Do you want to know how much money jewelers make yearly? If YES, here are 8 factors that determine the income & profit margin for jewelry retail shops. Whenever any entrepreneur wants to start a new business, one of the first questions that they usually ask or rather one of the first info that they try to get is how profitable the business is or how much they are likely to make on the average daily, weekly or yearly from the business.
This narrative also applies to entrepreneurs who are looking towards opening a jewelry business. They would want to know how much they are likely going to make from their jewelry shop. There is no one-mold-fits-all when it comes to how much a jewelry retail shop is expected to make. There are some factors that we are going to look into before giving you an estimate of how much an average jewelry retail shop makes and these factors are;
8 Factors That Determine How Much Money Do Jewelry Shops Make Yearly
1. The Size of the Jewelry Retail Shop
One cannot conveniently state the amount a jewelry retail shop is expected to make yearly if you do not know the size of the shop. The amount a small road-side or mobile jewelry shop is expected to make annually will be far different from the amount a standard jewelry shop franchise with several outlets will make annually even if they operate in same location.
Which is why brands such as Carter Jewelers, Pandora, Apricot Lane Boutiques, Style Encore® and Fire CZ Jewelry Collection et al that are selling franchise are making millions of dollars annually. Of course, the amount invested in a small road side jewelry retail shop is different from the amount invested in a large jewelry retail shop hence the amount they will both make will be different.
2. The Location of the Jewelry Shop
When it comes to setting up a jewelry retail shop, location plays a major role which is why feasibility studies and market survey are essential before settling for a location. Usually, if your jewelry retail shop is located in an area with good human and vehicular traffic, and you stocked your shop with quality jewelry from different brands, you may not have to struggle to get people to visit your shop and make purchase.
Please note that the amount a jewelry shop located in a low traffic area will make yearly will be far lower when compared to the amount a jewelry retail shop that is located in a high – traffic area in a cosmopolitan city will make. Please note that you are going to be paying more to rent a store in a high – traffic area as against the rent you are expected to pay in a low-traffic area.
3. The Types and Brands of Jewelries Retailed in the Shop
Another important factor that will determine how much a jewelry retail shop is expected to make yearly is the type and brand of jewelry they retail. Ideally, a world class jewelry store will attract influential people and they will retail any jewelry from solid sterling silver plated in 18K Gold or Rhodium to prestige of fine diamond jewelry to elegant and luxurious jewelry accessories inspired by high-end fashion trends around the world.
Some of these jewelries cost several thousands of dollars and some are even in the million-dollar range and the profit markups from such are usually very high because of the risk involved in trading them.
4. Other Related Products and Services Offered by the Store
Aside from retailing a wide range of jewelries and accessories, also offering other complimentary services such as repair, sizing, polishing and battery replacement, rental services and resell of refurbished merchandise and parts will position the jewelry store to earn more money and higher profit margin.
5. The Management Style of the Jewelry Retail Shop
Another key factor that will determine the amount a jewelry shop is expected to make yearly is the management style of the shop. Trust me, the results you will get when you have a good manager will be far greater than what an average or bad manager will get; definitely their results will be obvious and different, even if you give the managers same conditions to work and same products to retail.
6. The Business Model of the Jewelry Retail Shop
There are different Business models that a jewelry retail shop can adopt and these business model offers different results. For example, the amount a jewelry retail shop that also runs a online store will make yearly will be different from the amount a strictly brick and mortal jewelry shop will make yearly.
The amount a jewelry retail shop that also sells franchise will make yearly will be far different from the amount a one location walk-in jewelry shop will make. This goes to show that the amount a jewelry retail shop will make yearly is dependent on the business model of the shop.
7. The Advertising and Marketing Strategies Adopted by the Jewelry Shop
Another key factor that will determine the amount a jewelry retail shop can make yearly is the advertising and marketing strategies adopted by the shop. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings.
The results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a jewelry retail shop that is engaging in aggressive advertising and marketing to make same amount yearly with a jewelry retail shop that is passive with its advertising.
8. The Number of Years the Business is in Existence
Lastly, another key factor that will determine the amount a jewelry retail shop is expected to make on a yearly basis is the number of years the business is in existence. In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is properly managed. This is because you would have over the years won loyal customers.
For example in your first fiscal year (FY1) you might make two hundred and fifty thousand dollars ($250,000), in your second fiscal year (FY2) you might make seven hundred and fifty thousand dollars ($750,000) and in your third fiscal year (FY3) you might make one million, five hundred thousand dollars ($1,500,000). Interestingly, most businesses including jewelry shops usually break even from the third year of operation.
Estimated Profit Margin for a Jewelry Retail Shop
Please note that in the United States of America, manufacturers usually mark up their gross margin as big as 100 percent to recover their expenses made on polishing the diamonds. In this way, they make a net profit of 30 percent to 40 percent. Then, the broker passes on the diamonds to retail stores with an average profit margin of 20 percent.
For example, retail jewelers mark – up diamond wedding rings by an average of 300 percent up to an unbelievable 1000 percent. The estimates on markups are broad, but most of the reliable sources we’ve seen indicate that 300 percent is the usual markup. Which is why some people pay up to $10,000 for a diamond ring that was bought for $1,000.
Have it in mind that currently, the typical jeweler is only making 42 to 47 percent gross profit margin after all the over heads and operational cost has been deducted. If you make 50 percent, big deal, 3 more points. In essence, the profit margin from a jewelry shop is between 42 to 47 percent and it includes all the factors involved in getting the jewelry to the shelf.
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