Let me explain. When you size a ring, it takes about 20 minutes, and you charge for this service (say, $50). If you do even more work on it that takes another 20 minutes, shouldn’t you get another $50?

Has your jeweler ever sized a ring and stones became loose? Sure. Do they tighten them? Sure. Do you charge for that service? Most say no!

The customer says if you touch their jewelry and something happens, it’s your fault. Therefore, you should get extra money anytime you touch the jewelry.

If you take in jewelry for sizing or repair and it has four or fewer stones, you can tighten and guarantee stone tightness or loss at no charge. But if the ring has five to 20 stones, you should charge $35 to check and tighten the stones.

Many stores might charge extra only if the stones are loose, but you should charge extra just because there are stones that could become loose or fall out in the future.

My car insurance company has charged me $1,100 a year for the last five years and I haven’t had a single accident. Why charge me $1,100 when I didn’t cost them anything? So that when I do have a wreck, they never have to say, “It must have been your fault, we won’t pay.” Instead, they pay with a smile.

You should do the same thing. Here’s how to present it:

“Mrs. Jones, it’s only $85 to size your ring smaller. This includes our jeweler sizing your ring to fit, and you won’t notice where the work has been done. In addition, she will check all of the stones for tightness. If any stones are loose or become loose, we will make sure they are as snug as a bug when you pick it up. In addition, if during the next year the diamonds become loose, we’ll tighten them at no charge, and if you lose any, we’ll replace them for you at no charge. Furthermore, our jeweler will make your ring shine like the top of the Chrysler Building and it will be as pretty as the day your husband gave it to you. We can have it back to you on Friday.”

(I combined the price of $50 to size and $35 to check and tighten to make the money sound seamless.)

How much more money could you make if you earned $35 extra on every repair job of pieces with five stones or more? You do the math.

Quit giving customers such a hard time about whose fault it is that a stone fell out. Instead, do like my car insurance company: Guarantee it, take the money and treat them like a mensch.

The post Here’s Why You Should Charge $35 More on Certain Repairs appeared first on INSTOREMAG.COM.

One day, we decided to try what Fast-Fix did: have a two-tiered battery price. We started charging $8 for a one-year guaranteed battery and $15 for a five-year guaranteed battery. (Same battery, we just guaranteed it for five years.)

No paperwork required; all you need is a sharp-pointed pen. We opened the back and wrote inside a “1” or a ”5” for the battery warrantee along with the date.

When a customer came in and needed a battery, we said, “Great, you have two choices: a one-year guaranteed battery for $8 or a five-year guaranteed battery for only $15.” 60 percent of customers chose the five-year guaranteed battery.

Our average battery sale went from $5 to $12. If the battery died before the guarantee expired, we gave them a new one, but it was only guaranteed for the remainder of the original time frame.

In addition, many people have started using our suggestion of a “Watch Spa”:

Watch Spa And Lifetime Battery – $117

1. Remove the movement, ultrasonically clean the case and band.
2. Install a new battery.
3. Install a new rubber gasket.
4. Using silicone, seal the back gasket and apply silicone to the stem/crown area.
5. If the crystal is removed, reglue.

People will pay. Not only that, but giving customers a menu of choices helps them and your store.

Funny story: I used to travel to stores to train and help with QuickBooks. One day, I was doing something at the store’s point-of-sale computer and I was the only person in the showroom (the rest of the staff was in the back). In walks a very elderly woman who said she needed a battery for her husband’s watch. I gave her what I just typed about the two choices of warranties. She stood there gazing at the ceiling and finally replied: “He’s 98, just give me the one-year guaranteed battery.” True story.

The post Why Offering Multiple Fees for Product Guarantees Could Net You More Profits appeared first on INSTOREMAG.COM.

As someone who has visited stores in person and also sees their business and financials by connecting over the internet for almost 22 years, I can share with you what successful stores consistently do.

Most all jewelers make money, although many have very little of it in their checking account. Many years ago, I read a statistic that said well over 55% of companies who declared bankruptcy had a profitable profit-and-loss statement.

Here’s my list of what I’ve seen in the trenches, not in order of importance.

Successful stores charge easily double their shop’s actual costs for repairs and custom work.

Jewelers typically price by guilt rather than what they must charge to make a good shop profit. I hear all the time: “The customers won’t pay.” Not true. Across the country, the price to size a 14K yellow gold 1-carat round diamond engagement ring smaller ranges from $40 to over $125 (you read that right). Almost all of them enjoy a 90% closing ratio … the $40 jeweler AND the $125 jeweler. If you’re not making enough money from the shop, the only REAL solution is to charge more than you are now. But you’re scared. Think back to when you raised your prices. What happened when you did? NOTHING; they paid. If they squawked, that doesn’t matter.

Repairs and custom does not have TURN, so increasing the number of jobs coming in if a jeweler already has a full box doesn’t increase profits. Be more efficient? A laser machine will definitely do that, but for the most part, a jeweler’s efficiency can be increased about 50%. But if you’re short on profits, increasing a jeweler’s efficiency by 50% won’t help much. To increase shop profits, you have to charge more than you are now.

Successful stores handle inventory the way the very large successful retailers handle it: as if it were a block of melting ice. Before refrigerators became common, blocks of ice were delivered to homes. In the morning, a block of ice might have sold for $1.00. But as the horse-drawn carriage drove through town, the ice started to melt. By 3 p.m., the block was half its original size; who’d pay full price for half a block?

Most jewelers think ONLY margin: “How much can I sell this for above my cost?” That’s a good start, but that’s all it is. Have you noticed how retailers in other industries like clothing sell at their regular prices when new items arrive, and after 60 days or more, they start doing deep discounts to reduce stock? They understand turn. Clothing has a turn of 4 times a year because there are 4 seasons.

Why don’t the clothing retailers just seal the old shirts, slacks, shorts and swimwear in zip-lock bags and bring them out next season? If it cost them $5 for shorts that sell for $10, can’t they sell them for $10 next summer? Maybe, but here’s what they look at:

There might be a new style or “in” look next year, and many clothing retailers have to pay their bills in 30 days, unlike jewelers.

You can’t keep swimsuits on the rack with leather warm coats. No room. Of course, jewelers can pack showcases with more jewelry, just add another ring tray!

Merchandise has an obligation to give your store the profits you expected every year it sits in the store, not just the year it sells. If an item costs $100 and gives you a profit of $100 (keystone), then it should do THAT every year it sits in the case.

Stock the store by price point ranges that have sold in the past. Yes, experiment with some higher priced items, but don’t go overboard. If it sells within six months of its arrival, reorder and continue to do so until it doesn’t sell within six months.

For nine months, sell for “top dollar.” Discount a small amount if need be. After nine months, discount 25% to help move it out of the store.

After 12-15 months, be proactive about either returning the item to the vendor in exchange for other items or give the staff big bucks to move it for you.

Don’t have it in the store if it’s 18 months or older. If it stays, it has an 80% chance it will still be there 5 years later.

Find the dollar amount of inventory over one year old in your POS program. Leave out memo and consignment. Now multiply that number by 80%, and then go into your QuickBooks or accounting software and look at your accounts payables and credit card debt. You’ll see that about 80% of old inventory equals the store debt. Eliminate old inventory, and you lower debt dramatically, giving you more cash and availability to stock items that will move! Here’s some typical numbers:

In one full year, easily 60-80% of all sales made are those from inventory that is less then 6 months old.

Items that sell between six and 12 months of age comprise less than 10% of total sales. Look at the drop! Why? No one likes it anymore. Sales staff yawn when they see it now, customers aren’t interested and it just sits there not selling.

Sales of items that are one year old or older when it sold can be 20% of total sales, but to sell that 20% of total sales, the inventory required is an astonishing 57% of inventory .

Clearly, the golden age of inventory is the first six months of being adopted by you. After six months, it becomes the red-headed stepchild. After 12 months, it’s like a 40-year-old who never leaves home just draining mommy and daddy’s checking account.

Successful stores have ongoing sales training on a regular basis to take “just OK” staff and make them all STARS. A salesperson’s job description: Turn shoppers into buyers while increasing the store’s average dollar sale and their own closing ratio. This only happens with weekly or bi-weekly sales meetings, personal coaching and training.

There are a host of other things successful retailers do, too many to mention. But just a taste of some:

• Spend a budgeted amount on consistent ongoing advertising. Spending 6-10% of sales on advertising. Their advertising is not boring.
• Have several events a year, knowing collectively this enhances store sales.
• Send thank-you notes to customers.
• Have the staff personally contact customers all year long by notes or phone.
• Pay the sales staff a commission/bonus system that makes a difference in their paycheck.
• Renovate the store from time to time so it doesn’t get stale.
• Hire support staff to allow the owner to do what they do best.
• Take regular vacations.
• Have hours open that make it convenient for the customers.

The post Here’s The Difference Between Successful Stores and Those That Struggle appeared first on INSTOREMAG.COM.

So how should you respond? A lot depends on the value of the stone. Melee usually has no intrinsic value to the customer. A center stone … now that’s a different question.

The first kind of loss may not be your fault. Prongs get pulled back on clothing or sheets. Well-set stones shouldn’t fall out. I’d ask the woman if she sleeps in her jewelry, and if she says “yes,” tell her, “Never sleep in your jewelry. The prongs on small stones are only twice as thick as an eyelash, and they can get caught on sheet and banket threads.”

The second kind of loss is if you worked on the ring and a stone fell out. I’d still mention not sleeping in the jewelry but add: “I’m so sorry. I will make sure my best jeweler goes over every prong with a fine-tooth comb and make sure there’s no space between the metal prong and the stone so it doesn’t snag anymore.”

Most consumers believe everything sold in America comes with a 12-month warranty. Heck, some jewelry customers believe it’s guaranteed forever. That’s why take-in is so important. As an example, we didn’t guarantee stone loss unless it had at least four prongs, sometimes we’d say must have six. Write that down on the envelope. We also didn’t warranty large stones, as a few hundred-dollar repair doesn’t have enough money to pay for replacing a $9,000 diamond. That’s why they should get the ring appraised and have additional coverage. But again, this must be written on the customer’s receipt at take-in.

Most stores don’t understand the collective monies received charging a customer an additional $35 or more to check, tighten and warranty stone loss. If you take in 3,000 to 5,000 jobs a year (we took in almost 9,000) and charge the minimum of $35, in a year you could collect $18,000 to $35,000. The typical store pays out less than $5,000 a year for stone loss. So now you can afford to be a mensch with a smile.

Never start by telling a customer it’s their fault or they must have caught the ring in a door. Instead, let them talk and don’t interrupt; let them get it off of their chest. These days, with Google and Yelp reviews so important to your business, fix the problem if you can. Apologize for the inconvenience and tell them up front, “We’ll take care of it for you.”

If you set a major stone or retipped or maybe even sized it, you’re probably to blame. Even if you’re not, you’re going to have to make the customer happy. (Of course, it’s different if a ring comes back bent in two.)

Training the staff who takes in the work is paramount; we trained for 15 minutes every other Friday for years. And if you charge to check and tighten and, as a result, take in $15,000 a year or more in fees, it’s easier to swallow.

The post Here’s What You Should Do If a Client Loses a Stone appeared first on INSTOREMAG.COM.

On Facebook jewelers groups, I saw 2022 was mixed, up, down or same. Sounds like every other year.

What to do in 2023? I can tell you when I had my store I have only two regrets.

1. Instead of paying rent for 25 years, I wish I had bought a building. Jewelers who also own real estate retire richer and maybe those who have a small strip ownership make extra money from rent.

2. I should have raised my repair and custom prices even higher than my price book suggested.

My Geller Blue Book uses a three-time markup formula. I should have raised my prices even higher as myself and hundreds of jewelers who have my book have found repairs aren’t price sensitive, they are trust sensitive.

What would I suggest for you this year? I know the pain level of many of you and it’s this:

• Your low pay.
• Low bank account balance
• A lot of debt

Where does this come from? Most think their overhead is too high, payroll is too high. Not what I’ve seen. Your poor cash flow comes from a minor area and a HUGE major area.

Minor: Undercharging for the shop. Raise your repair and custom prices. You wouldn’t believe how many jewelers tell me I was right and many more say “David: I charge more than your book.” This is low hanging fruit. Really.

Major: Too much dated inventory. I want to tell you right now …

You are wrong! You can’t make correct profit on items after 18 months because 18-month-old inventory turns into 2- and 5-year inventory. If you buy a $500 item in January and retail it for $1,000, it should sell “about” within 12 months and make you $500 in profit. Then buy another one in January to restock and sell it again the next December. So in two years, a $500 item should have provided you with $1,000 in profits. If you keep it for two years and sell it for keystone at $1,000 and think you made a profit, you are wrong. You should have made $1,000 in that two years, not just $500.

That’s why your accounts payables are so large and bank account is low.

I help stores with QuickBooks so I get to see everything, and you wouldn’t believe how many stores that are heavy in shop sales use a portion of shop profits to buy inventory that doesn’t sell. Stop that!

You don’t have to scrap older merchandise, although that’s an option. Incentivize your customers and staff to get the items out of the store after a year. How?

1. When an item gets to be 12 months old, first see if you can exchange it with your vendors for merchandise that will sell better. If not, put it on sale in a 20% off case.
2. At 18 months, up it to 25% to 30% off. Still making a profit, but you are looking for inventory turn to kick in.
3. 24 months? 40% off and give the staff 10% of what they sell it for.
4. After 24 months, either scrap it or take the stones out to be used in the shop and sell the metal for scrap. Do this and all that will happen is

• You’ll have lower debt
• Higher bank account balances. Not so bad, eh?

What could you do with extra cash from turning inventory and scrapping?

Buy a building.

The post The 2 Things That Could Be Holding Your Jewelry Business Back appeared first on INSTOREMAG.COM.

I set up QuickBooks for many stores, so I see how they are run and the mistakes they make. For example, I recently worked with a store that has sales of about $2.5 million, and in their checking account they always have a bit over $500,000. Another store does over 10 million in sales and also has $500,000 in their bank account.

Then there’s a store doing $1 million with two owners. They complain that their bench jeweler is paid more than the two owners, which was about $45,000 each partner. Own a store, operate with the headaches, and their pay is about the same as an employee.

What do these stores have in common? Their inventory levels dictate their cash flow.

Unfortunately, many of today’s store owners once worked in a store where that owner ran the store starting in the 1960s or 1970s, and they follow their old advice. But if you could look at the P&L statement of these stores back then, you’d see their gross profit margin was easily 60 to 75 percent. When you have these high margins, you can afford to overbuy inventory. Today, most stores’ gross profit margins are 42 percent to 50 percent.

Here’s the solution: The amount of inventory you should keep in stock is about equal to your gross profit dollars in selling stock.

For example, if your product sales from the showcase (without memo and consignment) last year were $750,000 and the gross profit was $352,500 (a 47 percent margin), then the amount of inventory you should have on hand is about $350,000. The amount of “leeway” of this number is maybe 20 percent above (or $420,000) at most.

If this store has $750,000 in inventory at cost, it’s easy to look at their financials and see how this affects them. They have about $375,000 to $400,000 too much inventory.

Look at the store’s total debt by adding accounts payable, credit card debt and bank loans (other than for buying equipment). You’ll see total debt is about $200,000 to $300,000, and it’s all because of having more inventory than the store can sell in a year.

The store with the two owners who make $45,000 each? If they unloaded old inventory, they could almost double their pay.

As for the other two stores, the $2.5 million store has a gross profit margin of about 52 percent but manages inventory very well. The other store doing over $10 million has a gross profit margin of about 47 percent but way too much inventory. Every time they sell one item, they buy more than one more.

The secret to low debt and a bigger bank account is inventory level should be equal to about gross profit dollars for the past 12 months.

The post Want More Cash? Practice Restraint in Inventory Buying appeared first on INSTOREMAG.COM.

INSTORE had a piece from its Big Survey last month showing jewelers’ profitability is now hinging on:

• Adding lab-grown diamonds
• Embracing online sales
• Hiring staff
• Concentrating more on custom design
• Charging more for repairs
• Upgrading equipment: lasers, 3D printers, microscopes

Dumping Aged Inventory

Notice the ones I listed in bold? I like to think just maybe I’ve had something to do with that, although any good jewelry consultant or buying group has been telling jewelers to get rid of old inventory (just like other retail industries do).

A few short years ago, a store owner could “possibly” get by running a store by the seat of his or her pants. I help stores with the shop and QuickBooks accounting, so I’ve seen lots of people with their pants on FIRE financially!

Numbers 4 though 6 are not as difficult as you’d think. Number 7 (dumping inventory) is harder because it’s hard to change a jeweler’s mindset. It’s a numbers game, but jewelers don’t think so. It’s the No. 1 reason for low cash and debt in a store. Always has been.

Number 3 is now a big problem for almost every company and store in America. There are three positions in a store, and all three are harder to fill:

1. Bench jewelers

Many talented bench people are baby boomers who are either retiring or just want to work less hours. They are tough to connect with. Newspaper in my day was the No. 1 way to attract employees. Not anymore. There’s no central location to find them.

Stores are unwilling to train bench people and at the same time pay a wage that is attractive to them while they learn. Like Rapaport pulled back the veil of secrecy of the cost of diamonds to the public, Facebook and other social media sites share what other bench jewelers are asking and getting for pay. Not uncommon to see “$50,000 to $80,000” as a salary. It’s simple. Bite the bullet and raise your shop prices and pay better. It still has a 90 percent closing rate.

2. Office and bookkeepers

In some stores, you might be able to get by with part-timers in this position. Need a bookkeeper? Google “Bookkeeping Staff Service” (a temp service for bookkeepers). After 90 days, most will let you buy them out and hire them as your own.

3. Sales staff

Probably the most valuable asset. Doesn’t matter if it’s a retail store or restaurant, everyone has a problem hiring. One big complaint is getting newer employees to show up for work as scheduled. I hear all the time, hiring new people-they might call in “I just don’t feel like working today”. One store told me they have MORE employees than before the pandemic because they need extra people to cover for those who don’t show up. Like stand by employees.

The way I see it, the pandemic has shown workers that if they want it, they can have:

A. A life

B. A job they like

C. Better pay

As a store owner, you are going to have to adapt. You’ll be expected to make A through C happen. More flexible hours, better pay, better training than before.

Their compensation package will have to be parts of base salary, commissions and/or percent of gross profit of what they sell. Not everything is about money. Help make our numbers this month? Great! Take an extra day off with pay or a weekend vacation.

Many stores I’ve talked with have given nice raises to the staff to keep them in their store, bigger year-end bonuses, quarterly bonuses. Yes, based upon performance, but if you have any dead wood working for you, replace them. Better for them and you. It’s not how hard is it if they leave, it’s what if the dead wood STAYS?

Pay a bonus to any employee who brings you a friend or acquaintance after the new employee stays at least six months.

Here’s betting 2023 will be great for your store!

The post Here’s How You Can Improve Your Odds for a Strong 2023 appeared first on INSTOREMAG.COM.

Here’s one suggestion:

1. Have a sign on the counter (and have your staff ask the same question) that says, “Who else is on your list? Choose a gift basket with gifts already selected for them!”
2. Make up a dozen gift baskets and put an array of jewelry that’s already in a jewelry box but open, so customers can see what’s in them. When they get home, everything’s in a box and all they need is to wrap them and add a card.
3. Price? Add up the retail and put it on the basket: “Total 7 items = $289. Christmas sale, all contents in this basket on sale for $175.” Make baskets that range from $99 to $699.

Some customers will buy because an item is on sale. But what about free?

This is how it works. For the holidays, take one showcase and put dated items in the case that you’d like to get rid of. Mix it up with lots of different items and price points. You then do an offer: “Buy one, get one free,” or maybe “Buy one, get another at half off.” (I like “free” better.)

When customers come in, tell them, “After you choose the gift of purchase today, let’s go to showcase number 7, and whatever you pay for the gift of your dreams, in case 7 you can have any item that has a retail tagged price of 40 percent of what you bought today, on us, absolutely free. For you or someone in the family.”

There would be some minimums, but I’m a numbers guy and we’re looking to move merchandise. Here’s how it works:

1. The customer buys a $1,500 holiday gift.
2. They can go to showcase 7 and get for free anything in the case at a retail tagged price of 40 percent of $1,500, which is $600 retail.
3. Assuming keystone or higher, you’re giving away an item that cost you $300.
4. Giving the $300 item away is the same as taking $300 off the $1,500 item, which amounts to a 20 percent discount. The beauty is, if you discounted the $1,500 item by 20 percent, you’d only have $1,200 in the till. But by having them take an older inventoried item that cost you half of the tag, you get to keep the full $1,500, the old jewelry is moved out and the new item was sold at full markup.

Adjust the numbers to your liking and give the staff a spiff to make it happen (maybe a $25 spiff in addition to whatever you compensate them). Happy cash-positive holidays!

The post Here’s How to Unload Your Dated Inventory This Holiday Season appeared first on INSTOREMAG.COM.

One jeweler’s answer was a bit odd: “Either every 90 days or 6 months, slowly adjust by 25% (ish) until a year or 3 from now you are up to speed.”

MY ANSWER:

If you use that strategy, you’ll never get caught up. You’ll be behind again, especially as labor always goes up, but who knows what gold, silver and platinum might do. What would happen when you finally get your gold price for findings up to $1,800 and gold has jumped to $2,200? Futile.

Consider this scenario: You take over the relative’s store and they have two rope chains from five years ago in stock, when gold was $1,260 (today’s gold price is $1,769). You sell them to two sisters on Monday this week, boom, you are out of rope chains. You call Quality Gold to replace them.

They Cost You Today 40% More Than When the Previous Owner Put Those Two Chains in the Case

So those chains cost the store $200 in 2017, and now the newly ordered replacement chains cost YOU $280.

The two older chains cost $200 and had a retail price of $400 and sold for $400. The new chains cost you $280, which gives you these two choices:

a. keystone the new chains to $560

b. slowly adjust them “just a little bit higher until a year or three starting at $400, then $440, then next year $460, then ….????”

I’m betting you’d say the heck with this and keystone them to $560 right off the bat. Remember, that’s 40% higher than the last chains.

You are worried about giving customers a “heart attack”. Look at the world now: Gas is higher, eggs, meat, lumber housing. Why don’t these industries slowly raise their prices over a year or three years to adjust their prices?

Because They Understand Cost of Goods and Overhead

So, would you treat the replacement of gold chain or the replacement of a strand of pearls or a replacement of a white gold diamond bridal engagement ring by slowly raising the price over a year? I doubt it; you’d apply a markup today.

I’m here to tell you that there is no difference in asking more for your inventory and asking more for repairs to help you make a profit or pay overhead or pay payroll. All of these departments are required to help you make your monthly numbers.

Don’t get caught up in this idea that repairs will drive customers away if you raise prices. They won’t.

• Gas prices are up, people still buy gas
• Housing prices are up, people still buy houses
• Gold and diamonds are up, and people are still buying jewelry

Why is saying raise your repair prices slowly nonsense? Because your other expenses don’t raise their prices to you slowly. Retailers are screaming about their insurance premiums going up, rent at end of their leases go up, employees want raises and jewelers across the country are being paid more (which is a cost of sizing a ring).

So here are numbers you should look at in your store:

In a typical store, if 10 people come in and look in the showcase, 3 or 4 out of 10 buy a piece of jewelry.

In a typical store, if 10 people with a repair come in, 9 out of 10 will say, “OK, fix it.”

In a typical store, if 10 people come in for a custom job, 7 or 8 out of 10 will say, “Make it.”

If your old store charged $35 to size a ring smaller, but your jeweler died and you send it out to a trade shop and they charge you $25, keystone is $50, will you charge $50 or “go a little at a time”?

Every sale in a store, whether it’s jewelry, batteries or repairs, all have their duty to pay for their percentage share of expenses, overhead, payroll and reduce debt in a store.

Repairs are not price sensitive; they are trust sensitive.

Why would you think going up $5, $10 or $15 to size a ring smaller will cause anyone to have a heart attack? The cost of a young couple getting an engagement ring should cause a heart attack. The cost of just the loose diamond has gone up 20% or more just this year. But they still buy diamonds, don’t they?

Stores doing repair and custom design are jam-packed with jobs in their boxes. Customers are paying whatever you ask, whether it’s $50 or $90.

Want to know prices? How about 7000 prices? Go to my website where I have videos for training the staff and you’ll see over 7000 prices. The password is geller.

Every page, every chapter of my book is there. My voice teaching you and your staff how to charge, why we charge, what to say to customers when they ask why you charge what you charge. The last video is how to sell repairs and custom in the store.

The post This Is Why You Should Not Raise Repair Prices Gradually appeared first on INSTOREMAG.COM.

“How are sales this year?”

“How are shop sales?”

“How is custom business coming?”

When I ask question No. 3, usually I get a confused answer. See, since I’ve been in the jewelry business (which is since the age of 10), defining “custom design” gets a bit confusing.

“Custom design” to me means sitting with a customer, sketching out the new design created by you according to the customer’s wishes, and making a wax to be cast either using a CAD program or carving a wax by hand — then having the wax cast in metal, your jeweler filing it up, setting stones and polishing the piece. Or even fabrication by wire and stock. To me, this is a custom piece.

Many jewelers outsource to a manufacturer to make, alter a ring from the showcase that they have in stock, or send the picture to the vendor who makes the ring or item in their factory. So when this item comes into the store (usually ready to deliver or you just need to set the center stone), it pretty much bypasses your shop.

This is a special order, just as if you ordered a ring from the case, but in pink gold. If you ordered a ring in pink gold, they might have it in their stock or maybe they start from scratch.

Why does this matter? If it is like I just said, a special order, then in your GMROI reports, this will benefit the numbers for that category and vendor. The invoice for this goes in your Stock & Special Order inventory in QuickBooks. When sold, the cost leaves these accounts and goes to Stock & Special Order cost of goods and the sale goes to Stock & Special Order sales on the profit and loss statement.

But if you call it a SHOP sale, the complete sale for the mounting you made goes under shop sales “Custom Design Sales,” meanwhile all of the costs go into “Shop Cost of Goods”

Allocating it correctly will help you in your planning for both areas of the store and tell you true profits for the shop.

The post Be Sure You’re Categorizing Your “Custom Sales” Correctly. Here’s How. appeared first on INSTOREMAG.COM.