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Cost of gemstone mining and marketing
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Author:  Edward Bristol [ Fri Aug 07, 2009 8:45 am ]
Post subject:  Cost of gemstone mining and marketing

Theory: Marketing pros differentiate between "market-pricing" and "cost-pricing".

A “market-price” is given to a product by a sale at $X.

"Cost-pricing" on the other hand, is based on production cost plus a reasonable profit. Cost-pricing is the way most industrial goods are calculated.

Gemstones are obviously "market priced", like paintings or a rare stamp. For such items the real production costs are irrelevant.

Reality: Gemstones do have significant production costs.

We have tried to shed some light on the cost of mining and selling gems online out of Sri Lanka. To do so we assumed one fictions stand-alone mining and marketing operation.

Here is a summery:
• We need $109.000 per annum to run a gem mine and offer the finds online.

• The actual mining operation in the jungle accounted for only 36% of our expenses, processing the gems took 19% and the lion share of 45% went into sales & marketing.

• From a different angle 45% of our expenses were related to local staff, 39% went into locally purchased material or services; and only 16% were used for services abroad.

Conclusion:
• Government policy must do all to keep Marketing & Sales inside the mining country. Many gem exporting countries have utterly failed here, loosing the main value creation to Bangkok.

• One mine alone can not afford sales & marketing. Only a network of mines can do so.

For the interested, the details and some break even calculations are online in How2mine

Author:  gingerkid [ Fri Aug 07, 2009 4:25 pm ]
Post subject: 

hello, ed,

can you please post a link to the website, "how2mine?" i searched for it today and cannot find it. google provided links to pc games instead.

thanks! :wink:

Author:  gingerkid [ Fri Aug 07, 2009 7:30 pm ]
Post subject: 

:oops: just found it on your website, edward.

here's the link:

http://www.wildfishgems.com/how2mine

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