Remember that the jeweler may include the waste in the manufacturing charges or charge differently.
For example, if the cost of an 11 gram gold chain is 55,000 rupees and the charges charged by the jeweler are 12%, then the final price of gold jewelry that you will have to pay will be 61,600 rupees (not including GST ).
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How jewelers calculate the price of gold jewelry
Typically, gold jewelers charge manufacturing charges at a flat rate per gram, for example Rs 199 per gram or as a percentage of the cost of gold jewelry, as mentioned in the example above.
For example, an advertisement for Kalyan Jewelers on YouTube says that charges start at Rs 199 per gram and up. Similarly, Joyalukkas in one of his advertisements available on YouTube says that the charges to be made are Rs 299 per gram.
On the other hand, Tanishq on its website says that manufacturing costs for its gold jewelry start at 8 percent.
However, since gold prices are currently rising, buyers should be aware that different methods of imposing manufacturing charges can make a substantial difference in the cost of jewelry being purchased, particularly when the price of gold has increased considerably. Sometimes this aspect can help you save money when buying gold jewelry. Below are some calculations at different gold price levels that indicate what type of manufacturing charges you are likely to save some money on. In making these calculations, the weight of the gold jewelry is assumed to be 15 grams and the manufacturing charges are Rs 300 per gram or 12 per cent. GST has been kept out of the calculations.
- If the price of gold is 50,000 rupees per 10 grams
When making the charges they are a flat rate per gram
Gold jewelry cost: Rs 5,000 per gram X 15 grams = Rs 75,000
Making loads: 15 grams X 300 rupees per gram = 4,500 rupees
Total cost = 79,500 rupees
When the charges are in percentage
Gold jewelry cost: Rs 5,000 per gram X 15 grams = Rs 75,000
Make charges: 12 percent of Rs 75,000 = Rs 9000
Total cost = 84,000 rupees
Difference in cost: Rs 4,500 (Rs 84,000 – Rs 79,500)
- If the price of gold is Rs 30,000 per 10 grams
When making the charges they are a flat rate per gram
Gold jewelry cost: Rs 3,000 per gram X 15 grams = Rs 45,000
Making loads: 15 grams X 300 = Rs 4,500
Total cost = 49,500 rupees
When the charges are in percentage
Gold jewelry cost: Rs 3,000 per gram X 15 grams = Rs 45,000
Make charges: 12 percent of Rs 45,000 = Rs 5,400
Total = 50,400 rupees
Difference in cost: Rs 900 (Rs 50,400 – Rs 49,500)
- If the price of gold is 25,000 rupees per 10 grams
When the loads are in per gram
Gold jewelry cost: Rs 2500 per gram X 15 grams = Rs 37,500
Making loads: 15 grams X 300 = Rs 4,500
Total cost = 42,000 rupees
When the charges are in percentage
Gold jewelry cost: Rs 2500 per gram X 15 grams = Rs 37,500
Make charges: 12 percent of Rs 37,500 = Rs 4,500
Total = 42,000 rupees
Difference in cost: Rs 0 (Rs 42,000 – Rs 42,000)
From the above calculations, as gold prices rise, you will save more if manufacturing charges are charged as a flat fee rather than a percentage. However, as gold prices begin to decline from Rs 50,000 per 10 gram level to Rs 25,000 per 10 gram level, the difference between charging as a flat fee and the percentage drops to zero.
Other things to remember
Aside from the type of manufacturing expenses applied to gold jewelry, one must remember that gold jewelry manufacturing expenses also depend on the design of the jewelry. Charging for jewelry depends on several factors. One of the main factors is the design. Generally, a thin and intricate design will have more waste compared to a simple design. Therefore, the more delicate and intricate the design of gold jewelry, the higher the manufacturing burdens.
Another factor is whether the jewelry is handmade or machine-made. Handmade jewelry is likely to be more expensive than machine-made jewelry.
So the manufacturing costs for a gold jeweler can start at, say, Rs 149 per gram, but the design selected by you is charged at Rs 250 per gram. In such a case, your savings by paying a flat rate instead of a percentage may not be very substantial due to the higher charges for doing at a flat rate.
Consider the example above where gold prices are assumed to be at Rs 50,000 per 10 grams and the cost of gold jewelry is Rs 75,000 (Rs 5000 per gram X 15 grams). If the manufacturing costs are Rs 300 per gram, the total manufacturing costs will be Rs 4,500, but if the manufacturing costs applied to your gold jewelry selected by you are Rs 500 per gram, the manufacturing costs totals will be 7,500 rupees.
Therefore, the total cost of gold jewelry will not be Rs 79,500 (Rs 75,000 plus Rs 4,500) but Rs 82,500 (Rs 75,000 plus Rs 7,500). However, it is still less than the cost of jewelry when percentage manufacturing charges are applied in the above example, ie Rs 84,000. (excluding GST at 3 percent).
However, keep in mind that if the percentage of charges is very low, percentage-based charges may be cheaper than a high flat rate. The point being made here is that a buyer should be aware that jewelry manufacturing percentage charges increase enormously with a sharp jump in the price of gold that is currently happening. Due to the new coronavirus pandemic and other factors, gold prices have soared by 34 percent since the last Dhanteras, according to data compiled by the Economic Times Intelligence Group (ETIG). Such a sharp jump in gold prices is not normal, which is why there is both a fixed rate and a percentage levy on manufacturing charges.
conclusion
Please note that reputable brands or local jewelers may change the charge type or increase the flat / flat or percentage rates they charge at any time. Therefore, when you visit the jeweler you should not only ask him the current price of gold, but also the type of manufacturing expenses that apply to gold jewelry.
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