Why jewellery costs more than the gold rate, how shops charge for making and wastage, and simple ways to compare two shops fairly.
If 22K gold is ₹13,000 a gram, why does an 8-gram chain cost much more than ₹1,04,000? The difference is mostly making charges and, in many shops, wastage. Both are normal, but they vary a lot between shops and designs, so they are worth understanding before you buy.
What making charges pay for
Turning raw gold into jewellery takes skilled work: melting, shaping, joining, polishing and setting stones. Making charges pay for that labour and the shop's costs. A simple machine-made chain needs much less work than a hand-made temple necklace, so the charges differ.
Three common ways shops charge
| Method | How it works | Example on 10 g of 22K at ₹13,000/g |
|---|---|---|
| Percentage | A % of the gold value | 12% of ₹1,30,000 = ₹15,600 |
| Per gram | A fixed amount for every gram | ₹900 × 10 g = ₹9,000 |
| Fixed per piece | One price for the item's work | ₹6,000 for the piece |
Typical making charges range from around 8% for simple machine-made items to 25% or more for detailed hand-made or antique designs.
What "wastage" means
When gold is cut, filed and polished, a little of it is lost as dust. Many shops, especially in South India, charge for this as wastage or VA (value addition), written as a percentage of the weight. For example, 10% wastage on a 10-gram item means you pay for 11 grams of gold.
Some shops show only VA and no separate making charge; others show both. What matters is the total extra you pay over the gold value.
How to compare two shops fairly
- Ask each shop for the price of the same weight and design on the same day.
- Ask them to break the price into: gold value, making charge, wastage/VA, stone charges and GST.
- Add up everything except GST and divide by the net gold weight. That gives the real cost per gram of each shop.
- Also ask about the buy-back or exchange policy, since a lower making charge sometimes comes with a stricter policy.
Ways to keep making charges down
- Choose simpler or machine-made designs for everyday wear.
- Look out for festival offers on making charges, but compare the gold rate too: a "0% making" offer with a higher gold rate is not always cheaper.
- For savings rather than wearing, consider coins or bars, which have much lower making charges.
- Some jewellery savings schemes reduce or waive making charges at the end of the scheme.
Making charges and GST
GST of 3% is usually charged on the gold value plus making charges together. See the worked bill in GST on gold and silver, or use the calculator on any city page, for example Chennai.
When you sell, making charges don't come back
When you sell or exchange jewellery, shops pay only for the gold content. Making charges and wastage are not refunded. This is the main reason jewellery is a costly way to save money in gold.
Common questions
Are making charges negotiable?
Often, yes, especially on larger purchases or plain designs. It's normal to ask whether there is any reduction.
Why do big brands charge more?
Larger brands may charge more for their designs, showrooms, certificates and exchange guarantees. Smaller shops may be cheaper but offer fewer guarantees. Compare the total price and the buy-back terms, not just the brand.
Do coins have making charges?
Yes, but they are much lower than for jewellery, usually a small percentage or a fixed amount per coin.
This guide is general information for buyers. Rules and tax rates can change; check with your jeweller, bank or a qualified adviser before big decisions.