Gold has been a tradition in India for decades. Be it for investment, or gifting or buying for oneself, gold is usually the first and the most esteemed choice. Also before buying gold we tend to do our research in order to get the best deal. But still at times we get fooled by the jewellers. We get to hear from a friend or family member how they scored a profitable deal. And that makes us wonder what is it that we missed?
So, here we bring to you not a guide book or tips, but we are unravelling the facts about how your jeweller makes money. Since the jewellers know their customers well, it is time you get to know them even better, so that next time you when you go to buy gold, you can outsmart your jeweller with your wit.
1. The Karat game
K is the short form of ‘KARAT’. It is the unit used to measure the purity of gold. The purest form of gold is 24K and it further decreases depending upon the alloys mixed with it. For instance, 22K, 18K, 16K, 14K etc. represent the purity of gold where in 22K has 91.6% pure gold.
If you’re buying gold jewellery then the highest form of purity generally found is 22K, as the pure 24K is soft and cannot be moulded into jewellery. Hence some alloys are mixed with gold to give adequate strength for moulding.
The price displayed on the exchange is for 24K gold, whereas in practical we buy 22K or less. Usually people don’t check the value for the corresponding karat and this is where the jeweller has the scope of making money.
In most cases – people only know the price of 24k and not 22k. Although everybody knows that the price of 22k gold is cheaper than the price of 24k – but everybody does not know how much cheaper it is. You should always try and check the exact difference and not blindly rely on the price quoted by the jeweller.
2. Studded v/s Non-studded Jewellery
If you are buying gold jewellery then you need to check whether it is studded with diamonds/ other previous stones or non-studded. It is necessary for calculating the right price of gold while determining the weight of it.
For studded jewellery, assure that the weight of gems and stones is not included. Sometimes, the jewellers weigh the entire piece and weight of the studs also gets included in the weight of gold. Thereby increasing the overall price of jewellery.
The jewellery should always be weighted separately for ascertaining the actual quantity of gold and other precious stones like diamond etc.
3. How is the Jewellery made – Handcrafted or Machine-made?
These days jewellery is made in two ways, one is by machine and the other being the traditional handcrafted method. The machine made jewellery is comparatively inexpensive as compared to handcrafted jewelleries as making charges of the former are comparatively lower than the latter. But if you don’t know this fact, your jeweller might end up charging you more.
4. Check for other Charges in your bill
Always insist on a complete break-up of amounts in the bill. The final price of your bill is not just the price of gold but has many more elements in it, such as making charges, wastage charges and applicable taxes. And all these charges are where the jeweller has the scope to fool you and charge you exorbitant amounts.
Therefore, it is always advisable to get a complete break-up of the invoice clearly highlighting the various charges levied by the Jeweller. Some of the charges levied by the Jeweller are as follows:-
- Charges for Gold/ Diamonds/ other Precious Stones: This is the price and quantity of the actual gold/ diamond/other precious stones used in the jewellery. It is calculated basis the gold price prevalent on the date of purchase multiplied by the weight of gold you’re buying.
- Making Charges: It is actually the charge of converting gold into jewellery. It includes the cost of other materials used in making the jewellery as well as the labour charges. It varies from jeweller to jeweller, and is not fixed. It can be a flat rate per gram or percentage based. This is the charge where most of the jewellers fool you and charge exorbitantly. Also, this is where you can negotiate.
- Wastage Charges: Usually while making jewellery, jewellers claim that some of the gold is wasted in the process. The cost of which is charged from the customer. Just like making charges, even this varies with every jeweller and is also the area where your jeweller can charge you extra since there is no proof as to how much of gold was actually wasted. And it is generally charged on percentage basis. Some jewellers may not even charge this and rather include the same in making charges, by charging the same at a higher rate. Here also you have huge scope to negotiate.
- GST @ 3%: This is a mandatory tax levied by the government on the sale of gold. It is calculated on the total of the price of gold, making charge and wastage charge. It is non-negotiable.