Maths Behind Gold Jewellery Making Charges: Finfluencer Decodes What Jewellers Don't Tell You

A finfluencer has drawn attention to a key aspect of gold jewellery pricing that many buyers often overlook—percentage-based making charges.

"You’re getting looted while buying gold jewellery, and 99% buyers don’t even realise it. Because no one explained you the actual math behind making charges," Prem Soni wrote on X, highlighting a common misunderstanding among consumers.

Many customers complain that while gold rates fluctuate, making charges seem to remain the same percentage. Soni explains this is not arbitrary. "It feels unfair. But the truth is, percentage making charges exist because wastage is in grams, not in rupees. This changes everything."

According to Soni, every jewellery design involves a certain amount of natural wastage, also known as production loss. For example, a design requiring 100 gm of gold may lose around five gm during the manufacturing process. "Those five gm will be lost whether gold is Rs 50,000 or Rs 1,30,000. The process doesn't change. The loss doesn’t change. The effort doesn't change," Soni wrote.

The value of this wastage changes with gold prices. Soni illustrates this with an example. He says that the cost of gold lost during production varies with the price of gold. For instance, if gold is priced at Rs 50,000 per 10 gm, a five-gram loss would cost Rs 25,000. The same five-gram loss at Rs 1,30,000 per 10 gm would amount to Rs 65,000. The quantity of gold lost remains the same, but its value changes with the market price.

He adds that fixed rupee making charges would not work in a fluctuating market. "If jewellers charged a fixed Rs 5,000 or Rs 10,000 making charge, they would lose money on every piece in high gold price years. This would make the jewellery business impossible to run."

Soni explains that percentage-based charges ensure several things. "Wastage value is covered, skilled artisans are paid consistently, complex designs remain viable to manufacture and price fluctuation in gold doesn’t destroy margins."

He compares it to fuel costs, saying, "Whether petrol is Rs 70 or Rs 120 per litre, your car still consumes the same litres. But the cost goes up because the value went up, not the quantity. Jewellery works exactly the same way."

In short, Soni says, making charges are not an extra profit margin but a necessary cost to account for production loss and maintain fairness in the jewellery industry.