Pricing for stone removal?

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MGH

Well-known member
Joined
Sep 28, 2012
Messages
252
Location
Nebraska, USA
Hi all,

I’m wondering if someone could provide examples of what/how a refinery charges for stone removal from jewelry. I’ve been doing a little bit of this work for two different local customers. One of them told me initially that when they send it out, the refinery charges 1% of the gold content as the stone removal fee and also requires that the customer sell the gold to them (at what rate I don’t know). Of course the customer has to pay for shipping (both ways to get the stones back) and they lose a little more on the sale of the gold. I’ve been doing the service on small lots (about one ounce of recovered gold at a time) and I assume I charge a little more than what they would end up paying in total at the third party, but both customers seem happy to keep it local and get their physical metal back (I assume they get a better rate on selling their gold elsewhere).

Doing infrequent small lots one at a time, the work I do would not be at all sustainable as a business. But I value the experience and the contacts I have through these couple of customers. There are also at least some synergies as I can work on stone removal at the same time as my personal refining.

The main reason I ask about rates at other refineries is that I may have the opportunity to work on 1 – 2 pounds of breakout material for yet another customer. I found Dan’s comments in this thread that are in line with what one customer told me already. http://goldrefiningforum.com/~goldrefi/phpBB3/viewtopic.php?f=39&t=13033#p151641
Just wanting to make sure this is a typical rate. I want to be competitive in pricing, but I’m not sure I’d be willing to go much lower than my current rates. Anybody have any experience they can share on how this service is priced elsewhere?

Thanks,
Matt
 
Really, with stone removal it comes down to if you get them all of their gold due and don't lose it all over like most refiners do. This means careful washing of the silver chloride.

Lou
 
Thanks Lou. I suspect that may be another reason these customers choose to come to me. So far my return on the metal content has been on par with other mixed karat lots. With just a little bit of experience so far, I can see how easy it would be to loose quite a bit of gold to the silver chloride. I certainly try to keep it to a minimum. This is one good point I’ll be sure to remember to sell myself on assuming I’ll get an opportunity with this third customer.

Well gee, right after I wrote the above paragraph, this customer called to essentially set up a time to meet and hand over his material. Didn’t even ask for a better rate 8) . Thank you, Lou for the timely reminder on the silver chloride, and to everyone else on the forum for the collective knowledge!
 
Most refiners have a minimum lot fee so if the charge of 1 or 2 % doesn't add up to the minimum they always make the minimum. No refiner (commercially at least) is going to refine a 1 ounce lot for 1%. Think about it, a 1 ounce lot of plumb 14 karat will contain about 18.1 grams of gold. 1% of that is .18 grams or about $6.50. Usually in the big cities the minimum lot charges for up to a half kilo (which can conveniently be processed in a 4 liter beaker) is at least $150. Then there are incoming fee's per ounce in and outgoing fee's per ounce out. They get their fee's one way or another.

The minimum fee is likely the little detail the jeweler left out.
 
That's another very good point. Thanks 4metals. Looks like I'm willing to do smaller batches than most refineries. I have set up a minimum lot size of one ounce of recovered gold - same fee for everything up to one ounce of recovered gold, then a sliding scale beyond that. I'll just say that I am doing this work for something more than $6.50 per ounce 8). This may be a smaller minimum than most refiners will touch, and may be another reason these local customers choose to go with me. They have mentioned they like/need to turn things around quickly, which for them means smaller lot sizes.
 
I charge 10% for Karat without stones and add $20 if they want the stones back. If you send me more that 5 oz then that drops to 8% with no added charges for any stones returned. If you sent me 1 oz and i charge 10% that would only be 3.1 grams or about $108 + the $20 fee = $128. Much less then the usual min $150 lot charges and the other hidden fees 4metals mentioned. They use all them fees and numbers to confuse people. That's why i just add fees into my percentages and let it roll. Never had a complaint yet!
 
Pricing your work is kind of like doing a Mexican Hat Dance, you want to make a profit and not price yourself out of work either. The reason for minimum lot charges is you will get customers sending in 10 pennyweight lots. With a minimum that doesn't happen. On the other hand (or the other side of the Mexican Hat) if you work solely off percentage you can price yourself out of nice sized lots quickly.

For example, at 8% a kilo of 14 karat plumb scrap will cost your customer $1650 to have refined. You have priced yourself out of that work. But if you have a minimum lot fee, say $125, and a 2% accountability charge, that same kilo would cost your customer $416, since that exceeds the minimum the minimum is met and that's the charge. The minimum charge drops away around 10 ounces for 14 karat material. Ironically, as time is your greatest expense, it doesn't take much longer to process a kilo than 10 ounces. Plus your customers realize that they get lower cost per ounce as the lot size increases and 10 ounces incoming and over get the most favorable pricing.

In my mind, a reasonable minimum lot fee and a percentage accountability like 2% can be a nice price point in all but the big cities. That is for karat, sweeps are a different game, still have a minimum but the percentage is higher. The most important thing is good service and honest returns. So many small jewelers have been burned by big refiners that proven honesty will move you high up on the preferred refiners list.
 
4metals said:
The most important thing is good service and honest returns. So many small jewelers have been burned by big refiners that proven honesty will move you high up on the preferred refiners list.

Exactly!
Number one rule.
Sell yourself, not your pricing or your business! I don't care what your prices are if people don't like or trust you then your business model won't work no matter what. At least in this business anyways.
 
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