Some Thoughts on the Challenge of Making Custom Quotes

Now that I have so many gemstones for sale, I get considerably more requests for custom quotes than I did in the past.  And I face new challenges.  I have been thinking that if I share some of these, perhaps I can get some suggestions from you as I develop price lists and a custom form for my new webpage.

               Making a quote minimally involves calculations on the following three factors:

1. Gemstones:  this math is easy if you have picked out your stone, but if I have to multiply out, say, sidestones for a pendant or ring, or diamonds for a halo, then that involves more.  I usually just “ballpark” smaller colored stones (1-2mm sizes) but I have to calculate out diamonds exactly.  Each size and each grade will change the calculation.  So a half pointer G/H VS is different from a 1 pointer G/H SI.

2. Metal cost:  this can be tricky.  It is easiest if I have an existing ring that I can weigh or that is one of my molds, because I have the weights listed in my mold sheet.  Then I multiply by the current gold price. If I have to make the ring from scratch, I have to consult a catalog that gives me the weights of metal strips in different mm sizes and thicknesses.  The weight is usually in 14 K yellow, so that involves conversions if it is platinum or 18k.  For silver I just ballpark because silver is cheap.  Another factor that influences weight is the finger size.  A size 5 is much lighter than a 9.  I have lists for that also, that is, how many mm metal strip I need for which finger size.  With gold, you need to be exact because just ¼ gram in weight can make a big difference.  I also have to calculate some metal loss, or the cost of the sprue, so I add a little % to each calculation.  Finally, settings can vary drastically in price, and there are no price lists that contain every single setting in every single size (for instance, bezels weigh more than prong settings, but some prong settings are more hefty than others, and each mm size makes the setting heavier).  Plus gold prices change every day so when you shop, you pay a % markup on that day’s spot price.  As you get more experienced, you learn to estimate better, and that helps.  But the rule of thumb in the market is not to underestimate because if you cut it too tight, you can very quickly lose money, especially when your markup is low (mine is very low by industry standard).

3. Labor: labor breaks down into several categories.  If it is a casting, then you add casting labor.  That’s only a few dollars, so that’s good.  If you have to make a mold, you add that in.  If there is 3-C printing or CAD work involved, that’s another price depending on the time it takes to make it.  If there is soldering, I have a rough idea of what each type of soldering costs and I add that in. Then there is setting labor.  Setting labor depends on stone size, bezel or prong, millgrain or pave.  And of course the number of stones.  So a ring with 12 sidestones that are 2mm, with a 6 mm center, pave, can be very different from a 3 stone ring that’s prong set.  Finally, you have to add polishing and plating costs (i.e. rhodium). 

Now this was the simple calculation.  When you get to a complicated CAD design then often you have to make a 2-D or even 3D rough drawing before you can get the pricing exact.  That means the customer has to be very specific about what she wants, or provide me with a budget first, otherwise the back and forth can be endless.  And if I have to send out 3 possible quotes involving three design alterations, I can easily be sitting for an hour just to do the math.

At the very end, I add my wholesale markup, which has to account for the following factors: my own time and labor which involves quotes, photos, seeing the order through, all customer communications, shipping time.  I work approximately 40 hrs a week just running the shop.  Then there is assistant’s overall time helping with the shop, shipping costs, overhead (computer cost, travel to NY, electric, etc), Etsy cost, PayPal or Direct Checkout cost, as well as development costs when I make new designs, putting orders together, accounting costs, and costs for items not sold, items wasted, items broken (not negligible!).  What does that add up to?  Very very minimally, you have to double your cost once you’ve worked out the initial item cost.  But a safer calculation is x1.2-1.5 depending on how much your other costs are.  Everyone in industry – just about any industry – tells you that even for wholesale, if you don’t do at least double, you will go under.  I frequently get chided by people for not being careful with my own costs, and I’m not saying this to make you feel guilty!  My shop does very well but I work hard for that.

Complicated enough for you?  Now you know why custom shops usually charge so much money.  By the time the customer is satisfied and the numbers are correct, you can have spent more time than it takes to actually make the piece.  Well, I’m overstating of course, but it is definitely more involved than what meets the eye.  That’s why so many shops just have basic designs and price lists based on those, as opposed to making everything to order.