How to Start a Jewelry Store

Part 1 - How to start a Jewelry Store business - Background

Entrepreneurs who enter this industry are usually passionate about metalworking and gemstones and have a good eye for value. Jewelry businesses usually specialize in the fabrication and sale of unique jewelry pieces. They also resell estate or secondhand pieces. Some jewelers will also accept pieces on consignment.

Our guide is in 3 parts:

• Part 1 - How to start a Jewelry Store business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a jewelry store?

A small jewelry store can be started for as little as $20,000. However, depending on your location, it might cost up to $100,000 to get started.

A typical breakdown of expenses might look like this:

• Rent: $0 (if you start your business out of your home); $1,000 per month for a small storefront; up to $10,000 per month for a larger storefront, depending on location.

• Overhead and raw materials: $500 for basic raw materials to make low-end jewelry; $10,000+ for precious metals and gemstones.

• Insurance: $500 – $1,000 per year.

• Basic tools: $200 – $300

As your business grows, you will want to add more tools to your tool set, including grinders, a professional workbench, various gemological tools, hammers and mallets, laser welders, loupes and magnifiers, metal forming tools, gauges and scales, molds and casts, engraving tools, beading supplies and beaders, burs and drills, adhesives and various specialty compounds, polishers, and safety equipment.

Costs vary, of course, depending on the size and scope of your operation. However, a full tool set may add several thousand dollars to the overhead cost.

To reduce the overhead cost, consider bootstrapping your business.

For example, instead of taking on large loans, consider borrowing money from a retirement account, cash value life insurance policy, your own savings, or from a friend or family member. Grow the business slowly over time as finances allow.

What are the ongoing expenses for a jewelry store?

Ongoing expenses for a jeweler vary based on the size of the operation.

A jeweler may have to pay rent, supply costs, and labor for a small to medium-sized operation. Larger operations usually cost more to run.

A typical breakdown of costs may look something like this:

• Rent for building: $3,000 – $10,000, depending on location

• COGS: Precious metals spot price + spread + gemstone = $3,000 – $50,000+

• Labor cost: $25,000 – $50,000+ per employee

• Insurance: $1 – $2 per $100 of merchandise

Who is the target market?

Ideal customers are those shopping for an engagement or wedding ring. Alternatively, those who are interested in and can afford luxury jewelry or custom pieces are also ideal customers.

How does a jewelry store make money?

A jewelry business makes money by fabricating and selling jewelry. Customers typically pay a set price for the piece which is based on the cost of metal, gemstones, labor for fabrication, and jeweler’s markup.

How much can you charge customers?

Jewelers have their own language when it comes to pricing their product, called “keystone pricing.” This means wholesale pricing times 2. In other words, traditional jewelers will mark up pieces 100%. A piece purchased for $100 should be sold for $200, minimum. However, it’s not uncommon for rare items to be marked up 300% or more, which is called “triple keystone pricing.”

With smaller jewelers, cash or credit is the standard method of payment. For larger retailers, in-house special financing is often arranged for more expensive pieces.

How much profit can a jewelry store make?

According to the Bureau of Labor Statistics, a precious metals worker makes just under $40,000 per year. If a jeweler is an owner-operator, he may make this much net of costs. A successful owner-operator could earn more, however, depending on location and size of the operation.

How can you make your business more profitable?

Growing your business is the key to more money in the jewelry business. Prices for metals are determined by the commodities markets and gemstone pricing is determined by distributors. Therefore, jewelry store owners need to focus on business expansion.

Some ideas include:

• Selling over the Internet through popular online marketplaces (markets like etsy, ebay etc.)

• Selling through local markets, farmers markets, mall kiosk/pop-up shop, or other temporary locations

Day-to-Day and Growth

What happens during a typical day at a jewelry store?

Business owners typically work late hours and spend a lot of time creating jewelry, taking inventory, and managing supplies.

What are some skills and experiences that will help you build a successful jewelry store?

Being a jeweler is a trade, so most entrepreneurs who get into this business already have experience in the industry. However, that doesn’t mean an outsider cannot start a jewelry store. Experience in metalworking, sales, gemstone cutting and analysis, and accounting is strongly recommended.

What is the growth potential for a jewelry store?

Being a jeweler is a low-overhead business. You can run it out of a home or garage or rent a small office or building. Small jewelers are usually owner-operated and focus on custom jewelry and pieces for the general public. Large retailers may or may not do many custom pieces and often focus on mass-market appeal.

How and when to build a team

If you already have training in metalwork and gemology, then you probably don’t need to hire help outside of an accountant and other support staff. However, if you’re a first-generation jewelry store owner, at minimum you need staff with gemological training and experience working with, buying, and selling precious metals.

Part 2 - Is a Jewelry Store business the right fit for you?

Part 3 - Action plan to launch your Jewelry Store business in 90 days