How the price of a gold piece is worked out
A practical walk-through of pricing a gold piece: gross weight, fineness, pure weight, the live rate, the making charge and tax — with a fully worked example.
The price of a gold piece is not a number written on a tag. It is the output of a calculation whose inputs move every day, and often every hour. Understanding that calculation is the difference between a shop that knows its margin and one that assumes it.
The five inputs
- Gross weight: what the scale shows, stones included.
- Fineness: how much of the alloy is pure gold, written 999, 916, 875 or 750.
- Pure weight: gross weight × fineness ÷ 1000.
- Today’s rate: the market price of pure gold at the moment of sale.
- Making charge: the craftsman’s fee, per gram or per piece.
A worked example
A ring with a gross weight of 10 g at 875, on a day when pure gold is 4,514 per gram, with a making charge of 120 per gram.
| Line | Calculation | Result |
|---|---|---|
| Pure gold | 10 × 875 ÷ 1000 | 8.750 g |
| Metal value | 8.750 × 4,514 | 39,497.50 |
| Making | 10 × 120 | 1,200.00 |
| Before tax | — | 40,697.50 |
Then tax happens
And here countries differ structurally, not only in the percentage but in what the percentage is applied to. Egypt taxes a making charge the government publishes rather than the one the shop charged. India applies two rates inside one invoice line — one on metal, one on making. Turkey taxes only the value above the bullion value. A single "tax rate" field in a general-purpose system cannot describe any of that.
The mistake that costs the most
The most common error in a gold shop is storing the price. A piece is priced in the morning, a tag is printed, the market then moves thirty in the gram, and the old number is still on the tag at closing time. On ten grams that is a gap of around three hundred on a single piece — and it only ever runs one way, which is against the shop.
The fix is simple to state and hard to do by hand: never store a price. Rebuild it from the live rate at the moment of every sale, and snapshot it onto the document once the sale is posted, so reprinting it a year later reproduces the same figures.
How ZahabFlow does it
ZahabFlow stores weight in nanograms and fineness as an integer from 1 to 1000, and stores no price at all. Scanning a barcode reads today’s rate, applies the making rule, then applies the tax shape recorded for your market, and shows the salesman the full breakdown before anything is posted.
Questions we are asked
Is the making charge applied to gross or pure weight?
Gross weight, in the overwhelming majority of markets, because the craftsman worked the whole piece. Some markets charge per piece rather than per gram; both are common.
What is the difference between 21 karat and 875?
None — they are the same thing in two notations. 21 karat is 875 parts per thousand pure gold.
How often should the gram rate be updated?
Whenever the market moves materially. Busy shops update several times a day, and the system records the time of each change and who made it.