This article is going to answer a lot of common questions most people have when it comes to selling their gold to a gold buyer. Let’s talk about retail price versus market value price. This question comes up a lot and it’s good for the seller to understand the difference of these two prices so you have a better idea of what you’re getting for your gold. Let’s first talk about the retail price of jewelry. Ever since I’ve been buying scrap gold at real market value price, I have been blown away by how much jewelry cost the average consumer.
Let me explain. Through a friend of a friend, I met a gentleman who used to have some successful jewelry stores around our area. We got to talking about the business model of the jewelry store and the things he sold and how he made his money. Then he slipped an “insider” secret to me that I had never heard before. He explained to me the reason he was making so much money is because he was able to mark his products up five hundred percent! Easy example; if he got the product for one hundred dollars, then he was selling it for five hundred dollars. That’s what I call profit!
A good general rule of thumb for a business owner is this: if you can mark up your product one hundred percent, then you are in a good market. So you buy something at fifty dollars and sell it at one hundred dollars. That’s a good business model. Now am I trying to “expose” the jewelry business and tell you to stop buying jewelry? No I am not, I am just educating you on what I have learned on the back side of the gold business and I hope you can use it.
Here’s how this information applies to our business. Let’s say you buy a hundred dollar pair of shoes at a retail store. How much do you think it cost to put those shoes together? I am thinking it cost probably around four to ten dollars depending on the materials the shoes are made out of. That makes sense to you right? You wouldn’t expect to then take your shoes and sell them to a materials dealer for very much money because they’re not worth much money just as the material alone.
What gives them their worth is the style, make and model if you will. Well, the gold business is very similar. Gold buyers are just buying the materials in the jewelry. For us, this is the gold, silver, or platinum. So we base the pricing for these items off of the spot price of each of those three precious metals. Pulling it all together now. If you purchase a ring or bracelet, etc. for one thousand dollars on the retail market, then you’re not going to get that money back out of when you sell because the price you paid was inflated by the retail market. But there is good news. The prices we gold buyers pay off of (spot price) are very high, so it’s still a good time to sell these old items for extra cash.