Jewellery pricing for wholesale and retail

Every price is built on a cost, and the cost of a piece of jewellery is more than its metal and stones. Each piece is costed on its own rather than averaged across a range, because a heavy ring and a fine chain carry very different costs:

• Metal: the weight of the finished piece at the current price, plus what is lost in casting and finishing.
• Stones: their cost, and the cost of setting each one.
• Labour: design and CAD, casting, finishing, setting, plating or engraving.
• Findings and chains: clasps, jump rings, ear posts and backs.
• Hallmarking: assay office charges and carriage, for precious-metal pieces above the exemption weights.
• Packaging and collateral: the box, the pouch and the card that travels with the piece.
• Samples, wastage and a share of the overheads, which a price has to pay for even when no one sees them.

No single formula holds across the trade, but the structure is common. A wholesale price is set at a multiple of cost that leaves the brand its margin, and the retail price at a multiple of wholesale that leaves the retailer theirs. Many retailers mark up by at least double the wholesale price, the arrangement American traders call keystone, and some by more, depending on what they stock and where.

A formula worked only forwards, from cost to retail, can arrive at a price nobody pays. So the price is also worked backwards: start from what comparable pieces sell for where the brand wants to sell, take off the retailer’s margin, and see whether the wholesale price that is left still covers the cost and the brand’s margin. Where it does not, the answer is a lighter design, a different stone or a different channel, decided before launch.

Jewellery is charged VAT at the standard rate, 20 per cent. Prices shown to consumers in the UK must include VAT, while wholesale prices to trade buyers are normally quoted without it, so a line sheet should say which is which. The arithmetic matters: a retailer who doubles a wholesale price and then adds VAT reaches 2.4 times the wholesale price on the ticket.

A brand below the VAT registration threshold (£90,000 of taxable turnover in any 12 months, since April 2024) does not charge VAT, but its retail prices should be set with registration in mind. Crossing the threshold later means either absorbing a sixth of every retail price or raising prices on stockists who have already bought. Metal, stones or findings bought from abroad can also carry import VAT and duty, which belong in the cost.

A cost-based price is only the floor. Pricing by market asks what a piece can be asked for in the particular market and channel it is going to: the shops and their customers, the city or the country, and the pieces it will sit beside. A range is looked at as a range: the entry pieces that open an order, the pieces that carry the margin, and whether the steps between price points make sense to a buyer.

One retail price has to hold everywhere. A brand selling direct online keeps the margin a retailer would have taken, but if it uses that to sell below its own suggested retail price, stockists stop reordering. Marketplaces and concessions take their own commission, which comes out of the same margin.

Gold, silver and platinum are priced daily, and a range costed at one price can lose its margin within a season. Common practice is to review prices at set points, to cost with a margin of safety on the metal, or, for heavier pieces, to agree in the wholesale terms how a large move in the metal price is handled. Whatever the method, each line sheet carries its date, so a buyer can see which prices apply.