Don't overpay for gold jewellery! Understand this pricing formula jewellers use before buying wedding jewellery
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Gold jewellery purchase in wedding season
After the annual festive season, buyers and jewellers are gearing up for the annual wedding season, when the demand for gold rises further.
This wedding season, make sure you understand how a jewellery item’s final price is calculated and which charges and fees are included in the final bill. While most of us are aware of the gold making charges, there are several other charges that the jeweller adds to your total bill.
This wedding season, make sure you understand how a jewellery item’s final price is calculated and which charges and fees are included in the final bill. While most of us are aware of the gold making charges, there are several other charges that the jeweller adds to your total bill.
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Gold price calculator with making charges and GST
Typically, gold price is the net weight of yellow metal multiplied by the day’s rate for its purity (22K, 18K etc.). To this are added making charges, any wastage the jeweller may apply, cost of stones (if any), and GST.
Meanwhile, gold making charges vary across different jewellers. They may be charged per gram or as a percentage of the gold value, wastage terms, deductions or charges for stones, and the buyback or exchange terms.
This is why the cost of a similar piece of jewellery can vary across jewellers.
Meanwhile, gold making charges vary across different jewellers. They may be charged per gram or as a percentage of the gold value, wastage terms, deductions or charges for stones, and the buyback or exchange terms.
This is why the cost of a similar piece of jewellery can vary across jewellers.
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Gold jewellery price calculation formula
Jewellers calculate the gold value by multiplying the net weight by the applicable per- gram rate for its purity.
The formula that jewellers typically use to calculate the final price of a piece of gold jewellery is this:
Total = [(Net weight × Day's rate × Purity) + Making charges + Wastage] × 1.03 + Hallmarking fee
The formula that jewellers typically use to calculate the final price of a piece of gold jewellery is this:
Total = [(Net weight × Day's rate × Purity) + Making charges + Wastage] × 1.03 + Hallmarking fee
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Breakdown of gold jewellery price calculation formula
Before using the formula, keep in mind that the ‘net weight’ is the weight of the gold alone, after any stones are deducted.
For 22k gold, the purity factor is 0.916, while it is 0.75 for 18k gold.
Making charges cover the labour and design costs. Wastage covers gold lost in crafting.
The ‘1.03’ factor in the formula adds 3% GST.
The hallmarking fee is small (Rs 75 per article), and some invoices tax it as well.
For 22k gold, the purity factor is 0.916, while it is 0.75 for 18k gold.
Making charges cover the labour and design costs. Wastage covers gold lost in crafting.
The ‘1.03’ factor in the formula adds 3% GST.
The hallmarking fee is small (Rs 75 per article), and some invoices tax it as well.
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How jewellers calculate gold jewellery price; an example
Here’s an example to understand how jewellers calculate gold jewellery price.
For this illustration, we have taken the 22k gold price in Delhi - Rs 128,650 per 10g. Now, assuming that a buyer is purchasing a 22KT gold chain of 10 grams, weighing 3.5 grams, and the making charges are flat Rs 500 per gram, the calculation would be as follows:
Price of 10 grams 22KT gold chain*: Rs 128,650
Making charges for 10 grams gold chain: Rs 5,000 (Rs 500X10g)
Total price of gold chain: Rs 133,650
GST @ 3%: Rs 4,009.5 (3% of Rs 133,650)
Hallmarking charges: Rs 75
Final bill: Rs 137,734.5(Note: This is just an illustration; the charges may vary across jewellers).
For this illustration, we have taken the 22k gold price in Delhi - Rs 128,650 per 10g. Now, assuming that a buyer is purchasing a 22KT gold chain of 10 grams, weighing 3.5 grams, and the making charges are flat Rs 500 per gram, the calculation would be as follows:
Price of 10 grams 22KT gold chain*: Rs 128,650
Making charges for 10 grams gold chain: Rs 5,000 (Rs 500X10g)
Total price of gold chain: Rs 133,650
GST @ 3%: Rs 4,009.5 (3% of Rs 133,650)
Hallmarking charges: Rs 75
Final bill: Rs 137,734.5(Note: This is just an illustration; the charges may vary across jewellers).
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How is diamond jewellery price calculated?
Diamond jewellery price calculation is not the same as gold.
Diamond jewellery’s value depends on the 4Cs: carat weight, cut, colour and clarity.
The craftsmanship and setting add to the final cost.
Remember that unlike gold, diamonds have no single daily rate, so pricing varies more.
Before purchasing a diamond piece, ask for a grading certificate from a recognised lab for diamonds and an itemised bill that shows the gold value, diamond value and making charges.
Diamond jewellery’s value depends on the 4Cs: carat weight, cut, colour and clarity.
The craftsmanship and setting add to the final cost.
Remember that unlike gold, diamonds have no single daily rate, so pricing varies more.
Before purchasing a diamond piece, ask for a grading certificate from a recognised lab for diamonds and an itemised bill that shows the gold value, diamond value and making charges.
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Check these things before paying
Do a simple check of the following things before you take out the cash to pay the final bill:
Full bill: Gold value based on weight and purity, making or minting charges, packaging charges if any, and GST.
Buyback and exchange terms: Understand how the buyback rate is determined.
Invoice: It must state the product description, weight, purity and each charge.
Authentic source: Buy gold only from authorised sellers and check that packaging and certificates are intact.
Full bill: Gold value based on weight and purity, making or minting charges, packaging charges if any, and GST.
Buyback and exchange terms: Understand how the buyback rate is determined.
Invoice: It must state the product description, weight, purity and each charge.
Authentic source: Buy gold only from authorised sellers and check that packaging and certificates are intact.