Round this number up to the next 5% or 10%, the extra percentage will cover unforeseen changes in expenses. To this number, add the percentage of shop profit you would like to make. This total is the minimum percentage you need to charge for the shop mark-up.
If you are just starting a shop or do not have the figures, start with the typical 50%. Keep track of expenses, then re-figure the mark-up after a year, and make necessary changes.
Cost of Shop Work
In order to properly set the prices for your repair work you must know what it cost to have that work done. This includes the cost of materials, and the cost of your jewelers' time.
Material Cost
Determining the cost of materials is straightforward. On findings, the cost of materials is the price of the findings plus shipping. For gold and platinum used in custom design manufacturing use an average cost per DWT for each metal, and add shipping cost. Although sheet and wire used for fabrication cost slightly more than casting grain, one retail price is generally used for each metal (14k, 18k, plat. etc.). Use the average price of sheet, wire, and casting grain to figure cost.
Pricing the cost of metal used for sizing over two sizes, half-shanks, and similar repairs are a little more involved. To figure the cost of materials you need to determine the average amount of metal used. Then multiply this by the average cost of the metal. The cost of metal used to size up less than two sizes is generally not included in the price. The metal received from down sizings offsets the metal needed.
Labor Cost
To determine the cost of labor is not difficult but it is more time consuming.
Determine Time Spent
The first step is to determine how much time is needed to perform the job. To do this your jewelers need to keep track of their time.
If you perform similar work on multiple jobs during the day, do not keep track of each individual job. Average the time in minutes for the type of jobs. For example, size all down sizes together and average the time spent on them. Size all up sizes together and average their time. The price difference between one size up and four sizes up is a difference in cost of material not cost of labor. Repair all chains together and average their time, etc. If all jobs completed during the day are saved to polish and clean together, take the total time spent polishing and cleaning and average it over the total number of jobs done that day.
Forms are given at the end of this chapter to assist you in this project. Have each jeweler keep track of their times for two weeks then average their times. Having a digital clock at the bench helps in recording times.
Determine Labor Cost
Now that you have determined how long each job takes, you need to figure how much the labor cost you. Using the hourly rate of your jeweler for your cost of labor is not sufficient. This hourly rate does not include items such as benefits, overtime, and employer share of taxes. These all need to be included in the cost of labor that you charge.