What's a Fair Price for Beads?

I love beads.  When I first started my business, I bought all my beads in person.  There was one supplier in particular that had a basement full of old, dusty boxes, and I just loved rummaging through them looking for new beads.  Now that I order everything online, the thrill is still there, but I have to wait a week while the beads are shipped to me.  However, despite my great love of beads, I don't make much money selling them.  My markup is more than 100%, yet my income is pretty paltry (less than $30,000 a year).  But the fact that I'm not making much money doesn't change the fact that you should look for the best prices you can find.  The questions for you, as a consumer, are:  What are beads worth?  And, What's a fair price for beads?

Let's start with what it costs to manufacture machine-made Czech beads, which is what I primarily sell:  The truth is, I don't know!  But I do have some ideas.  I'm quite certain that the cost of manufacturing a lot of fifty 8mm glass beads is less than 50¢.  So if that's the case, why do beads cost $4.00 or more at retail?  Aside from the monetary exchange rates, which are always unpredictable, the answer is:  Labor.  The most expensive part of any product is the labor that goes into it, not just the labor of the factory workers but of all the other people who handle it.  Four or five middlemen may handle your beads between the factory and you:  the manufacturer, the exporter, the importer, the wholesaler, the retailer, and two or three shippers (I am a retailer).  (Sometimes the exporter and manufacturer are the same company, and sometimes the importer and wholesaler are the same company.)  Each middleman has labor costs as well as other expenses.

The largest markups are applied by wholesalers and retailers.  I don't know how much wholesalers mark up their beads, but I can tell you that I mark them up more than 100%.  The reason is simple:  It takes an enormous amount of time to sell beads to the public.  Here are all the tasks that I must perform as part of my business:

- First, I must buy the beads.  That can take hours each month, examining pictures on my suppliers' web sites, corresponding with suppliers, and placing the orders.

- Once the beads arrive, each style must be photographed.  That involves arranging them on a plate and taking a dozen photographs of each style.

- After transferring the photos to my computer, I have to select the best one for each style and fix it up in a photo-editing program, applying my logo to each picture.

- Then for each style I have to create a page on my website.  If the beads are, say, pink, I also have to put them on the Pink page and on the What's New page.  You might think that there's an automated way to do that, but there isn't.

- Once all the new beads have been posted, I have to update my mailing list since the previous mailing.  This involves examining all orders since my last mailing and determining which orders are from new customers, and then putting their names and email addresses on the list.  I also must include the names and addresses of people who have signed up on my website to receive mailings.

- Then I send out the mailing.  In order to avoid my ISP's outgoing spam filters, I have to program my computer to send out the mailing slowly over several hours.  As the mailing is going out, I'll receive Delivery Error messages telling me that some email addresses are no longer valid.  Those email addresses must be deleted from my mailing list.

- Before I ship the beads for the first time, they have to be divided into lots.  If I bought a mass of each style, and if they are sold in lots of 50, that's 24 little baggies that I have to put them in.  I also have to print and apply labels to all the baggies.

- As orders start to come in, I receive emails from my shopping cart and from PayPal.  I have to transfer the information for each order to my sales ledger.

- When filling the orders, I have to collect baggies of beads from the shelves, package them, and apply postage.

- I examine all table-cut beads individually and eliminate defective beads before shipping.  I doubt that any other supplier in the whole country does this.

- At the end of each day I have to carry the packages to the post office.

In addition to the above tasks, I have various other non-specific tasks that take up a lot of time:

- Corresponding with customers.

- Purchasing supplies, which are constantly running out.

- Keeping various ledgers up-to-date.

- Filling out quarterly and yearly tax returns.

- Writing and updating articles on my website.

In addition to all the work I have to do, I have a certain amount of overhead (although not nearly as much overhead as brick-and-mortar stores have).  The overhead includes:

- 3% to 4% of each order goes to PayPal for their services.

- Website hosting fees.

- A monthly fee for the shopping cart service that I use.

- A monthly fee for my online postage account.

- A monthly fee for a high-speed internet connection.

- Heating my apartment all day long, since I am home about 20 hours a day.

- Various fees paid to federal, state and local governments to stay in business.

I also lose 10% of each order over $50 to the discount that I give my customers.

As you can see, a huge amount of work goes into the business.  I usually work seven days a week, although sometimes, admittedly, I sit at the computer like a zombie and get little done (that happens when I'm feeling burned out).

For years before I got into this business, I valued things by guessing what the manufacturing cost might be and then adding a percentage to that (say, 100%).  If I figured that an item cost 25¢ to manufacture, I would conclude that a reasonable retail price would be 50¢.  But such a small mark-up isn't enough to pay the store clerk who takes your money, much less all the other middlemen.  It's the same thing with beads.  My mark-up on beads is higher than the other handlers (with the possible exception of wholesalers), but then I am doing more work than they did to get the beads sold.

So what is a fair price for you to pay?  If you make beaded jewelry in small quantities, or if every design is unique and you don't use large quantities of any bead style, then you are purchasing beads in small quantities and should expect to pay retail prices, $3 to $8 per lot of 50 (depending on size and type) of machine-made glass beads, and much more for handmade lampwork beads.  But if you make jewelry in large quantities or reproduce your designs, then keeping your costs down is important and I suggest that you buy your beads from wholesalers in the largest quantities you can afford.  Of course, that means that you must meet the minimums of the wholesale suppliers.  Those minimums include a minimum for each order (usually $250 or more) and a minimum number of beads for each bead style (300-1200 beads depending on the size).

Most wholesalers are also retailers and will charge you high prices for small quantities, so walking into a wholesale shop doesn't guarantee low prices.  To get the lowest prices, you usually have to buy beads by the mass (1200 beads), and even then you won't get the best prices unless you spend thousands of dollars.  If you live in a locality that doesn't have any bead wholesalers, then you should be able to find some on the internet.

In summary, I hope that I have made it clear why beads are so expensive.  When you get one of my bead packets in the mail, you may find yourself wondering, "Why did this little lot of beads cost so much?"  The reasons that I've given in this article should assure you that you are not being cheated.

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More About Wholesalers

My experience with wholesalers in New York City may not be typical of all cities (or all wholesalers), but perhaps this information will be useful to you.

Wholesalers make most of their money off of sales to big customers who spend a lot of money – or, at least, that's what they want you to believe.  The fact is, most bead wholesalers have many customers who spend small amounts of money.  Indeed, many wholesalers have both a retail business and a wholesale business.  For example, if you buy a gross of beads (144 beads), you may pay 8¢ per bead; but if you buy a mass (1200 beads), you may pay 2.5¢ per bead; and if you buy five mass (6,000), you may pay 2¢.  Very few designers (which is what I assume you are if you are buying beads) can afford or use five mass of any bead; but if you can use a mass, by all means buy by the mass to get your costs down.  Some designers make every necklace an original and then sell their necklaces at high prices.  But if you create an especially nice design, I see no reason not to duplicate it.  If you are duplicating your designs, then you can buy the beads for that design in large quantities.

There's definitely a negative side to dealing with wholesalers, and that's their general attitude.  They feel that their true business is to service the large wholesale customer, and they resent having to deal with small customers (which all of them must).  If you are spending $3,000, they will roll out the red carpet for you, but if you are spending $40, they will treat you like a nuisance (not all, but many of them will).  They'll get irritated if you haggle on the price (haggling is part of the wholesale game, but they don't want to haggle with small buyers).  They also get irritated when you make returns, which are inevitable.  One of the reasons I left the jewelry business 20 years ago was that I was tired of being made to feel like a nuisance.  One wholesaler bawled me out in a very nasty way when I bought only $50 worth of Swarovski crystal beads (that's about $75 in today's money); it was a very unpleasant experience.  The best wholesalers realize that the small customer is their bread and butter, and that many of the small customers eventually become big customers.

Here are some tips that will make your buying trips easier:

1.  If possible, buy at least $100 on every trip.  The more money you spend, the more they will take you seriously.

2.  Get a tax ID number (also called a resale certificate) that will allow you to avoid paying sales taxes on your purchases.  Having a number will make you look like a serious customer.

3.  Look at the beads under bright light – many defects are not noticeable in dim light.  Also, unless you are buying very small beads (such as seed beads), don't buy beads that are sealed in plastic without asking the supplier to open the package so you can examine them (many defects can't be seen through plastic).  If the bag is open, by all means pour some into your hand and examine them (but do the right thing and put the beads back and close the package).  If you are buying beads by the hank (a hank is 300 or 600 beads on strings tied together), make sure that all the strings are there.  (Note:  In the past, hanks always had twelve strings, but recently I have seen some hanks with six or eight strings.)

4.  An extra caution about hanks:  4mm beads have 50 or 100 beads per string, so a mass will be either one or two hanks.  6mm beads have 25 or 50 beads per string, so a mass will be either two or four hanks.  8mm and 10mm beads have 25 beads per string, so it takes 48 strings (four hanks) to equal a mass (although some hanks now come with six strands, so you need eight hanks to equal a mass).  Don't do what I did once, and that is to buy two hanks of 8mm beads thinking you are getting a mass – that's half a mass!  To complicate matters, synthetically coated beads often come on strands of 75 beads, so it takes 16 strands to make a mass.  Always count the number of strands per hank at the time you make your purchase.  If a hank is short one or two strands, you want to catch it at the time you make your purchase.

5.  Check the prices the supplier puts down on the bill very carefully.  If they over-charge you (which is quite common, I've found), it is much better to catch the mistake at the time you are paying, rather than later.  Walking in the next day asking for a refund will not make you popular.  Also, if you are buying your beads on your lunch hour, don't leave the order with them to total up later – the total will invariably be wrong, and then there'll be problems.

6.  Bring a price list with you, your price list.  In other words, every time you buy beads, note the size, style, price and wholesaler on your price list, and then bring it with you when you shop.  If they charged you $30 for a mass of beads two months ago, and this month they are charging you $36 for the same beads, you don't want to stand there wondering if you are remembering wrong, and then go back the next day asking for a refund.  You want to be able to say immediately, "I paid $30 two months ago – has the price gone up?"  In other words, settle the problem then and there.

7.  Be friendly but otherwise unemotional.  Don't get angry or defensive if they don't give you the price you want, or if they won't give you a refund.  It helps to have a sense of humor.  (I violated this rule myself recently.  I picked out 20 strings of semi-precious beads and brought them to the counter, each string marked with the price $4.50, and they told me the price had gone up to $4.75.  The local law says they have to sell items for the marked price, and I flipped when they wouldn't do that.  I wouldn't buy the beads and I didn't go back to that store for the better part of a year.)

I've probably made the wholesaler-customer relationship sound like guerilla warfare, and that really wasn't my intention.  Some wholesalers are friendly and accommodating, but not to the same extent that you find in retail.  (Actually, the quality of service in retail isn't so great either!)

An Experience with a Wholesaler

When things go wrong, they really go wrong.  Here is an account of a shopping experience I had early in my business.

This particular wholesaler has a street-level storefront.  The first time I went in, I got an uneasy feeling, as the salespeople weren't very friendly.  In fact, I was totally ignored for a long period of time, until I finally spoke up and asked some questions.  I didn't buy anything that time.

Eventually I went back with money.  I spent my whole lunch hour picking out beads, and by the time I was finished I was due back at the office, so I told the saleslady to total it up after I left.  She told me they'd be closed when I got out of work, so I arranged to pick up the beads from the building guard after the store had closed.  When I got the beads home, I discovered I had been over-charged on 3 items, and that the beads in one of the bags were about 30% defective.  The next day I went back and asked for a refund, which they gave me but weren't happy about.  However, as it happened, I ended up buying more beads that day.  But because I was in a hurry, I left one hank of beads on the counter.  I was short $8 and they told me I could pay it the next day, but instead, I went to the bank and returned immediately with the money.  When I walked back into the store, I saw the hank that I had left on the counter and, not realizing that I had already paid for it, purchased it it a second time!  When I got home that evening, I realized my mistake, as there were only four hanks in the bag (I had paid for five).

The next day I went in and explained what had happened.  They immediately suspected that I was trying to cheat them, and they denied that I had paid for the hank twice.  I spent a couple minutes trying to convince them but couldn't change their minds, so I decided to let it drop.  However, coupled with the fact that I had asked for a refund the day before, the owner was now convinced that I was dishonest.  I could see what he was thinking and, in an attempt to show him that I was honest, I proceeded to buy another $130 worth of beads.  The owner watched me the whole time to make sure I didn't steal anything.  When it was time to pay, he made a point of charging me tax, since the state hadn't yet issued me my tax ID number.  However, he had previously promised not to charge me tax while I was waiting for my ID card to arrive, so I angrily told him that he was going back on his word and I refused to pay the tax.  After a short argument, he relented and sold me the beads without tax.

That was a learning experience for me.  I made the mistake of allowing the saleswoman to total my bill without being present, and I made the mistake of rushing and leaving beads on the counter.  My relationship with that store was uneasy for a very long time after that.  They only came to trust me as I repeatedly made large purchases and they could see that I was a serious customer.  That's why I say it's important to be careful and cautious.  Don't rush.  Be professional.  And check everything they do.