Gold making charges: how they work and how to compare offers
The making charge is what a buyer pays on top of the raw gold value: the goldsmith’s fee, the design and mould cost and the shop’s margin on the piece. It is quoted in three ways. The first is an amount per gram, the most common in Saudi shops, where the seller names so many riyals a gram. The second is a percentage of the gold value, common in shops selling imported Italian or Indian jewellery. The third is a fixed amount for the piece, used for set and handmade work. The difference between the first two matters: a per-gram charge does not move with the gold price, while a percentage rises with it, so when gold goes up the making charge goes up too. In every case VAT is charged on the making charge along with the gold, 15% in Saudi Arabia and 5% in the UAE, so every riyal you knock off the making charge saves you more than a riyal. The calculator compares a per-gram offer with a percentage offer on your own piece and gives the break-even rate between them.
Cheaper offer
A (per gram)
Difference SAR 172 including VAT
| Total with offer A | SAR 7,974 |
| Total with offer B | SAR 8,146 |
| The percentage equals per gram | SAR 34.98 |
Checked by Radif Partners · How we calculate · Editorial policy
The three methods in numbers
Take a 15-gram piece of 21K. If the seller says the making charge is 25 riyals a gram, it is 375 riyals whatever gold does. If he says 8% of the gold value, it moves with the ounce: at today’s gram price it is one figure, and if gold rises it rises. If he says 400 riyals for the piece, it is fixed whatever the weight. The calculator above prices the first two side by side and tells you which is cheaper for your piece now; for a fixed amount, divide it by the weight and enter it per gram.
The break-even rate
The last line of the calculator turns the percentage into its per-gram equivalent. If 8% of a 21K gram works out at, say, 34 riyals, any per-gram offer below that is cheaper than the percentage offer, and the reverse. The figure moves with gold, so we compute it at the current ounce price from gold-api.com and the exchange rate set by the Saudi Central Bank. If you expect prices to rise before you pay, a per-gram offer shields you from the rise.
VAT on the making charge
VAT is charged on the whole value of the supply, and the making charge is part of it. In Saudi Arabia that is the basic rate of 15%, in the UAE 5%. In practice, taking 100 riyals off the making charge in Riyadh saves the 100 plus its VAT. If an invoice quotes a gram price including making, VAT is still due on the total; do not accept VAT on one part and none on another unless the invoice says so explicitly.
Making charges on set jewellery
On diamond or gemstone jewellery the setting work is part of the making charge, and the stones may be priced on a separate line. The scale weight includes the stone, so make sure the invoice gives the gold weight alone; otherwise you pay a gold price on the weight of a stone. The 18K page explains why making charges on such pieces run high and why most of it does not come back on resale.
When a high making charge is fine
A making charge is not always a loss. Someone buying a piece to wear for years is paying for a design they like and a goldsmith’s handwork, which is a legitimate choice. What matters is knowing how much you pay for that work. The simple rule: if your aim is saving, choose a low making charge or a bar; if it is wearing, compare making charges between two shops on similar pieces before paying. The buy and sell gap calculator shows how far prices must rise to cover the making charge.
Questions to ask before the piece is weighed
Is the making charge per gram, a percentage or per piece? Does the board gram price include making? Will making appear on its own invoice line? Does the shop have an exchange policy that returns part of the making charge? What karat is stamped on the piece? The answers to these five questions are enough to fill in the jewellery price calculator and know the final price before the receipt is printed.