Understanding
Jewelry Store Markups

© by Eugenia Bivines; all rights reserved

The #2 trade secret that jewelry stores don't want you to know is that their average retail markup is 100% and higher. Actually, this information is available if you dig through the SEC filing for public jewelry companies.

But why is the markup so high on jewelry?

The main reason is that there are lots of costs associated in selling jewelry.

For example, each store has to pay rent, pay commissions, pay its sales staff, pay for advertising, and hold its own inventory. And because most jewelry retailers do not sell in high volume, their profit for each item must be high in order to stay in business.

Another reason some jewelry retailers mark up the price so high is that they believe a higher price tag increases its perceived value.

How can jewelry stores that have 50% discounts still stay in business?

Have you ever seen small silver trinkets at jewelry stores selling for over$100? The mark-up can be as high as a few hundred percent. But a high price tag at a jewelry store does not necessarily reflect the item's true value.

Have you ever noticed that some stores always have a 40% sale sign, especially around holidays? You should watch out for these stores because they always inflate the price and then give you a big discount so you feel like you're getting a great deal.

So how do you find a good price?

The best thing to do is comparison shop on the internet. After comparison-shopping at least three internet jewelers, you will get a good idea of the lowest price you can find. Even if you don't feel comfortable buying jewelry on the internet, you can use your research to negotiate a better price at the jewelry store.

Almost all brick-and-mortar jewelry stores negotiate on price. Remember, most retailers mark up their jewelry at minimum 100%, so if you are ready to purchase, they will definitely negotiate on price to make the sale. Just tell them the price you found online for the exact same item. You will probably not be able to get as low of a price as on the internet, but if you want to see and touch the jewelry and talk to a salesperson, the higher price may be worth it.

Why is jewelry so much cheaper on the internet?

The nation's largest jewelry chains have more than 2500 stores nationwide. Multiply 2500 stores by the cost of rent, salespersons' commissions, advertising, and the cost of holding inventory. That's a huge expense.

In comparison, most of the largest internet jewelers are direct importers orwholesalers. This means they supply anywhere from hundreds to thousands of retailers in volume.

And an online jeweler only needs one distribution center to serve the entireUnited States, with few salespersons. These cost savings result in lower prices for the consumer.

Secret #2 Summary:

• Average jewelry store retailer markup is 100% and higher.
  
• High price tag doesn't always reflect true value.
  
• Most prices at jewelry stores are negotiable.

You may also be interested in Eugenia's previous article, What Jewelry Stores Don't Want You to Know about Their Pricing.

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