A complete guide to how local jewellers calculate their making charges, pure gold deductions, and profit margins when you buy or sell gold ornaments in Pakistan.
One of the most confusing aspects for consumers buying gold jewellery in Pakistan is the calculation of "making charges." In local Sarafa bazaars, understanding this metric is crucial to ensure you are getting a fair deal.
What Are Making Charges?
Making charges represent the labor and craftsmanship cost of converting pure raw gold into intricate jewellery. Unlike standard gold biscuits or bars, which trade at the pure 24K spot price, jewellery requires skilled labor, machinery, and design work.
How Sarafa Bazaars Calculate It
In Pakistan, local jewellers typically calculate making charges in two ways:
- Per Tola Flat Rate: A fixed Rupee amount is added per tola (e.g., Rs 3,000 to Rs 8,000 per tola depending on the complexity of the design).
- Percentage Basis: A percentage of the total gold value (typically ranging from 8% to 15%) is added as the making charge.
The Purity Factor (Khaat)
When buying 22K jewellery, remember that the base price should be calculated on 22K purity, not 24K. 22K gold is 91.6% pure. Jewellers will take the 24K rate, multiply it by 0.916, and then add their making charges. Furthermore, when you sell the jewellery back, the jeweller will deduct a "Khaat" (impurity/wastage deduction), which means you will not recover the making charges.
Tips for Buyers
- Always ask for a computerized receipt detailing the exact weight of the gold, the karat purity, and the separate making charges.
- Negotiate the making charges. While the gold rate is fixed by the market, making charges are at the discretion of the shop owner.
- For investment purposes, avoid jewellery entirely and buy 24K gold bars or coins, which have near-zero making charges.