In gold shops you negotiate only the making charge and the shop's margin. The gold value follows the market price, and the 15% VAT is set by law. So before you negotiate, know today's price per gram for your karat (21K is 408.86 SAR right now), ask for the making charge per gram separately, and compare it with another shop. Having the figure in your hand is your strongest card.
How do I negotiate the gold price in Saudi Arabia?
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Last updated: Source: metals.dev in Saudi riyals, dollars at the 3.75 peg · World benchmark: LBMA price · How we get our prices
What can you negotiate, and what can't you?
| Part | Negotiable? | Why |
|---|---|---|
| Gold value (weight × price per gram) | No | Tied to the market price at the moment of sale |
| Making charge | Yes | Varies from shop to shop and piece to piece |
| Shop's margin | Yes | Usually inside the making charge figure |
| 15% VAT | No | Set by law, charged on the whole amount |
So when a shop says "I've given you a discount", check which part it came out of. If the gold value fell because the market fell, that is not a discount.
Why can the making charge be negotiated at all?
Because there is no official price for it. Asked about gold pricing, the Ministry of Commerce told the Saudi newspaper Okaz (November 2020) that prices of goods and services are set according to market rules and the principles of free competition.
So each shop sets its own making charge (مصنعية, masnaiya), and competition between shops is what brings it down. That is what makes comparing figures the strongest tool you have.
Before you go to the shop
- Know today's price: 21K is 408.86 SAR per gram right now, and you can follow it on the 21K price page (Arabic).
- Decide on the karat and type: compare pieces of the same karat and the same kind.
- Have a quick sum ready: how to break a shop's price into its parts is in How do I know if a gold shop's price is fair?.
At the shop counter
- Ask for the weight and karat before the price, and check them against the hallmark.
- Ask about the making charge per gram directly: "How much is the making charge per gram?"
- Work out the gold value yourself and subtract it from the price before VAT. That tells you whether the figure they gave you makes sense.
- Compare: say calmly that another shop gave you a lower making charge on the same kind of piece, if that is true.
- Negotiate the making charge specifically, not the whole price. Asking to "bring the making charge down from 60 to 45 per gram" is clearer than asking for "a discount".
- Ask for an invoice itemising the weight, karat, price and VAT. According to Okaz, the ministry requires shops to write the price per gram and the total price of the piece.
How much difference does negotiating make? An example
A 21K piece weighing 10 g, and the shop is asking a making charge of 60 SAR per gram. If you agree on 45 SAR per gram (the gold prices here are today's and update on their own):
| Before negotiating (60 per gram) | After negotiating (45 per gram) | |
|---|---|---|
| Gold value (10 × 408.86 SAR) | 4,088.60 SAR | 4,088.60 SAR |
| Price before VAT | 4,688.60 SAR | 4,538.60 SAR |
| Price incl. VAT | 5,391.89 SAR | 5,219.39 SAR |
| Saving | Amount |
|---|---|
| On the making charge (15 × 10 g) | 150 SAR |
| On the VAT on that amount (150 × 15%) | 22.50 SAR |
| Total | 172.50 SAR |
Note that any reduction in the making charge also saves you the VAT on it, because VAT is charged on the whole amount.
Things that make negotiating easier
- Heavy, plain pieces: their making charge per gram is usually lower, and there is more room to negotiate.
- If you are exchanging an old piece for a new one: work out the two deals separately: what they give you for the old piece (at its gold value), and the making charge on the new one. That way the difference doesn't get lost between the two figures.
- Comparing with figures: "Your making charge is 60 and elsewhere it's 45" is stronger than "that's expensive".
In seasonal sales, compare the making charge after the discount, not the percentage: White Friday gold deals.
Sources
- Ministry of Commerce, via Okaz: Shops switch to selling gold by the piece, not by weight... Ministry of Commerce: free competition (Arabic, 18 November 2020).
- ZATCA: 15% VAT on jewellery (Arabic), with details in VAT on gold.
Frequently asked questions
Can I negotiate the price per gram of the gold itself?
Usually not. The price per gram is tied to the market price at the time of sale. Negotiating is over the making charge and the shop's margin.
Does negotiating cover the VAT?
The VAT itself is fixed at 15%, but any reduction in the making charge reduces the VAT with it, because VAT is charged on the whole amount.
What do I do if the shop refuses to itemise the making charge?
Work it out yourself: divide the total price by 1.15, then subtract the weight × the price per gram. What is left is the making charge and margin. The Dhahabi iPhone app has a calculator that does this and gives you a price to start negotiating from and a ceiling not to go past (in Dhahabi Pro).
Does negotiating differ between bars and jewellery?
Yes. Investment bars have no making charge in the same sense, so any negotiating is over the dealer's premium, which varies by weight and store. See how to buy a gold bar safely. See Gold bars or jewellery: which is better for investment?