3. Pricing Formula Engine
Formula Mathematical Model
⏱️ 6 min read•📅 Updated 3 days ago
SpotMetal computes prices using a continuous mathematical pipeline that accounts for spot commodity valuation, fine karat purity, tiered markups, and fixed casting labor.
The Master Pricing Equation
Final Price = Material Value + Premium + Fixed Fee
Where:
Material Value = (SpotPricePerTroyOz / 31.1034768) * KaratPurity * GramWeight
Premium = Material Value * (MarkupPercentage / 100)
Fixed Fee = SettingFee + CastingLabor + HallmarkingCost
Effective Mass & Conversion
All internal calculations normalize to 1 Troy Ounce = 31.1034768 grams.
Karat Fineness Multiplication
Gold alloys contain varying proportions of pure 24K gold:
| Karat Purity | Fineness Ratio | Gold Content % | Value @ $2,942.10/oz |
|---|---|---|---|
| 24K (999.9) | 0.9999 | 99.99% | $94.59 / g |
| 22K (916) | 0.9167 | 91.67% | $86.72 / g |
| 18K (750) | 0.7500 | 75.00% | $70.94 / g |
| 14K (585) | 0.5850 | 58.50% | $55.34 / g |
| 10K (417) | 0.4170 | 41.70% | $39.44 / g |
| 9K (375) | 0.3750 | 37.50% | $35.47 / g |
| 8K (333) | 0.3333 | 33.33% | $31.50 / g |
Full Worked Example: 18K Diamond Band
Let’s calculate an 18K gold ring weighing 8.50 grams with current spot gold at $2,942.10/oz, a 25% markup, and $60 fixed diamond setting fee:
- Raw 24K Spot/g: $2,942.10 / 31.1035 = $94.5905/g
- 18K Pure Alloy/g: $94.5905 * 0.75 = $70.9429/g
- Raw Metal Value: $70.9429 * 8.50g = $603.01
- 25% Premium: $603.01 * 0.25 = $150.75
- Fixed Setting Fee: $60.00
- Total Calculated Price: $603.01 + $150.75 + $60.00 = $813.76