A jewellery edition penned by Elizabeth Galton.
By Elizabeth Galton
Aurum creative director of jewellery Elizabeth Galton has penned her first book, Basics Fashion Design 10: Jewellery Design. Read an extract from the book about how to navigate your way into the industry from building lists to making samples.
A supplier and materials database can be built up via trade shows and industry contacts and work placements. Many of the industry’s governing bodies have directories, which a designer can buy or access to source reputable suppliers.
While the bigger manufacturers and Asian suppliers have large minimum order quantities, it is possible to negotiate smaller production runs with local manufacturers. Many Asian suppliers have international agents based in Western markets who can oversee production for designers unable to make regular trips to Asia.
The manufacturing process also employs specialist suppliers or artisans for specialist techniques, and local or European factories will undertake small-batch production runs.
Most major cities have jewellery districts where suppliers are based, such as Hatton Garden in London, Birmingham’s Jewellery Quarter and the Diamond District in New York City located at West 45th to 48th Street between Fifth Avenue and Seventh Avenue, which is one of the primary centres of the global diamond industry.
Designers working for an established brand follow a range plan to ensure that they are designing a piece that meets the commercial requirements of the business. An experienced designer will be aware of the cost of raw materials, target cost price and the margins their designs need to meet. A business will identify the retail pricing of its competitors and what the market will bear, based on sales and past performance.
A new designer can use competitor shops to research competitors at the market level that they wish to target. If there are no competitors, a visit to a high-quality department store or boutique will show you how market-level definitions are defined by retailers. Retailers and department stores may mark up a designer’s wholesale price by up to 300% of the wholesale price. This mark up is referred to as the triple key or triple keystone. Fine jewellery collections can cost a huge amount of money to produce, but this is not a prerequisite to success, and many jewellers enter the market with a small collection of key pieces that can be expanded upon as they grow their stockist and client base.
Retailers make more profit than the designer because they have to cover their staffing costs, advertising and promotion, sales duties, rent and overheads. Unlike some other commercial products, jewellery commands a high margin due to its intrinsic value and the skill involved in producing it.
It is important to be realistic when planning and costing a collection, and it should reflect your chosen market and customer. In order to arrive at a cost price or cost of goods’, a designer calculates the amount of time it takes to make a piece, the cost of all the materials, any outsourced work such as plating and casting, and finally hallmarking. This figure does not include research and development – time spent coming up with a design – since this would make the piece financially unviable; this may be written off (amortised) over time. One-off pieces are always more expensive as their set-up costs cannot be written off over a period and they are often made using intensive methods. Whereas repetitive runs or editions of a design have economies of scale built into their production.
Large-scale production of jewellery involves batch production techniques such as casting, electroforming or stamping, which makes repetition of them faster and more efficient. In order to calculate a wholesale price (the price the designer gives retailers), the designer will add a mark up of up to 100% to the cost price; this is the profit margin. The profit margin is the amount by which revenue from sales exceeds costs in a business before tax.
It is a good exercise to use a similar product made by a competitor as a benchmark for price. Take the retail price and work backwards to see realistically what cost price you will need to try and achieve. Based on this, you can assess whether a product is commercially viable.
The sampling process links the design and manufacture processes, samples are made up either by a model maker, in-house craftsman or factory (depending on the size of a business) to ensure a designer’s vision is carried through to manufacture and then to the shop floor.
The first set of samples may be reworked and sometimes materials are substituted if the cost is too high after the margins are added. The design team will then receive a final set of production samples for sign-off by the wider business and these will then go into production.
This article was taken from the November 2012 issue of Professional Jeweller. To read the issue online, click here.