Gold jewellery cost calculation: How jewellers calculate price of gold jewellery
Tue May 07 2024
A gold jewellery can be of different karat and fineness. A customer should enquire about the purity of gold jewellery before buying it.
Gold prices have been touching new highs. The price of 24 karat gold crossed Rs 75,000 per 10 grams to touch a lifetime high. As gold becomes expensive, it is important for buyers to understand how jewellers calculate
the price of gold jewellery. There are many factors that impact the total amount payable by a buyer for a gold jewellery. These include gold price, making charges, price of diamond or other gemstone embedded in the
jewellery.
As Indians have a tradition of buying gold in any form such as jewellery,
coins, etc, especially on auspicious days like Akshaya Tritiya, it is important
to do due diligence before making the payment.
Remember that gold prices vary depending on the jeweller. The gold prices vary
from jeweller to jeweller because the price at which they bought gold
(including cost of refining, cost of transportation, etc) varies.
This is the formula used by jewellers to calculate the final price of gold jewellery:
Final price of the
jewellery = {Price of gold X (Weight in grams)} + Making charges + GST at 3%+ Hallmarking charges
Remember, the price of gold will depend on the karat (KT) bought by you. This
can be 24KT, 22KT, 18KT, 14KT, etc. The price of each of these are different.
The purer the gold, the higher the price. Hence, 24KT gold will be expensive and
14KT will be cheaper.
Also Read: Today's
gold price from Kalyan, Tanishq, Malabar
Jewellers also levy making charges, also called wastage charges by some.
Usually, these are calculated either on a per-gram basis or as a percentage
basis. Some jewellers use a mix of both. They use 1% of the prevailing gold
price and then charge on a per-gram basis. For example, if 22KT gold price is, say, Rs
68,000 per 10 grams, the making charges will be 1% of the prevailing gold
price, per gram. This will be equivalent to Rs 680 per gram. If you buy a gold
chain of 10 grams, then the making charges will be Rs 6,800 (Rs 680 per gram X
10 grams gold chain).
GST is levied on the total cost of gold jewellery (including making charges).
Hallmarking charges are levied as selling of hallmarked gold is mandatory.
Here is an example to understand how gold jewellery calculation is done by a
jeweller: The jeweller lists 22KT gold as Rs 65,000 and the price of 18 KT gold
as Rs 56,000. Both the prices are for per 10 grams. A buyer
buys a 22KT gold chain of 11 grams and a diamond ring having 18KT gold weighing 3.5 grams. The making charges are flat Rs 500 per gram.
As both the jewellery items are of different karats, the calculations will be
done differently.
Calculation of gold chain
price
|
Particulars |
Amount |
|
Price of 11 grams 22KT gold chain* |
Rs 71,500 (Rs 6,500X11 grams) |
|
Making charges for 11 grams gold chain |
Rs 5,500 (Rs 500X11 grams) |
|
Total price of gold chain |
Rs 77,000 (Rs 71,500 + Rs 5,500) |
|
Adding GST @ 3% |
Rs 2,310 (3% of Rs 77,000) |
|
Hallmarking charges |
Rs 45 |
|
Final bill |
Rs 79,355 |
*Price of 10 grams 22 KT gold: Rs 65,000. Hence, Price of 1-gram 22KT gold: Rs 6,500 (Rs 65,000/10)
Calculation of diamond
ring price
|
Particulars |
Amount |
|
Price of 3.5 grams 18KT diamond ring* |
Rs 19,600 (Rs 5,600X3.5 grams) |
|
Making charges for 3.5 grams gold chain |
Rs 1,750 (Rs 500*3.5 grams) |
|
Cost of diamond |
Rs 4,500 |
|
Total price of diamond ring |
Rs 25,850 (Rs 19,600+1,750+4,500) |
|
Adding GST @ 3% |
Rs 776 (3% of Rs 25,850) |
|
Hallmarking charges |
Rs 45 |
|
Final bill |
Rs 26,671 |
*Price of 10 grams 18 KT gold: Rs56,000. Hence, Price of 1-gram 18KT gold: Rs 5,600 (Rs 56,0000/10)
Things to keep in mind
while buying gold jewellery
Diamond/gemstone jewellery
If a customer is buying gold jewellery with diamond or any other gemstone
affixed on it, the gold and the diamond/gemstone must be weighed separately to
calculate the cost. Some unscrupulous jewellers weigh the entire
piece (gold and gemstone together) and calculate a price for it at the cost of the gold.
But when the customer wants to sell or exchange this jewellery for another
piece, only the value of gold will be considered. The stone's weight will be
deducted from the total weight of the jewellery to arrive at the gold's
weight.
Gold jewellery bill
A customer should ensure that the bill issued by the jeweller includes all the information related to the gold jewellery. According to the Bureau of Indian Standards (BIS), "The gold jewellery bill should mention description
of the gold item, net weight of precious metal, purity in carat and fineness of gold item, and hallmarking charges."
If the gold jewellery has diamond or other gemstones, the price of the stone
must reflect in the bill separately.
Purity of gold jewellery
The purity of gold is measured in karat and fineness. A gold jewellery can be
of different karat and fineness, as mentioned above. A customer should enquire
about the purity of gold jewellery before buying it.
24KT is considered too soft to make jewellery. So gold jewellery is usually
available in 22KT, 18KT and 14KT. Some jewellers sell gold jewellery in 20KT as
well. Do remember that as the karat of gold decreases, the gold
value in the jewellery decreases as well. A
22KT gold jewellery will have 91.6% gold. Other metals or alloys such as zinc,
copper or silver are added to the gold to make it stronger and more durable.
A 20KT gold jewellery will have 83.3% gold and the balance will be other
metals. Similarly, 18KT gold jewellery will have only 75% gold. Do remember
that for diamond jewellery, 18KT or
14KT gold is usually used. 22KT
gold is considered too soft to hold diamond.
Hallmarking on gold
jewellery
Ensure that the gold jewellery bought by you has BIS hallmarking signs. The
government made hallmarking mandatory from June 16, 2021. The hallmarking signs
were revised on July 1, 2021. Hallmarked gold should
have 3 signs - BIS logo, purity/fineness grade and a 6-digit unique alphanumeric code (also known as HUID code). From April 1, 2023, a jeweller cannot sell gold jewellery without the HUID code.
Also Read: How to
check purity of gold via BIS app
|
Gold purity in jewellery |
Fineness number |
|
22KT |
22K916 |
|
18KT |
18K750 |
|
14KT |
14K585 |
Source: BIS Website
Exchange policies of
jeweller
It is very common for customers to exchange their old gold jewellery for new
ones. While buying new gold jewellery, it is important to understand the
exchange policies of the jeweller. Some jewellers offer 100% gold value
for exchange but only 90% gold value in lieu of cash.
Further, one should check if there is a resale value for the diamond or
gemstone in the jewellery.
Source: https://economictimes.indiatimes.com/