Selling Jewelry | True Value vs Perceived Value

Here is a typical question we get when clients come in to sell their precious valuables. “Hey, I just bought this expensive watch for my wife 2 months ago, why is it worth so much less when it’s fairly new?”

The question they should be asking is, “whoever said it would be worth more?”

A large misconception in the jewelry industry is that buying retail gold or diamonds is a secured investment for the future. The truth about gold, precious gems and metals is that they are investments that hold their value, but only when based on the material itself. We all know that anytime you buy any item at retail, it loses a portion of its value before you hit the door. Also, many people forget that buying high-end designer items like Cartier, Tiffany and Rolex carry a marketing cost in their retail value.

Marketing Cost??….What’s that?

Manufacturers of designer goods in any industry build in their design, tooling, advertising and branding cost into the final retail value of their product. Here’s a made-up simplistic example: Rolex makes an 18k gold watch with diamonds, selling at retail for $27,000, but in truth has an aftermarket material value of only $6,000. Basically, buying something new and trying to flip it back into cash a few months or even years later will most likely be significantly lower than what you paid.

Are there exceptions to this rule? Absolutely!

Items will have exceptions when you’ve purchased them many years ago when the value of the metals were lower. Another case is when someone has something rare and collectible. Too often we see people coming in with beautiful yet common pieces. The only way an item is typically valued above its base material cost is when it is a sought after, rare collectible. The basic story of supply and demand is probably the defining factor in most cases where the value is judged beyond the original purchase price.

In our industry we have a term for clients who think they can get their original or higher value for an item paid at retail…”Mooners”.

Basically the only place they’ll ever get the numbers they want would be on the Moon. The lesson here: understanding what makes up the value of your jewelry and how it translates into cash.

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