By Lainie Petersen Updated January 25, 2019
The profit margins for jewelry makers and sellers can vary widely, particularly given the numerous categories within this industry. Fine jewelers who either make their own products or source their pieces from wholesalers will have different considerations than those who sell costume or fashion jewelry. Labor costs, as well as market prices for precious metals, have a significant impact on what a jewelry entrepreneur can expect to earn.
Tip
In 2013, the gross profit margin for jewelry stores was 43.5 percent. In 2017, it was 42.6 percent.
A Question of Materials
Because many types of jewelry are made from precious and semiprecious metals and stones, both jewelry makers and retailers who purchase from wholesale sources will have to be aware of market fluctuations when developing a business plan. This is particularly true for jewelers who source their items from other businesses.
While the style of jewelry is certainly a consideration, it is also important to calculate the amount of a precious metal in a piece of jewelry and understand how much the wholesaler is charging given the actual market value of the piece. In many cases, jewelers will mark up precious metal jewelry by two to three times its wholesale price. However, particularly famous luxury brands may mark their products up even higher in an attempt to maintain a position of exclusivity.
Handmade Jewelry
Many jewelry makers open small businesses to sell the products they create. A difficulty can arise, however, when it comes to pricing items. In some cases, these jewelry entrepreneurs may be reluctant to charge what a product is actually worth because they have come to see their work as more of a hobby. However, over time, it will become necessary to develop a robust pricing strategy that allows the jewelry maker to stay in business.
Each jewelry maker must come up with a formula that works for him or her. Artisan jewelers who use precious metals and stones have to consider market trends when developing a pricing policy. Jewelry makers who use non-precious materials often figure the price of a finished piece by multiplying the cost of materials by 2, 3 or 4, adding the cost of packaging and overhead, and then an additional charge for labor.
Typical Profit Margins
According to analysts at the Retail Owners Institute, the gross margin percent trends for jewelry businesses have stayed relatively consistent in recent years. Gross profit margin is calculated by subtracting the cost of goods from a business's revenues. In 2013, the gross profit margin for jewelry stores was 43.5 percent. In 2017, it was 42.6 percent.
Other Considerations
Jewelry sellers who operate retail stores or stalls at fairs and craft shows will have to consider other factors when pricing jewelry. There is always the risk of loss due to shoplifting and employee pilferage. In addition, products can be damaged through careless handling. Fine jewelers often provide free minor repairs and alterations to jewelry sold, and the cost of offering these services should also be calculated in the product's final price.
