Profit Making from Rough Gems
Can I make money cutting that rough?
This is an all important question for people that want to facet and make money. Surprisingly many people cannot answer this question or if they do answer the question they tend to be wrong.
The first thing you have to know to answer the question of course is. What does the finished faceted stone sell for? OK, here are my personal views, observations, and how I price my work.
Gemstone Pricing Guides
I also suggest that people do their own research, shop around on the web, look at local gems show et.
One important thing I want to mention is that the examples I am going to give and the pricing is only current as of the date of this article and that pricing is always changing. Because prices are changing all the time, a faceter must keep in mind that what they think maybe the correct price, may not be any more. Always check and stay current. So it is very important to realize, that while a piece of rough may not make much profit when you purchase it at the current going rate, it may and probably will make very significant profits down the road depending on the various factors.
What are the factors?
Quality – Always buy the best quality because that is what will appreciate and become more valuable, as well as be in demand. You will almost never go wrong with quality.
Cut – This is in control of the faceter (you) and will influence, some times dramatically, the value of the finished stone. Facet the material in a unique design and high quality and you will set the stone apart, and earn more profit. Cutting is important, as well as design. In many cases the cutting and style are what really counts and what will sell the stone.
Market – This of course is out of the faceters (our), control. However, if you are paying attention and studying the market you can predict trends, directions, and profits. So pay attention, and realize that some thing you buy now may not be all that profitable, but could be very lucrative in the future.
My point? The point is think ahead and realize that making money is a long term strategy, do not pass on a piece of rough, or parcel, now because you think you may not make enough money. Realize that making money in any business takes investment and some planning. OK, here are some things you should have memorized or printed out and on hand for easy reference. This chart is a quick way for any cutter to do some simple math and figure profits, by the cost of the rough.
Note: In most cases the percentage of yield in the top row will be between 20% and 45%. Usually 25% to 40% is the most common yields on quality rough. But I list the higher yields because of carving and cabbing which typically yield much better than faceting.
How to use the chart. In the far left column the price of the rough is listed by the carat. Look at the top row and see the % of yields. Simply round the cost of your rough up the nearest figure, or down if it is closer.
Note: I fudge a bit for example if the rough cost $6/ct to 7/ct, I would figure in the $5/ct bracket. If the rough is $8/ct or more I figure the $10/ct bracket.
How the math works. Figure the rough cost per carat times 5 (carats per gram) x the % yield = Cost of Goods (cog).
So how does this work in the real world? Easy. Take a piece of rough (from my Tourmaline page 1) for example. 1 each 13.40 carats – $402.00 Top Rubellite, best cut trillion – 12.5mm x 11.8mm x 9.5mm deep. The rough costs $30/ct, so look in the column that is $30/ct… If you get a 35% yield (which on hand select rough should be fairly easy). The cost per carat of the finished stone is $97.50/ct. If you look in my pricing guides I price top Rubellite at $180 to $950/ct depending on size and quality. Here is the pricing.
Medium (45% tone to 65%) – Medium pink to peach. Hot pink/Rubellite. Comments – This material is the top quality, I cut it for shape and yield. Pricing – I generally price this material $180/ct to $950/ct and a minimum of $150 for a small stone to cover the labor. So the answer is yes, profit is quite good on this rough/cut stone. Even at the lowest rate I list which is $180/ct… with a cost of $97.50/ct the profit is very close to 100%.
Of course if you yield higher or lower you will need to use the correct percentage figure, but you get the idea. These are all tools that will help people calculate costs and profits. But remember there are variables, time, cutting, and the stone market are all ones I have mentioned. Nothing is ever guaranteed. But using these charts and tools will certainly give any faceter a very good idea of potential profits.