Golden Tips: Be savvy about making charges when buying jewellery this Diwali

Buying gold on Dhanteras

Headed to the store to buy jewellery this dhanteras? It helps to know the components of your ornaments bill. Apart from the price of the yellow metal, a significant portion of the cost — about 10-35 percent — is the making charge.

Just like the price of gold per gram differs from store to store, so does the making charge, and not just by the jeweller  — it even depends on the type of jewellery you purchase. In the same store, rings and bangles could have a particular making charge, while necklaces and earrings could have another. If the jewellery is studded with stones, the making charge would vary.

As costs — both gold and labour charges — aren’t transparent, here is how you can be smart when it comes to making charges.

Trendy jewellery: less gold, higher making charges

Stylised pieces worn by millennials and even senior executives attract higher labour charges than simple yellow gold jewellery, say jewellers.

Also read: Why Indians love buying gold?

“Trendy ornaments and diamond jewellery are made using 18-20 k (carat) gold, as moulding intricate designs requires lower carat gold (because pure gold is too soft for this). But simple gold jewellery is always set in 22 k gold. So, 18 k pieces mostly come with a higher labour cost,” says a wholesale jeweller based in Mumbai’s Zaveri bazaar.

According to him, the making charge of bangles made using 22 k gold would comprise about 5-8 percent of the sale price, whereas those with copper wiring (for more stability and rough use) would carry a 12 percent making charge.

Gem- and diamond-studded jewellery too attracts higher making charges, as against simple gold chains and pendants. “Antique, kundan, and jadau pieces carry a higher making charge compared to regular gold jewellery,” says Saiyam Mehra, chairman, All-India Gem and Jewellery Domestic Council.

Also read: Should you sell gold and reinvest in equity?

This is because different gemstones need to be inlaid using different techniques in a necklace. “Because of this, the making charge is higher. The cost of the diamond or and other gems would get added too,” says
C Vinod Hayagriv, Managing Director & Director, C Krishniah Chetty Group.

Designing costs

Trendy jewellery also has higher design and technical costs. Take, for instance, the rose gold finish that has been launched recently. “Rose gold jewellery is made in 18 k gold, and the making charge is about 25-30 percent of the price,” says Mehra.

Another new design that’s hit jewellery stores of late is “channel setting” jewellery. These have a refined cut and smooth texture, and making charges comprise 18-20 percent of their value.

“Since people buy for themselves in this season, well-designed and well-made items are appreciated by buyers. Mostly, light-weight jewellery is preferred,” says Rajiv Popley, director, Popley group.

Also read: Is this a good time to invest in gold?

Additionally, limited edition pieces always attract additional costs.
“The cost of production depends on the type of jewellery you select. If the necklace has been made as an exquisite piece of handwork, where the design process itself has taken us 6-8 months, then the price for designing also needs to be included. Since these are usually limited edition pieces, their making charge is higher compared to mass-produced jewellery,” says Hayagriv a jeweller, who has launched a Darbar collection with Mysuru palace as the theme.

“Mass produced pieces would always be cheaper than bespoke jewellery. But certain customers are not worried about the labour charge,” Hayagriv adds.

Gold coins too carry making charges

Gold coins and bars are a prime example of mass production. But even though these aren’t quite jewellery, making charges are applicable here too, with unique designs costing a tad more.

For example, an Om-embossed 10-gram coin costs  Rs 64,324 on gold refiner Augmont’s website, even though their listed price of gold is Rs 6,170.29 per gram. On the website of another refiner, MMTC PAMP, an embossed 10-gram coin cost Rs 67,690 as on November 9, 2023.

The shape of the coin, too, determines the price. A limited edition 20-gram Lakshmi Shankh coin, that’s shaped like a conch shell, costs Rs 1,34,720, while a generic embossed coin of the same weight costs Rs 1,32,520) at the time of publishing.

One way of saving on making charges on coins and bars is by buying a rough-cut piece of gold called “lagdi,” that’s sold over the counter by some national refiners.

How making charges are disguised

But before falling for marketing spiel about zero percent making charges, do understand that jewellers can charge you under other heads, without calling them making charges. For instance, the gold price listed at a store could be significantly higher than that published daily by the India Bullion and Jewellers Association.

“If the making charges are lower, then chances are that other intelligent ways of selling are being used,” says the Zaveri-bazaar wholesaler.

Hence, you should not just look at individual components, but also at the overall charges involved. “Consider the making charge as well as the gold price for the day,” suggests Mehra.

Selling price is important when trading old jewellery

Exchanging old jewellery doesn't get you the full price

Bharti Shah, 69, bought her old bangles (53 gram) for Rs 2,380 per gram in 2016. When she traded them in September 2023 for new ones, she was offered Rs 5,107 per gram for the old jewellery, but charged Rs 5,635 per gram for the new ones (41 gram). On top of that, high making charges ate up much of the benefit she got on the rise in the price of the precious metal, according to her bill that moneycontrol.com saw.