Gold Prices Are Dynamic, But Why Are The Making Charges? Consumers Fume
The fluctuation creates a painful financial squeeze for buyers when gold prices climb, and conversely, it compresses jewellers' margins when prices dip.
A growing debate is surfacing among consumers and industry observers over the traditional practice of calculating gold jewellery making charges as a percentage of the metal’s price.
This method has come under fire as it forces consumers to pay significantly more for the artisan's labour when gold prices rise, even though the actual work involved remains constant.
The fluctuation creates a painful financial squeeze for buyers when gold prices climb, and conversely, it compresses jewellers' margins when prices dip, creating an inconsistent cost structure for a fixed service.
The crux of the issue lies in the disconnection between the cost of materials and the cost of labour. The process of transforming a gold ingot into a finished piece, the cutting, shaping, soldering, and polishing, requires a fixed amount of time and skill. The fluctuations in making charges happen, although the makers' work remains the same, despite what the gold price is.
Impact On Consumers And Transparency
When gold prices climb, say from Rs 50,000 to Rs 60,000 per 10 grams, a making charge set at 10% immediately jumps from Rs 5,000 to Rs 6,000. This 20% increase in the service fee is extracted without any change in the artisan's effort or time invested.
This is fundamentally unfair to the consumer, who is paying an inflated labour cost simply because the underlying commodity has appreciated. Consumers had taken it to X to demand greater transparency.
The consensus suggests that the jewelry industry should move towards a flat rate or per-gram basis for making charges, decoupling the artisan's fee from the volatile metal market.
For instance, charging a fixed fee of Rs 500 per gram of 22-carat gold, regardless of the fluctuating gold price, would provide consistency and clarity for buyers.
Industry Stability And Future Pricing
From the industry's perspective, decoupling making charges from metal price volatility would offer more stable margins and simplified cost planning.
The current system creates profit volatility, high percentage margins during price spikes, and strained margins during price dips, even though the true cost of labor is stable. Moving to a fixed fee structure could possibly stabilise the artisan's income and provide jewellers with a predictable gross profit on their labor and design.
