills are paid, there is very little left over. A mount that sells for $2000.00 will, by the time all of the costs are factored in, leave the vendor with less than $400.00 in net profit. That''s if everything works out properly.

Now, I''m curious as to why you asked this question.......

 

[paulsiu]

David,

The reason I asked the question is so I can figure out where the Jeweler''s coming from. Ideally, both side of the transaction should be happy with the deal. If mountings for example have a very slim profit margin, then I know why they''re giving me the cold shoulder when bring in a stone and it is best that we don''t even form a relationship (may be the mounting is a loss leader). I''ll also know that there is much less bargining room on a setting than a setting + diamond.

Recently conflict with Robbins Jeweler for example stemmed from a lack of knowledge of how they work and where they are coming from. Vendors tend to be secretive about their process. Customers are the same since each side wants to negotiate for the best price at their end. Robbins told me that I could bring in my own stone, but when I did they started talking about insurance. The reasoning is of course that they don''t make as much money from the mounting as from the diamond (or diamond + mounting). It is not profitable enough for them to assume the risk. Once I figure out why and that JM has a type of policy that can cover the gap, the vendor and the consumer can be both happy.

Another example is that Robbins has several stores in the surrounding area. The ones in Delaware pays no sales tax. The one in Philadelphia pays 7% tax, while the one in the other areas in PA pays 6%. Philadelphia store is actually closest to me even though I don''t live there. I once ask if I had the ring shipped to Delaware, would the sales person lose their commission. Apparently, they will. If they ship it to some other stores in PA, they have to share their commission with the other store. I know that legally, I have to pay PA a use tax even if I buy in Delaware, but I rather pay 6% rather than 7% for a large purchase. I could negotiate a mere 1% discount at the Philly store so I would get the same price as I get it at the other PA store and save the driving time. The sales person is happier because it''s easier to lose 1% than half or all of the commission.

Paul

 

[Iceman]

I will agree that the jeweler will make the higher % markup on the mountings and labor then a diamond.


I have also seen that the price on internet diamonds are creeping up. They are on the average 10% higher in profit then they were 3 years ago being listed.

You will see diamond prices on the internet will keep climbing. Nobody wants to run wild all year and have no money in their pocket to show for the hard work.

I remember when Blue Nile came on the net, their prices are higher now then when they tried to get into the market years back.

Profit on diamonds very, there is no one price you buy them for.

I can call up 10 cutters for the same diamond and get 10 different prices. The more you know about this the crazyer it gets. Even most the jewelers dont know were cost is on diamonds and or bottom dollar to buy.

All I can tell you is shop around and compair apples to apples.