Rule #4 – Consider carefully how much you can markup certain stones before you buy them

Lower priced gems receive a higher markup than expensive ones. For example, when a jeweler orders a stone for a customer, he may have a set minimum price. It does not matter if the stone costs onehundred euro or two-thousand; a jeweler may feel he needs a minimum of one-hundred euro to justify the labor of ordering the stone.

It may be easier to find 25 buyers for 200 € stones than one for a 5,000 € gem, but it might not be easier to find 5,000 buyers for a ten-euro stone.

As things get more expensive, the markup can get lower. Anyone would gleefully accept a 15% markup on a 30,000 € alexandrite. The diamond market is so competitive, that markups frequently drop below 10%.

Now consider this from an investment point of view. The greater the difference between wholesale and retail, the better your chance is of making a profit (see rule #1). It is also easier to find buyers for lower priced goods. However, you can take this too far. You just have to decide what type of business you want to be in.

 

Rule #5 – Consider whether you can add value in a gem deal.

There are two areas where gems take a substantial jump in price. One is between rough and cut; the other is between loose gems and finished jewelry.

This involves more effort, but is one of the best ways to increase the value of your gems. With an investment of labor, a lapidary can turn low value rough into high value finished gems.

The startegies are to buy your rough at a price that allows enough markup to justify your labor and learning to cut in a reasonable amount of time.  Likewise, an experienced lapidary can re-cut an existing gem and often improve it’s optical properties and therefore it’s desirability.

If you are not a gem cutter, you can have others do the work for you, like us (for example). Again, you need to do your homework, but this is one of the most direct means of adding value to your gems. The creation of jewelry may require less effort, and have the advantage of having a market much wider than that of loose gems, although, starting a jeweler’s business is not easy and immediate.

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