ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How Jewelers Earn Profit?

Updated on June 2, 2013

It's quite a common perception that jewelers make huge money from jewelry sales.

But, as a buyer, many people don't know how jewelers earn profit in today's neck-deep competitive market. Being aware of different earning models of a jeweler, a buyer can do a more informed negotiation, and can get a better deal on jewelry purchase.

Do you know?

Small diamonds are better earners than bigger diamonds, because latter being comparatively more expensive are sold at lesser margin. Read how carat weight affects price of diamond.

How Jewelers Earn Profit?

Primarily, following are the ways through which a jeweler earns profit:

  • Hedging against future price-rise of gold
  • Charging pure gold price for low purity gold
  • Making Charges of jewelry
  • Re-purchase of old jewelry

Hedging Against Future Price Rise

Jewelers usually buy gold and ready-made jewelry, stock those, and then sell at prevailing market price. Now, since the price of gold increases over the period of time, jewelers earn profit by selling at a price higher than the cost price.

Historically, price of gold has always moved in upwards direction over the period of time. There may be some price fluctuations across short span of time, but gold price trends suggest that its price has only gone up over the long period of time.

Charging pure gold price for low purity gold

Many people believe that gold jewelry is made of 24 karat gold, which is not at all correct. Instead, purity of gold used for making jewelry is 20 karat or below. This is because pure gold is not hard enough to be suitable for jewelry, so it's mixed with other metals for increasing its strength.


Always inquire the jeweler about purity of gold used in jewelry, and pay accordingly.

This (purity difference) is where potential of profit lies. While selling, a jeweler may quote price of 24 karat, but would sell low purity gold at 24 karat price.

However, this tactics is not followed by all jewelers, but there are many who will not let go any chance of earning money.

Making Charges of Jewelry


That is why, one must never buy jewelry for "investment purpose". For investment, go for gold bars or gold ETFs.

This is another source of income for any jeweler. Making and polishing charges are added on top of price of gold. Making charges depend on the design of jewelry.

Also, at the time of resale of jewelry, jewelers don't pay making charges to the seller. Reason given by the jeweler is, he will have to re-craft the jewelry, so why should he pay the making charges of existing piece.

Re-purchasing Old Jewelry

In case of re-sale of any jewelry piece, it's the jeweler (from whom the jewelry was purchased) that seller approaches first. Now, this is how the jeweler calculates the buy-back price:

Buy-back Price = (Current market price of gold * weight of gold) - x% of total value


If you don't have special inclination towards any trendy jewelry design, then go for a classic design that has always been in vogue. This will give a better resale value.

This "x% of total value" is nothing but the profit margin of jeweler.

This is because, if the jeweler will sell the same re-sold piece, then he will charge:

(Current market price of gold * weight of gold) + additional polishing charges.

While selling an old piece of jewelry, it's always good to do a proper research before finalizing the deal. One must go for a buyer (jeweler or individual) who is ready to pay the best value.

Finally, the basic knowledge of different earning models of jewelers should help the prospective buyers at the time of jewelry purchase. After all, being aware of jeweler's profit earning tactics, a buyer can do a more informed negotiation with the jeweler and can get a better deal.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: ""

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)