Novice gem cutters often ask me about gem pricing. They want to know how to determine a fair price for what they cut. This is never an easy question. Publications such as National Jeweler have gem listings. Various wholesalers have price lists for readily available gems, like amethyst or tourmaline. However, these guidelines aren’t always rigidly followed. Indeed, gem prices among wholesalers vary quite a bit!
Markups and Gem Pricing
Some cutters use the 7X rule. They simply mark up their finished goods seven times the cost of the rough.
If this works for you, fine. However, you may find pricing your finished gems based on the cost of rough plus your labor more equitable. A fair markup on the rough is usually in the 50% to 100% range. How long you’ll keep your rough in inventory plays a key role here. Are you ordering a large quantity of rough that will take some time to sell? Or, have you ordered a piece of rough someone has prepaid you to cut?
Calculating Your Labor Cost
When figuring your labor, be realistic. While your full-time job may pay you $25/hour before taxes, that doesn’t mean you should get that for…