Pricing Sterling Silver Jewelry

 

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Why learn about pricing Sterling Silver?

If you’re considering a business in jewelry as an importer, wholesaler, or retailer, understanding the costs of jewelry you purchase is critical. Having this knowledge allows you to better appraise pieces you purchase and avoid being ripped off by those offering over-priced or fake jewelry.

Costs Drive by Supply and Demand

Every year, 650 million ounces of silver gets mined from countries like Canada, Australia, Mexico, Peru, and the United States, with more coming from scrap recycling and investor trading. In 2001, 24% of the silver was used in photography, while 33% was used in jewelry, 40% for industrial uses, and only 3% for coins and medals. Within these categories, silver is used in a myriad of ways, from circuits for electronics, as anti-bacterial treatments in medicine, and even sprinkled on food as decoration.

As a result of this supply and demand from competing industries, the last century has seen tremendous fluctuations in the price of silver. Prices saw an all-time high in 1980, when it reached $49.45 U.S. dollars per Troy ounce, dropping to $4.15 per ounce in 2001. Recently, prices have steadily risen to about $15.00 per ounce as of late 2007, a result of growing demand and dwindling supply for silver worldwide.

Cost of Silver

While less expensive than gold and platinum, jewelry pieces made from silver still sell for a high premium on the market. The first cost associated with sterling silver jewelry is the cost of silver. The current cost per ounce is around $15.00 U.S. dollars, having risen sharply in the past few years. The base cost of the metal used is usually only a fraction of the costs that go into creating and delivery a piece of jewelry to the end customer.

Costs of Extra Material

Often silver is not the only component used in Sterling Silver Jewelry. The addition of added decorations such as Crystals, Pearls, Jade or other stones will increase the final cost of the piece. Many silver pieces also come coated with other more expensive metals, such as Platinum, Gold, or Rhodium, either to add tarnish resistance or improve shine.

Costs of Labor

Jewelry pieces are handled by a person at one point or another, often for the more delicate tasks of design. Everything from setting the stones and creating the finish are part of the significant processing costs associated with turning a piece of silver into jewelry. Such labor costs are heavily influenced by where the jewelry is made. Thus, in countries with higher labor costs, jewelry production is usually more expensive regardless of whether the pieces are of higher quality or better design.

Business Overhead Costs

The creation of jewelry and its distribution is a business that incurs costs like any other business. These costs are offset by the profit made selling the product. The jewelry maker sells at a price to cover the costs of business overhead, such as machinery, staff, sales, and marketing, as well as make a profit. This process occurs again down the supply chain when the importer, distributor, or retailer must sell the item at a price where these costs can be recouped and a profit made. The importer will have to factor in shipping and customs duty costs involved with getting the jewelry into the country, while a distributor may have to add costs for warehousing and storing the pieces. The final retailer will often have costs of running a brick and mortar location and advertising to customers.

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