FAIR PRICE GUARANTEE
Fair Price Policy
How do you know you’re paying a fair price for the gold jewellery that you buy? It’s a trickier subject than you might think. Unlike gold bullion, the price of gold jewellery doesn’t solely depend on the quantity of gold that it contains. It also relates to the quality of craftsmanship, the brand, and, to a lesser degree, the techniques involved in creating it.
Naturally, when most consumers consider buying an item of gold jewellery, it is primarily their emotions driving their purchasing decisions. They fall in love with the elegance of the item, what it represents, or its sentimental value. They attach great weight to its outward appearance without considering whether they’re getting a good deal.
While there is nothing wrong with this approach, it can potentially mean that you end up paying too much for gold jewellery items. You think you’re getting a good deal because you love the jewellery so much, but when you compare it to what you could have bought for your rupees, you realise you could have done better.
For this reason, it’s essential to choose a jeweller that offers a fair price policy, such as Vernive. These policies protect you against paying too much for gold jewellery and let you compare the price you’re being quoted to the market price.
How jewellers determine a fair price
To create a fair price policy, jewellers need methods to determine the fair price for gold jewellery they sell. Fortunately, you can boil these down to a simple formula. The amount you should pay for a piece of gold jewellery is proportional to the gram price of gold multiplied by the quantity of gold, plus a charge for the value of the craftsmanship that goes into making the jewellery, plus goods and services tax (GST).
You can express this more concisely as:
Price per gram of gold x quantity of gold (in grams) + charge for crafting the gold jewellery + GST = price of jewellery
The purpose of this equation is to fix all of the variables, except the charge for crafting the gold jewellery. This way, consumers can see how much the crafting price is impacting the price that they pay.
For example, suppose that you purchase a piece of gold jewellery weighing 30 grams for 165,000 rupees. If the gram price of gold is 4000 rupees, then the total price of the gold is 120,000 rupees. This implies a 30,000 rupee fee for craftsmanship, plus 15,000 rupees GST charged at 3 per cent on the 150,000 pre-tax total.
Whenever you buy a piece of gold jewellery, you should check gold’s live spot price on Indian markets. You can then use this information in combination with the weight of gold in the jewellery to calculate how much extra the jeweller is chainring you.
What are making charges?
Making charges refer to the cost of craftsmanship of the gold jewellery in question. These involve costs associated with designing and producing any item that you buy. Put simply, it is all of the costs (including labour) of taking a raw piece of gold and transforming it into rings, brooches, necklaces, bracelets, or any other accessory.
As you might expect, the more intricate the design, the higher the making charge. Thus, the greater the artistry involved, the more you will pay.
The amount you’ll pay will also vary according to brand. Less established jewellers are not able to charge as much for their items as the leading brands. Mass market gold chains, for instance, should have a lower markup than those that are bespoke designed by a reputable jewellery company.
During the manufacturing of jewellery, there is also gold wastage. Off-cuts represent a cost to jewellers so they often include this in their making charges as well. Again, the more wastage the jewellery embodies, the more you’ll pay. For instance, pieces with stone embellishments tend to have more wastage than those that don’t.
Fortunately, technology is improving and this is becoming less problematic. However, you should expect to pay anywhere between 5 and 7 per cent extra for gold on pieces that contain jewels.
Fair price policies when buying online or offline
If you’re buying gold in India, you should always check for a fair price policy, whether you’re buying online or in-store. These ensure that you’re paying the right amount for any piece of gold jewellery that you buy.
Reputable sellers will always quote the weight of gold in the piece, allowing you to check the markup. Always make sure that you buy gold jewellery hallmarked by the BIS to ensure its traceability, quality and purity.