The making charge (مصنعية, masnaiya) is what you pay to turn raw gold into a piece, together with the shop's margin. You can work it out from a shop's price in three steps: divide the price including VAT by 1.15, subtract the gold value (weight × today's price per gram for that karat), and divide what is left by the weight. For example, a 5 g 21K ring priced at 2,704.87 SAR including VAT is 2,352.06 SAR before VAT; minus 2,152.06 SAR of gold, that leaves 200 SAR of making charge, or 40 SAR per gram.
How do I calculate the gold making charge from a shop's price?
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The full formula
A shop's price for a piece =
(gold value + making charge and margin) × 1.15
- Gold value = weight × price per gram for the same karat. Today 21K is 430.41 SAR per gram and 18K is 368.93 SAR.
- Making charge and margin: design, shaping, polishing, setting any stones, and the shop's profit. Most shops quote it as one figure per gram.
- × 1.15: 15% VAT on jewellery, charged on the whole amount, including the making charge.
Worked example at today's price
A 5 g 21K ring, and the shop asks 2,704.87 SAR including VAT (gold prices here are today's and update on their own):
| Step | Sum | Result |
|---|---|---|
| 1. Price before VAT | price incl. VAT ÷ 1.15 | 2,352.06 SAR |
| 2. Gold value | 5 × 430.41 SAR | 2,152.06 SAR |
| 3. Making charge and margin | step 1 − step 2 | 200 SAR |
| 4. Making charge per gram | 200 ÷ 5 | 40 SAR |
| VAT on the making charge | 200 × 15% | 30 SAR |
So the making charge really costs you 230 SAR including its VAT (200 + 30). The VAT on the whole ring is 352.81 SAR.
To skip the arithmetic, enter the weight, karat and price in the shop-price check, which builds the same table at today's price.
Why does the making charge vary from piece to piece?
- Design: a plain thin chain costs less to make than a piece with fine engraving or handwork.
- Weight: light pieces usually cost more per gram, because the work does not shrink with the weight.
- Karat and type of piece: it differs between karats and between bracelets, rings and sets, so always compare the same karat and the same kind of piece.
- Brand or shop: well-known brands charge for the name as well as the work.
- Handmade or machine-made: handwork costs more than mass production.
There is no official making charge in Saudi Arabia: the Ministry of Commerce says prices follow free competition, as it told Okaz (Arabic, November 2020). Comparing shops is the only way to know whether a charge is high. The full method is in How do I know if a gold shop's price is fair?.
Why do gold bars have almost no making charge?
Because they are investment gold with no shaping, and VAT treats them differently from jewellery. Article 36 of Saudi Arabia's VAT Implementing Regulations defines investment gold this way:
«يعد المعدن المؤهل على أنه تم توريده للاستثمار إذا كان مستوى نقائه لا يقل عن (99%) ويكون قابل التداول في سوق السبائك العالمية.»
"A Qualifying Metal is considered to be supplied for investment when the metal is at a purity level of not less than ninety-nine percent (99%) and tradeable on the global bullion market." (ZATCA's English text)
21K jewellery (87.5% gold) and 18K (75%) do not meet that test, so they carry the full VAT.
The making charge does not come back when you sell
When you sell a piece, the shop pays for the metal only, by weight and karat; the making charge and VAT you paid are not counted. Today shops buy used 21K at about 425.41 SAR per gram. If what you get back matters, a high making charge is a cost you will not recover. If the goal is a piece to wear, the making charge is a normal part of the price; just compare it before you buy.
To follow the raw gold price before you go to the shop, see today's gold prices, or the Dhahabi iPhone app by SKA, which works out the making charge from a shop's price (in Dhahabi Pro).
Sources
- ZATCA: VAT Implementing Regulations (Arabic), Article 36, Supplies of Investment Metals; English text.
- Ministry of Commerce, via Okaz: Ministry of Commerce: free competition (Arabic, 18 November 2020).
Frequently asked questions
Is VAT charged on the making charge?
Yes. The 15% VAT on jewellery is charged on the whole amount, including the making charge and margin. A 200 SAR making charge costs 230 SAR with its VAT.
How do I work out the making charge per gram?
(price incl. VAT ÷ 1.15 − weight × today's price per gram) ÷ weight. With 21K at 430.41 SAR per gram today, a 5 g ring priced at 2,704.87 SAR has a making charge of 40 SAR per gram.
Do I get the making charge back if I sell?
Usually not. A shop buys the piece for its gold value by weight and karat only.
How do I compare the making charge between two shops?
Work out the making charge per gram in each shop for the same kind of piece and the same karat, and compare the two. The gold value is about the same, so the real difference is the making charge.