Metal Waste and Recycling: Calculate True Material Costs and Recover Scrap Value
Making a 4-gram ring from an 8-gram piece of gold isn't a 50% loss—you can sell the 4 grams of scrap to a refiner and recover 10-30% of your material cost. This guide teaches you to track waste, calculate true costs, and turn scrap into profit.
Understanding Metal Waste in Jewelry
Jewelry makers lose metal in three ways:
Saw Cuts (Filings)
When you cut a blank from a sheet, you generate waste. A 2mm saw blade removes 2mm of material from each cut.
Typical waste: 5-15% of the starting material
Filing and Shaping
Hand-finishing (files, sandpaper) removes surface layers. The dust and filings contain precious metal.
Typical waste: 3-8% of the shaped piece
Failed Pieces and Revisions
Broken castings, failed solders, pieces you redo for quality reasons. These go straight to scrap.
Typical waste: 2-5% of production
Total typical waste: 10-28% of starting metal. Don't ignore this—that's money sitting on your workbench.
How Much Scrap Are You Actually Creating?
Track your waste for one month to establish a baseline:
Step 1: Weigh Starting Material
At the beginning of each day (or week), weigh all metal you'll use—sheets, blanks, ingots. Record weight and type (14K gold, sterling silver, etc.)
Step 2: Weigh Finished Pieces
After production, weigh all finished jewelry. Record total weight and number of pieces.
Step 3: Separate Scrap
Collect all filings, dust, failed pieces, and store by metal type (14K gold scrap, sterling scrap, etc.). Weigh at month-end.
Step 4: Calculate Waste Percentage
Waste % = (Scrap Weight / Starting Weight) × 100
Example: Started with 200g 14K gold. Made 150g of finished rings. Collected 30g scrap. Waste = (30 / 200) × 100 = 15%
Once you know your waste %, build it into pricing. If you waste 15% of material, your actual material cost is 15% higher than the finished piece weight.
Revised Material Cost Calculation
Here's how waste changes your pricing:
Before: Ignoring Waste
Ring weight (finished): 4 grams 14K gold
Gold price: $64.30/gram
Material cost: 4g × $64.30 = $257.20
You think material cost is $257.20
After: Accounting for 15% Waste
Ring weight (finished): 4 grams
Waste factor: 15% = 4g ÷ 0.85 = 4.71g of starting material needed
Material cost: 4.71g × $64.30 = $302.81
True material cost is $302.81 (17% higher!)
This is why hallmarks matter: a $302.81 material cost needs to be in your pricing formula, not $257.20.
Recovering Scrap Value
Once you've tracked waste, the next step is recovery. You can sell scrap to precious metal refiners:
How Refiners Pay for Scrap
Refiners test your scrap to verify metal type and purity, then pay based on current spot price minus a refining fee (8-12%).
Example: You submit 30g of 14K gold scrap. Refiner assays it as 17.4g of pure gold (58.3% purity). At $2,000/troy oz: 17.4g ÷ 31.1 = 0.56 troy oz × $2,000 = $1,120. Refiner takes 10% ($112) fee. You receive $1,008.
Finding a Refiner
Look for certified precious metal refiners (check Better Business Bureau, ICTA certification). Refiners in major jewelry hubs (New York, Los Angeles, Bangkok) typically offer better rates than online services.
When to Refine
Accumulate scrap for 2-3 months before refining. Smaller lots have higher refining fees per gram. Batching saves you 2-3% in fees.
The Financial Impact
Let's calculate the true impact on your business:
Monthly Scrap Recovery Example
Scenario: You make 50 rings/month at 4g each = 200g finished gold
Starting material: 200g ÷ 0.85 = 235g (accounting for 15% waste)
Scrap collected: 235g - 200g = 35g of 14K gold
Pure gold in scrap: 35g × 0.583 = 20.4g
Scrap value: (20.4g ÷ 31.1) × $2,000 = $1,311
Refiner fee (10%): -$131
Monthly recovery: $1,180 or $23.60 per ring
At 50 rings/month, scrap recovery is $1,180/month or $14,160/year. That's a significant addition to your margin. Most makers completely ignore this revenue stream.
Key Takeaways
✓ Track metal waste for one month to establish a baseline (typically 10-28%)
✓ Account for waste in your material cost formula—multiply finished weight by waste factor
✓ Accumulate scrap by metal type for 2-3 months before refining to maximize recovery
✓ Recover 85-92% of scrap value (minus refining fees) through certified refiners
✓ At volume (50 pieces/month), scrap recovery adds $1,000+/month to profits
Turn Scrap Into Profit
TrueCraft tracks waste reduction and scrap recovery to maximize your material margins.
Start Your Free Trial