How to Calculate Gold Jewelry Price: Making Charge, Profit, VAT

By P-Soft Expert Team October 9, 2026 9 min read

The selling price of gold jewelry is calculated as: weight × per-gram rate for that karat + making charge + seller’s profit + VAT. In Iran, VAT applies by law only to the making charge and the profit, not to the value of the gold itself.

Gold jewelry price calculator

Enter your numbers; everything is calculated in your browser. In Iran VAT applies only to the making charge and profit — enter the current year’s rate.

Weight (g)Fineness (e.g. 750)Rate per gram of 18K (750)Making charge (%)Seller profit (%)VAT (%)

Gold value—

Making charge—

Profit—

VAT—

Final price—

The formula looks simple, but behind a jewelry store counter it leaves room for several costly errors: rounded weights, the wrong karat rate, the wrong base for profit or tax. In this article we break the price into its parts, work through a complete example with hypothetical figures, and then look at the common mistakes and how gold accounting software automates the calculation. The method follows the standard practice of the Iranian gold market; where other markets differ, we point it out.

What makes up the price of gold jewelry?

Weight

Gold weight is recorded in grams to three decimal places, a thousandth of a gram (in Iran called a soot), for example 6.480 g. Every milligram ignored in the calculation goes straight into the price.

Karat and the per-gram rate

In Iran the daily rate is usually quoted for 18K gold, which is 750 fineness (750 parts gold per 1,000). If a piece has a different karat, you either use the rate for that karat or convert the weight to its 750 equivalent. We cover the full conversion method and per-mithqal pricing in our guide to gold karat conversion and per-gram vs per-mithqal rates.

Making charge

The making charge (labor, in Persian ojrat) covers the cost of manufacturing and design, and it varies widely with the type of work: machine-made, handmade, stone-set and so on. It is usually set in one of these ways:

As a percentage: a percentage of the gold value of the piece; the most common method in retail.
Per gram: a fixed amount for every gram of weight.
Per piece: a fixed amount for the item, mostly for special or custom pieces.

Seller’s profit

The seller’s profit is the percentage the store keeps for itself. In common practice this percentage is applied to the gold value plus the making charge, although some stores use a different base. What matters is that your method is the same on every invoice.

VAT

In Iran, VAT on gold jewelry is charged on the making charge and the profit only, at the rate approved for that year; the raw value of the gold is not taxed. Because rates and regulations can change, always confirm the current rate with your accountant. Tax treatment is different in many other countries, where VAT or sales tax often applies to the full selling price of finished jewelry, so check your local rules.

The gold price formula, step by step

Gold value = weight × per-gram rate for that karat
Making charge = gold value × making-charge percentage (or weight × per-gram making charge)
Seller’s profit = (gold value + making charge) × profit percentage
Tax base = making charge + seller’s profit
VAT = tax base × the year’s approved rate
Final price = gold value + making charge + profit + VAT

Worked example: what does an 18K necklace cost?

All figures here are hypothetical, and the rate is deliberately a round number so the arithmetic is easy to follow; it has nothing to do with a real market price. Prices are in Iranian toman (1 toman = 10 rials). Assume:

Necklace weight: 6.480 g, 750 fineness (18K)
Hypothetical rate per gram of 18K gold: 1,000,000 toman
Making charge: 18% of the gold value
Seller’s profit: 7% of gold value plus making charge

Step	Calculation	Result (toman)
Gold value	6.480 × 1,000,000	6,480,000
Making charge	6,480,000 × 18%	1,166,400
Gold + making charge	6,480,000 + 1,166,400	7,646,400
Seller’s profit	7,646,400 × 7%	535,248
Tax base (making charge + profit)	1,166,400 + 535,248	1,701,648
Price before tax	7,646,400 + 535,248	8,181,648
VAT	1,701,648 × the year’s rate	Depends on the current rate
Final price	8,181,648 + VAT	—

Note that the tax base in this example is 1,701,648 toman, not 8,181,648. If VAT is wrongly charged on the full amount, the base becomes roughly 4.8 times larger and the customer pays more for no reason.

How do you price a piece that is not 18K?

Say you have a hypothetical 5 g piece at 900 fineness and the published rate is for 750. The simplest approach is to convert the weight to its 750 equivalent: 5 × 900 ÷ 750 = 6 g of 750 equivalent. Then gold value = 6 × the per-gram 18K rate, and the remaining steps are the same as above. If the conversion is forgotten and the piece is sold at the 750 rate on its raw 5 g weight, one sixth of its gold value is lost.

How is the buy-back price of old gold calculated?

When a store buys old or second-hand gold from a customer, no making charge or tax is usually paid; the basis is the weight and karat of the gold: weight × buying rate per gram for that karat. Many stores set the buying rate slightly below the selling rate. That spread is each store’s own policy and should be explained clearly to the customer. If the karat of the old gold is unknown, it must be assayed before purchase.

Common mistakes in gold price calculation

Mistake	Consequence	Prevention
Rounding the weight (e.g. 6.480 to 6.5)	At the hypothetical rate above, just 0.020 g means 20,000 toman of gold value, plus its knock-on effect on making charge and profit	Record weight to three decimals
Using the 750 rate for another karat	Selling below or above real value	Automatic karat conversion in the invoice
Charging tax on the full amount	Overcharging and unhappy customers	Separate tax base (making charge + profit)
Salespeople using different profit methods	Two different prices for the same piece	One fixed method defined in the software
Using yesterday’s or an outdated rate	Losses in a volatile market	A single daily rate that every invoice reads from
Calculating on a calculator and retyping into the invoice	Data entry errors	Calculation inside the invoice itself

Checklist before handing a gold invoice to the customer

Before the invoice goes to the customer, run through these six points in a few seconds:

The weight is recorded to three decimals and matches the scale exactly.
The karat is correct, and if it is not 18K, either the 750 conversion or the rate for that karat has been applied.
The per-gram rate is today’s rate and matches the rate quoted to other customers.
The type of making charge (percentage, per gram or fixed) and its amount match the item tag.
The seller’s profit follows the store’s fixed method.
The tax base is only making charge plus profit, and the total adds up from its parts.

If you check any of these by hand, there is still room for error. The goal is for the software to perform these checks itself.

Automatic gold price calculation in accounting software

Every mistake above has a common root: manual, repetitive calculation. A jewelry store accounting program should take weight, karat, rate and making charge inside the invoice and compute the price without the salesperson retyping anything. For the rest of the features you need, see our complete guide to gold and jewelry accounting software.

In Zaran gold accounting software:

Sales, purchase and wholesale invoices are issued with exact weight, karat, making charge and price calculation.
Karats are converted automatically to a standard equivalent, and per-gram and per-mithqal pricing is supported.
On the Zaran Elite plan, the manager’s trading desk lets you set and record the day’s rate and trades quickly on a single screen.
On the Zaran Elite plan, invoices with an inconsistent karat, rate or trade direction are flagged automatically, which catches exactly the errors in the table above. For more on these controls, read our guide to cash control and fraud prevention.

If you still calculate prices in a spreadsheet, our article on Excel vs software for jewelry stores shows where that approach is vulnerable.

Frequently Asked Questions

What is the formula for gold jewelry price?

Price = weight × per-gram rate for that karat + making charge + seller’s profit + VAT, where (in Iran) VAT is calculated only on the making charge and the profit.

What amount is VAT charged on for gold in Iran?

Under Iranian law, VAT is charged only on the making charge plus the seller’s profit, at the year’s approved rate; the value of the gold itself is not taxed. Rules differ in other countries.

What is the seller’s profit on gold calculated on?

In common practice the profit percentage is applied to the gold value plus the making charge. What matters is that the store applies one fixed method on every invoice.

Why should gold weight be recorded to a thousandth of a gram?

Because every milligram is multiplied by the rate, and rounding weights across many invoices a day adds up to a noticeable gap in the cash drawer and in profit.

How do I price gold that is not 18K?

Convert the weight to its 750 equivalent (weight × fineness ÷ 750) and then price it at the per-gram 18K rate like any ordinary piece.

Want every invoice priced correctly without a calculator? Request a Zaran demo.