How do jewellers set their prices? What’s a fair mark-up? Who regulates pricing? Or is it purely subjective?
Picture the scene: a couple goes to a shopping centre over the festive season; the man decides he wants to get engaged and they start looking in jewellery shops. In one, they find a ring they like selling for R40 000 and the salesperson says her “best price” is R25 000. Bargain, right? They buy the ring for cash, receive an evaluation certificate that it’s valued at R39 000 and everyone’s happy.
Then, while visiting friends, the happy couple show off the ring - only for the man to be pulled aside and told gently, “you’ve been ripped off”.
Shocked, the friend doesn’t want to ruin a lovely evening and only mentions it to his fiancée once they get home. Another friend tells the distraught couple to see his brother-in-law, who’s a manufacturing jeweller.
He examines the ring and tells them the cost of the material was no more than R3 000 and he couldn’t value it at more than R6 000. The couple see a few more jewellers, telling them they want to sell the ring, but nobody offers them more than R3 500.
They contact the Jewellery Council of SA and are told the jeweller is not a member so they have no jurisdiction.
What they want to know is whether it is legal to mark-up a ring by that amount? “This seems to be outright theft and fraud,” they believe, saying as laymen they don’t know the value of the ring and relied on the honesty of the jeweller.
“The jeweller said they don’t accept returns or make refunds. This would seem to be contrary to the Consumer Protection Act.”
Without sight of the ring - or the valuation certificate - it’s impossible to make a call on whether the couple were ripped off. But that’s not to say the jeweller acted unethically or illegally. Two leading jewellers, Vassiliki Konstandakellis and John Skotnes, say without an image of the ring and the size of the diamond(s) and the weight and caratage of the gold, it is impossible to verify the notion that its material worth was only worth R3 500.
Skotnes, a goldsmith and sculptor who started the jewellery design department at Cape Peninsula University of Technology (CPUT), says the gold alone could come to more than R3 000 if the ring weighed 6g.
“Take into account the gold loss in the making of the ring, plus a small mark-up one could be looking at R700 a gram. It seems unlikely that the diamond(s)) would be worth less than the gold.
"Last month, we valued a 12pt diamond of reasonable clarity at R2 000.
There are guidelines that would indicate a material cost though.
Skotnes says there are many inputs and processes which are part of a manufacturing chain.
“The reputation of the designer, design and complexity of manufacture, method of manufacture and where it’s manufactured. The cost of labour and technology, time, etc. Is it bespoke, or part of a serial production chain? Profit is added to the cost of manufacturing.”
Skotnes says the brand and reputation of the jewellery store has its own currency: the same ring sold at a flea market or in a Tiffany & Co chain would be valued differently. The location of the store can add a cost. “I actually understand how powerless a consumer can feel when purchasing a piece of jewellery, simply because one has to trust the jeweller that at least the material costs are reasonable.
"However, that is a small part of the value. Jewellery valuation is very much a specialised skill. But the value of design is hard to quantify.
“The consumer understands that the material cost of a designer T-shirt and one from Pep Stores can have a value that differentiates by thousands of rand, but struggles with jewellery. That doesn’t make jewellery a rip-off.”
He adds that he’s only sold jewellery he’s made with a life-time guarantee, given normal wear and tear.
“That comes at a cost. I also have my own hallmark which adds value to the design. I can’t offer a legal opinion on the Consumer Protection Act but on a ‘sale’ maybe there are terms and conditions that can be different from standard practice within the store. I would certainly advise seeking legal opinion to find out if the store is acting contrary to the Act.”
He doesn’t believe jewellers should pronounce so flippantly on value because it’s subjective and disregards its intrinsic value.
“It is so undermining of the value of design and so reduces the value attached by the couple to the symbolic meaning of the piece.”
Konstandakellis, senior lecturer in the jewellery design and manufacture department at CPUT and head of programme, adds that when making any purchase of emotional and financial weight, it’s important to research the fundamental issues attached to such an investment.
“How are diamonds valued, what are the 4Cs (carat weight, cut, colour and clarity) in grading, what is the difference between 9ct, 14ct and 18ct gold, white gold and platinum? What technique is used to set the stones, is there any hallmarking and the significance of it, is the piece comfortable and what are the practical realities of wear and tear?”
She says an artisan has the licence to sell an art piece at whatever cost - and the customer should be equipped to make an informed purchase.
* Georgina Crouth is a consumer watchdog with serious bite. Write to her at [email protected], tweet her @georginacrouth and follow her on Facebook.