Precious Metal Pricing for Jewelry: How to Price Around Gold, Silver, and Gemstone Costs
Gold prices fluctuate. Gemstone costs vary by quality. If you're pricing jewelry by weight or passing metal costs directly to customers, you're either leaving money on the table or pricing yourself out of the market. This guide teaches you to price precious metals profitably.
The Metal Weight Problem
Jewelry makers face a unique pricing challenge: the raw material cost varies based on market conditions. A ring that costs $80 in gold one month might cost $95 the next. You have three options:
Option 1: Pass All Metal Costs to Customer
How it works: Weigh the finished piece, look up gold price, charge $X per gram + labor markup.
Problem: Prices change daily. Customers get sticker shock. You absorb the risk if gold prices drop after they order.
Option 2: Fixed Markup on Metal + Labor
How it works: Price = (Material Cost × Markup %) + (Labor Hours × Hourly Rate) + Overhead
Problem: If gold doubles, your margin gets squeezed. You either raise prices or absorb the loss.
Option 3: Price on Labor + Design, Reference Metal Baseline (Recommended)
How it works: Price = Labor + Design + Overhead. Metal cost passed at current market rate + small buffer (2-3%).
Benefit: You only absorb market fluctuations within a narrow band. Customers pay current metal prices, not a markup on volatility.
Reality: Successful jewelry makers price the craft, not the commodity. The ring's value comes from your design and execution, not the weight of gold it contains.
Calculating True Metal Cost Per Piece
To price correctly, you need to know the actual metal cost in each piece you make:
Step 1: Know Your Metal Weight Per Piece
Weigh your finished ring, bracelet, or necklace. This is the amount of precious metal you'll sell.
Example: A 14K gold ring weighs 4 grams.
Step 2: Account for Purity and Density
14K gold is 58.3% gold, 41.7% alloy. If you sell by weight, you're charging for the whole piece, but only the gold portion has commodity value.
Example: 4-gram 14K ring = 2.33 grams of actual gold + 1.67 grams of alloy
Step 3: Get Current Spot Prices
Check daily spot prices on sites like Kitco or APMEX. Gold is priced per troy ounce (31.1 grams).
Example: If gold is $2,000 per troy ounce, then 1 gram = $2,000 / 31.1 = $64.30
Step 4: Calculate Material Cost
Material Cost = (Grams of Actual Precious Metal) × (Spot Price per Gram)
Example: 2.33 grams × $64.30 = $149.80 in gold cost
Step 5: Add Your Markup (2-3% Buffer)
Add a small buffer to account for waste (oxidation, tiny filings lost), refining costs if you recycle scrap, and price rounding.
Example: $149.80 × 1.025 (2.5% buffer) = $153.55 metal cost per ring
Pricing Formula: Metal + Labor + Overhead
Once you know the metal cost, add your labor and overhead:
Retail Price = (Metal Cost) + (Labor Hours × $X/hr) + (Overhead Allocation) + (Desired Profit Margin)
Metal Cost: $153.55 (calculated above)
Labor: 2 hours × $40/hr = $80
Overhead (10% of material + labor): ($153.55 + $80) × 0.10 = $23.36
Total Cost: $153.55 + $80 + $23.36 = $256.91
At 40% Markup: $256.91 × 1.40 = $359.67 retail price
This approach decouples your pricing from commodity fluctuations. If gold prices rise, you pass the cost to your next customers. If they fall, you benefit.
Gemstone Pricing Complexity
Gemstones add another layer of complexity. Unlike precious metals with a standardized spot price, gemstone pricing depends on:
Quality grade: Color saturation, clarity, cut, and origin (lab-created vs. natural)
Treatment: Whether the stone is heat-treated, irradiated, or untreated (affects price 2-5x)
Carat weight: Non-linear pricing (2-carat diamond costs 4x more than 1-carat)
Certification: GIA-certified stones cost 15-30% more than uncertified
Strategy: For custom orders, ask customers for stone specifications upfront. Source the stone, add 15-25% markup for your sourcing effort and risk, then price the finished piece.
Key Takeaways
✓ Don't markup precious metals heavily—price the labor and design instead
✓ Calculate actual precious metal content (purity) in each piece, not just total weight
✓ Use current spot prices + 2-3% buffer to absorb waste and refining costs
✓ For gemstones, understand the 4 Cs and build sourcing markup into your pricing
✓ Document metal costs at the time of pricing to justify prices to customers
Price Your Craft, Not the Commodity
TrueCraft tracks precious metal costs and margins by product so you stay profitable regardless of market fluctuations.
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