Guide
Pricing gold jewellery: purity, making charges, tax and the share that is gold
A jeweller’s bill for a gold chain seems straightforward until you read it: weight, rate, making charges, wastage, GST, sometimes a stone. Each line affects the total, and quoted rates differ between shops. Calculating the price yourself from the day’s rate lets you check the bill, compare two jewellers who quote their making charges in different ways, and see how much of what you pay is the metal.
The rate for the purity
Gold’s purity is expressed in karats, with 24 karat being nearly pure. In India it is also stamped as a fineness, the parts of pure gold per thousand: 24 karat 999, 23 karat 958, 22 karat 916, 21 karat 875, 18 karat 750 and 14 karat 585. The day’s rate is normally quoted for 24 karat gold. The rate for another purity is the 24 karat rate × fineness ÷ 999, so the 22 karat rate is 916 ÷ 999 of the 24 karat rate. You enter the 24 karat rate and choose the purity, and the page does the conversion.
Making charges
Jewellers price their craftsmanship in three ways. A percentage of the gold value is the most common, and is charged on the metal price, so a heavier piece pays more. A rate per gram charges the same for each gram of metal. A fixed amount is typical for a design. The page offers all three, and shows the making charge as a share of the gold value so that you can compare shops. Machine-made chains usually carry lower charges than handcrafted pieces.
A worked example
The default is a 20 gram ornament of 22 karat gold with a 24 karat rate of 7,500 a gram and a making charge of 12%. The rate for this purity is 6,876.88 a gram and the piece contains 18.320 g of pure gold, so the gold value is 1,37,537.54. The making charge is 16,504.50, GST at 3% on the gold is 4,126.13 and GST at 5% on the making charge is 825.23, for a total of 1,58,993.39, or 7,949.67 a gram all in. The gold is 86.5% of what you pay. In the second sample, 8 g of 18 karat with a making charge of 650 a gram, the rate is 5,630.63, the content 6.000 g, the making charge 5,200 (11.5% of the gold value) and the total 51,856.40.
Tax
The tax rates in the page, 3% on the gold and 5% on the making charge, are the Indian GST rates at the time of writing, and you can change them for other countries or when they change. Tax applies to each part separately, which is why the bill shows two lines. Some jewellers advertise a price including tax, so check whether a quoted figure is before or after it.
What you get back when you sell
When you sell jewellery to a jeweller, the price is based on the gold content at the day’s rate, usually with a deduction for melting and testing. The making charge, the tax paid on it and the value of any stones are generally not recovered. The share of the price that is gold, 86.5 percent in the sample, is therefore an upper limit on what you could get back, before any deduction. Coins and bars carry lower charges for this reason.
Edge cases
Weight must be above zero. A making charge of zero is allowed. The page does not deduct the weight of stones, so enter the weight of the gold alone. Rates for 23 and 21 karat gold are included for pieces made in some regions. A tax rate of zero shows the price before tax.
Limits
The page does not fetch the gold price; you enter it, and it varies through the day and between sellers. Wastage charges, stone values and hallmarking fees are not modelled unless you include them in the making charge.
Related tools
- Gold Loan Calculator shows how much a lender would advance against the same jewellery.
- Sovereign Gold Bond Calculator looks at holding gold as a bond with interest.
- Sales Tax Calculator adds tax to a price for other purchases.
- Percentage Calculator helps compare making charges quoted in percent.
Checked against the current version of the Gold Jewellery Price Calculator on .