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by Kevin Bowden
 

When we first arrived in Australia back in 1998 one of the first things that caught my attention was the high prices for jewellery. (I am actually a computer guy but used to make jewellery as a hobby in South Africa)

Over the years I got more involved in the local jewellery industry and today I am in partnership with two locals. I manage all the web sites and marketing efforts and they concentrate on the manufacturing. I would like to share a few pointers that I believe will save you money when you buy jewellery locally.

Sales

Be wary of constant sales so many of these stores run. Many of these aren't sales at all; they simply hike the price for awhile and then offer a so called sale when in fact it is standard retail. There is a well known jewellery chain in our local shopping mall and for the past two years they have run a sale every week. I would love to meet the individual who comes up with a different worded sale every week because they have to be the most imaginative individual on planet earth.

Solid, hollow and silver filled jewellery

A jewellery store pays the manufacturer a price per gram; they then add their markup to this. Because the price of gold is continually increasing the manufacturers try to use less and less gold in an effort to ensure the items are affordable. This is where you the consumer need to be careful when buying hollow or silver filled. Other than the obvious reason that hollow jewellery dents and then looks terrible, the most important is value for money.

Always ensure you ask for the gold weight of an item when buying because as can at least calculate whether the price is reasonable or not. At the end of this article is a simple formula for those of you who would wish to calculate it yourself.

Solid

As of today 4th December 2011 we would sell a gram of 9ct gold to a store for $29. This is a finished product like a bangle. If the bangle weighs 31 grams in 9ct then we would sell it to a store for $29 x 31grams = $899

I did a quick search on google now and found the price different stores are selling a bangle ranges between $36 - $124 per gram of 9ct. As you can see if you do not shop around you may end up paying an extremely high price.

On our example of a 31gram bangle the retail would vary between $1,116 - $3,844 a difference of $2,728

If you purchased at $40 per gram or less then you are doing well.

Hollow

If you have the weight simply divide the price by the gold weight and you will have the per gram price they want to charge you.

Silver filled

Generally a silver filled gold bangle will consist of around 20% gold and 80% silver so if the weight was 31 grams as in our example then

31grams x 20% = 6.2grams 9ct gold

31 grams x 80% = 24.8grams of silver

Fine silvers cost is $1.02gram as of 4th December 2011

925 Sterling Silver ranges between $4.50 - $22gram retail

Our example bangle would cost in the range of
  • 31grams x 20% = 6.2grams 9ct gold @ $36gram = $223.20
  • 31 grams x 80% = 24.8grams of silver @$4.50gram = $111.60
  • Price = $334.80
  • 31grams x 20% = 6.2grams 9ct gold @ $124gram = $768.80
  • 31 grams x 80% = 24.8grams of silver @$22gram = $545.60
  • Price = $1314.40

As you can see there is a huge variation in prices and it is important to shop around for the best value for money. Hollow and silver filled are cheaper than a solid item because they contain a lot less gold.

If you have any questions please feel free to contact Kevin Bowden at Mikes Designs

Formula

Remember that precious metals are weighed using troy ounce which is 31.1grams as opposed to an avoirdupois ounce which is 28.3grams. The avoirdupois ounce is for Commodities such as sugar, grains, and the typical grocery items.

9ct gold

  • Fine gold is known as 24 Karat.
  • 9ct (also known as 9K) is 9/24 parts of gold = .375 or 37.5% gold
  • 9ct is made up of 37.5% fine gold and 62.5% other alloys. These other alloys are usually a combination of silver, copper and zinc. To create different colours of gold you would change the % within the alloy component.
  • Now back to our formula. We know that 31.1grams of fine gold is one ounce. To calculate the price of 9ct based on any specific days gold price you simply divide 9/24 which gives you .375
  • You then divide 31.1grams by .375 which equals 82.93grams of 9ct. In other words one ounce of fine gold equals 82.93grams of 9ct.
  • If the daily price for an ounce of fine gold is $1708 you divide this by 82.93 to give you the price per gram of 9ct. $1708/82.93 = $20.59 per gram of 9ct.

18ct gold

  • 18ct (also known as 18K) is 18/24 parts of gold = .750 or 75% gold.
  • 18ct is made up of 75% fine gold and 25% other alloys.
  • To calculate the amount of 18ct grams in one fine ounce of gold we divide by .750
  • 31.1grams of fine divided by .750 = 41.46grams of 18ct gold which is exactly half the weight of 9ct.
  • If the daily price for an ounce of fine gold is $1708 you divide this by 41.46 to give you the price per gram of 18ct. $1708/41.46 = $41.19 per gram of 18ct.
 
 
 
Posted in lifestyle | Mikes Designs
Posted by Kevin Bowden
10 Dec 2011



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Thank you for sharing your thoughts Gavin. The Australian consumer pays more for just about everything compared to other countries such as the USA, UK etc. Water, Gas, Electricity, Jewellery, Food, Furniture, Electronic goods and I can go on and on. I do understand that jewellery is more expensive here because of the excessive rents and wages and that is one of the reasons I opted for an internet model. Don’t get me wrong I do understand the issues and I feel for the small business owner because I am one; however I also feel for the consumer. Wearing my consumer hat I can’t help but ask myself if this is supposed to justify the excessive prices we as consumers should pay? Should the consumer and small business be the one who has to foot the bill so that big business can continue to impress their share holders with ever increasing profits? It's about time big business realised they should be more concerned with taking care of their customers because without customers there would be no share holders to impress. The equation is skewed at the expense of the consumer and small business and it is not us who should be shoring up a business model which costs us more and more. At the end of the day costs will keep rising to the point that a business is no longer sustainable and shuts down. Already we are seeing an increase in bankruptcies and this will continue to rise. In my opinion this big business model is the one that is flawed. More and more consumers are shopping online from stores in Australia as well as international and in so doing saving themselves thousands. Adding 10% for GST will make no difference at all because the price difference often times is close to 100% and sometimes even higher. I have been manufacturing in Melbourne for years and have the same labor costs as everyone else. I chose the internet as my business model and it has worked well for me and my customers. I do have a competitive advantage which has benefited my customers and that is what business is all about. We have a great saying in South Africa which I am sure you are aware of, "Die een se dood is die ander se brood" Business is changing, and we have to consider this change and how best to move with, rather than against. Business in retail stores, in upmarket shopping malls, paying excessive rents, will have consumers paying those higher prices, however many cannot. A business model expanding into the internet as well is potentially a better choice for all concerned. The internet allows the small business owner to expand their market not only to include all of Australia but the rest of the world as well. I am in the fortunate position, due to years of experience in the internet market, to advise and assist any businesses who approach me about re-aligning into the internet market. Please feel free to contact me at any time. The bottom line is consumers are increasingly aware of other avenues of shopping, and thanks to the rapid advance in technology this will expand at a more rapid pace in future. Those of us who have evolved our business model to include the internet will continually grow at the expense of others who fail to change with the times.
Rating: 1 / 5
 
by Kevin Bowden on 11 Dec 2011

 
Hi This article is flawed in its reporting. 1. Jewellery is more expensive here because we pay excessive rents and wages compared to SA. It runs at up to 20% of sales for rent and 15% for wages. So that is 30% plus for two fixed expenses. You should blame the landlords for this. 2. Jewellery retail is strictly governed by the ACCC and a product must have a price establishment period of 8 weeks before it can be discounted and then it can only discounted for a certain period of time before it reverts back to normal price. A retailer has to keep all records of pricing and the ACCC has the power to fine if in contravention of the act. 3. Jewellery is very competitive here compared to SA where you only have a few national jewellery stores whereas here you have up to 18 jewellers in the major centres, so you are bound to get a good deal. I worked for a national jewellery chain in SA and now in Aus and in SA it is a breeze.
Rating: 1 / 5
 
by gavin shaw on 10 Dec 2011

 
 
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