Wholesale and Imported Sterling Silver Jewelry: Top 6 Factors Determining Cost
If you are considering a jewelry business as an importer, wholesaler, or retailer, understanding the costs of that jewelry is critical. Having this knowledge allows you to better evaluate the pieces you buy and avoid being scammed by those offering fake or overpriced jewelry. This article is specifically concerned with the costs associated with creating, distributing and marketing sterling silver jewelry.
Demand Driven Costs
Every year, 650 million ounces of silver are 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 silver was used in photography, while 33% was used in jewelry, 40% in industrial uses, and only 3% in coins and medals. Within these categories, silver is used in a myriad of ways; circuitry in electronics, as antibacterial treatments in medicine, and is 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 reached an all-time high in 1980, when they reached US$49.45 per troy ounce.
precious metal costs
Although less expensive than gold and platinum, pieces of jewelry made from silver still command a high premium on the market. The first cost associated with sterling silver jewelry is the cost of the silver. The current cost per ounce is around US$16.00, having increased considerably in recent years. The base cost of the metal used is often only a fraction of the costs required to create and deliver a piece of jewelry to the end customer.
Extra Material Costs
Silver is often not the only component used in sterling silver jewelry. The addition of Crystals, Pearls, Jade or other stones will increase the final cost of the piece. Many silver pieces also come plated with other, more expensive metals, such as platinum, gold, or rhodium, either to add tarnish resistance or enhance shine.
labor costs
Jewelry pieces are handled by a person at one time or another, often for the most delicate design tasks. Everything from setting the stones and creating the finish is part of the significant processing costs associated with turning a piece of silver into jewelry. Such labor costs are strongly influenced by where the jewelry is made. Thus, in countries with higher labor costs, the production of jewelry is usually more expensive regardless of whether the pieces are of higher quality or better design.
General expenses
Jewelry creation and distribution is a business that incurs costs like any other business. These costs are offset by the profit obtained by selling the product. The jewelry manufacturer sells at a price to cover general business costs such as machinery, personnel, sales, and marketing, as well as to make a profit. This process occurs again in the supply chain when the importer, distributor, or retailer must sell the item at a price where these costs can be recovered and a profit made. The importer will need to factor in shipping costs and customs duties related to bringing the jewelry into the country, while a distributor will need to add the costs of storage and storage of the pieces. The ultimate retailer will often have costs of managing a physical location and advertising to customers.
Marketing and branding costs
A final cost worth separating from standard overhead costs involves the branding and marketing of certain collections. A sterling silver piece from Tiffany’s will cost more than one from Walmart. Such costs are the result of the time and money that the trademark holders have invested in their trademark.