This post, essentially, is the product of my thinking through the risks and ramifications of going into business, selling beaded jewelry. Due to experience, I believe that I can do much better with my life than make copy after copy of established patterns — even if they’re my own patterns. Toward the end of this post, Alternatives describes five different methods I could use if I wanted to have some kind of an impact in the online beading world. Essentially, I want to avoid all my work being for naught, but I still have to determine what the place of beadwork will be in my life. I think I’ve established that it will not be a vocation. In terms of time spent in production — time in which I could be reading or writing or earning money more efficiently or undergoing professional development — it is too risky and too expensive.
There is a process to this
After purchasing the materials — which is, generally speaking, the easiest part of beading to accomplish (at least if one has the funding to go back and try again if one bought the wrong thing), the next step is construction. This assumes one’s designs are already set: creating original designs is an entirely different post (or series of them). I’ve timed myself — repeatedly — to know what amount to multiply by which rate, to apply to labor.
After finishing the work (and hopefully not having had to discard one or more pieces due to some loop of thread in the wrong place or a broken bead), comes tinkering with the variables and values on a worksheet. The cost of materials generally isn’t a huge deal, if you’re working only in glass and fiber. Adding in crystal to that (by this I mean leaded crystal; or lead-free crystal, in some cases [Swarovski eliminated the lead from their crystal formulations quite some time ago]), or precious metals, raises the price significantly. So does using actual stone (that someone had to mine, or at least collect, and then cut), instead of synthetic materials.
Determining cost of materials is much easier if you’ve been keeping track of what you’ve paid for what you’ve bought, and in which quantities. Buying online can help this, as generally speaking, you’re told the quantity of materials you’re buying…whereas in a physical bead store, the receipt can be less than helpful, and you may have to count the numbers of beads that you buy on strands. A vial or pack of beads may not list the weight of the beads: which is, in many cases, the way seed beads are measured. You may have to ask. Otherwise, having a scale — or marking how much of a vial you use for any one project, along with the total cost of the vial — helps.
They say that if you want to make a lot of money, don’t be a jeweler. I can understand this, now. Still, I can see the benefit of having a skill set that most of the populace doesn’t have (like, being able to work effectively and safely with hot metals). Needle and thread are more accessible to most people.
As a guide to what I would have to charge, should I attempt this full-time, I found myself informed by MIT’s Living Wage Calculator. I would need to charge a cumulative rate of at least $24/hour over an 8-hour day, over a 5-day week, in order to survive in this…extremely expensive, pocket of the world.
That means I would have to take in at least $192 after everything else was paid for (though perhaps inclusive of my labor fee) per day, in order to stay here independently. Could I even make enough jewelry, per day, to earn that much? And take care of marketing, shipping, organization, design, tax preparation, tools, customer care, etc.? Simply buying things and reselling them, is much different than making things.
This is stressful, and I haven’t even started yet
However: if I am making the jewelry, and I am also selling it; the portion of my return which I charge in labor, accrues to the business. This is outside of the cost of materials and tools: things used in making my jewelry, which I also have to charge for. It is also outside of the cost of doing business (for instance, in licensing, web space, an anonymized mail box, and taxation, a.k.a. overhead). That $192/day that I need, maybe I should set aside as earned from my labor: although apparently, if I’m a sole proprietor (and the sole worker), that stays in the account until I have need to draw on the equity of my company.
My living expenses, including health care, housing, food, clothing, personal insurance, would be paid either from owner’s draws, or from a secondary form of income. Emphasis on secondary form of income. I am not married and don’t plan to be, so this means that I have to find a way to support myself that is worth my time and not crazy-making.
Payments going into the business (materials, tools, overhead, etc.) are drawn from within the business. Profit after payment of the cost of goods sold + cost of running the business, would be rolled back into the business (unless emergencies arise).
I have a little trouble with marking up my costs, considering the inexpensiveness of my materials (though if I’m importing materials regularly, there’s a question as to just how “inexpensive” that actually is). If I’m planning on selling wholesale to a boutique, there’s also the fact that half the sale goes to the boutique.
In which case…although I save on the costs and labor of selling the goods myself, for something like a set of earrings which I have marked up above cost by 40%, my wholesale price minus the cost of goods sold (the latter of which, includes my labor) is simply $9. My business earns $9. This is at a retail price of around $63: half of which goes to the boutique, and half of which goes to me. Every cost my business incurs has to come out of that extra amount: the $9 multiplied by however many units, for the sake of simplicity. This is if I’m paying myself CA 2023 minimum wage, or $15.50/hour: which is still about $9/hour less than a living wage…so maybe I would want to pay a higher labor rate to myself.
The other route is to offset this by my markup, in order to make the activity worth my time.
Changing the price of my labor to the living wage rate, while still keeping the 40% markup, means that the retail price of the jewelry is bumped up to $90; while I garner about $13 per earring set, with which to pay the costs of my business, beyond my basic living expenses. Granted that I have no idea how much indirect costs, interest payments, and taxes actually would come to, at this point.
I realize that some people have no qualms about charging other people money for their work…I happen not to be one of those people. Yes, I’m using special (e.g. multi-hole) beads; beads you generally can’t find sold unless you know 1) that they exist, and 2) where to find them. Yes, I designed — and made — the work. If I were to have an operation at all, it is by definition a microbusiness. Am I just seriously undervaluing myself and my skills?
And honestly, there’s the question of whether a set of earrings is worth $63 — or $90 — though I might easily have dropped as much on other craftspeoples’ jewelry.
There is also the possibility of selling B2C, or direct to the consumer, through a route like Etsy or Amazon Handmade. To keep options open for the future, one may still charge the going retail sales rate even though there is no middleman at this time. This, however, introduces a different business model…one in which all costs of getting the item to the customer have to be accounted for by the producer, in addition to keeping a secure payment portal and handling returns and customer service.
At least doubling the cost of an item to sell at retail — as I had read was normal — benefits the retailer. It is not necessarily a producer’s strategy. This makes more sense when I look at the markup to wholesale (that 40%), and then the markup to retail (2x that sum).
Ultimately, this means that when figuring out how much to charge for one’s work, one has to consider at least two or three questions:
- Do I ever intend to sell my work wholesale to retailers? If so, I need to mark up my prices from the beginning (in addition to selling my work for twice what they paid for it, they may return goods-not-sold). If I’m not planning to sell B2B (Business-to-Business) — ever — I can simplify my base rate.
I can, that is, sell a pair of earrings B2C (Business-to-Consumer) that cost me $32 in time and materials to make, for $45 plus taxes and shipping. I don’t have to sell it at $90 plus taxes and shipping (unless, that is, there is a legal obligation to do so).
This has implications in a global market. I do not live in a society where labor drives the economy. I live in a society where services drive the economy. I would get deeper into this, but suffice it to say that outsourced labor is cheaper due to lower costs of living in other localities; and the Internet is relatively lawless, on a global scale. That means that if someone halfway across the world decides to parrot my designs and sell them for a fraction of my cost, there is the question of what exactly (if anything) I can do to stop it.
- Is this a hobby, or is it something I can sustainably make a living of, full-time? If I plan on going full-time, I’ll need to mark my base rate up to at least a living wage. If not, I don’t have this pressure — but I’ll need to reserve time and energy to pursue whatever it is I’m doing to support myself.
There also might be a third question:
- Do I ever plan on hiring anyone else to help in production? If so, I’ll have to factor in at least a minimum wage for my locality, where it comes to labor. If not, I don’t have to worry about this.
One of the things I (can still) realize now which I hadn’t realized before: I shouldn’t plan on making a living wage off of this. I can make some money off of doing it, but I shouldn’t expect to live off of it.
This was more of a resolution before I realized that I didn’t have to sell my goods at a, “retail,” price. That is: as a very small producer (if in fact I ever vie to be a producer at all — I haven’t yet decided), I don’t need to aim to become a huge company. There are a number of reasons why this project — should it include selling finished jewelry — is not scalable.
First of all, it is handmade work, not machine-made work. To make more of it, I have to hire more people.
I can teach other people how to do what I do, but this introduces two variables:
- The fact that my employees, once trained, can then compete directly with me in the market: I’ve done research into Intellectual Property Law, and I don’t believe that I can “Patent” my designs, unless they’re exceptionally difficult to conceptualize or produce. Non-compete agreements are worthless in my State.
- The fact that I might not be able to pay an employee what they were worth, if my goal was to support myself…and that has been my goal. Now, if I were to start a Co-op or something, that would be entirely different; and quite possibly entirely more engaging. But right now, I don’t have plans for that.
- The point of this, originally, was to make some money doing what I loved (instead of it simply being a financial drain, with people asking me to make stuff for them). If I become a Manager of other employees, that is no longer doing what I love, technically speaking.
That’s…capitalism. Luckily, I have skills other than beadwork (one of which, is writing). Whether I can employ those skills in a healthy manner to support my own living expenses, and my own physical and mental health, is a separate question.
So far I have been detailing one specific business model, which is the design, production, and selling of finished jewelry. There are, however, alternatives. I found it useful to detail the pros and cons of the above model, along with the alternatives, below.
You may have seen me go over some of this, elsewhere on this blog.
- Take the patterns I develop on my own, write them down/draw them up in instructional worksheets, and sell the patterns, not the finished work.
PROS: I would be able to get further into the creation of digital documents, which could be enjoyable, in light of the skills I would need to employ. Pattern-making would also be what I’ve heard referred to as, “passive income,” in the sense that I make it once and it continues to be a small trickle of income into the future (or so long as the beads used are still being made). I don’t have to worry about the safety (e.g. toxicological) of any particular kind of bead, as I don’t choose the beads being used.
CONS: The specific bead sizes/shapes used in the patterns could stop being sold. I might get complaints from people who can’t understand the directions. Although I might just refund them and consider that the end of it, I might also want to support them (which could be difficult over the Internet, specifically because I have no video skills). Someone may (likely, will) purchase a pattern from me and then republish it elsewhere.
- Sell kits with the patterns.
PROS: I would know that the parts I’m giving the customer will work with the pattern I’m also giving them, because I would have trialed them. It might be more convenient for the consumer to buy all the materials in one place, instead of having to place multiple Web orders for specific beads from different retailers. Glass beads are irregular by nature; not everything that says it is an 6/0 Czech rocaille, actually fits the size and shape profile of a 6/0 Czech rocaille. Beads (ostensibly) of the same brand and size may be larger or smaller than other beads of the same brand and size. The end user would not have to pay me for labor, and I would be able to spend drastically less time making copies of things. I would, that is, be able to focus more on Design, and charge less. Selling a kit with the pattern means that there is still a tangible gain for me in the transaction, even if someone pirates the pattern itself.
CONS: I would not be able to ship Swarovski components, due to specific legal terms of Swarovski (though I should be able to tell you where to find the components, online). I would not be able to guarantee the safety of the materials included (re: the warnings that glass beads are not intended for use by those under 15 years of age). I would not necessarily know how the components will age.
- Give away the patterns.
PROS: Increased Web traffic, and a raised profile where it would come to myself and my work, which could help with networking online. Little or no financial liability. Possible increase in goodwill. I could do this with or without selling kits of materials.
CONS: No income generated if kits are not sold. If this route is taken, there is the very real question of why I would put this information out there in the first place, with the concomitant risk of abuse.
- Sell the finished jewelry online (B2C without B2B).
PROS: It seems straightforward enough, though I would still have to deal with returns and scams.
CONS: I would have to charge the end consumer for my labor. I would have to spend a lot of time making the same things over and over again. I might need to forgo selling wholesale to a retail outlet, in order to keep my financial returns within a reasonable range. I would have to research the safety of everything used, or stipulate that my jewelry is not for use by those under 15 years of age (which will [and likely should] raise some questions, which I might not be prepared to answer).
- Sell B2B wholesale.
PROS: Someone else would take care of selling, shipping, display; nearly everything related to retail sales.
CONS: I would still have to charge the end consumer for my labor. I would still spend a huge amount of time, making copies of things. My financial return could be cut in half, or worse, depending on how many units the retail outlet managed to sell. The price to the end consumer would essentially be higher (due to retail markup) than if I sold the jewelry to them, directly. I would still have to research the safety of everything used, or say that my jewelry is not for use by those under 15 years of age.
What this looks like:
It really seems, at this point, that I would be much better off at generating patterns (which I have to draw/write down anyway, so I don’t forget how I did what I did), and then selling or giving away those patterns. If demand grew, I could put together kits; though I shouldn’t do that at the beginning (as I have no idea how popular my patterns would be). Anyone else who wanted to put together kits would risk their own financial solvency, not mine.
Because this is a “hobby” for me, and not a vocation, giving away the stuff may be less expensive (or at least, lower-risk) for me in the long run, than setting up a business!
There are freedoms about this. I can still maintain my website and blog. I can tell you all about where to source materials, and not have to keep their prices and locations an open secret. I can share what I’ve learned over the past 30 or so years of beading. I can even review the beadwork books I’ve bought, or patterns I’ve found online; and keep this place as an online resource for beaders — particularly the intermediate-to-advanced beaders who aren’t necessarily well-served by the proliferation of copyrighted recipes and lack of tips on how to work from scratch.
It also does mean that I should not plan on making money off of this knowledge: in effect, I’ll have to look elsewhere for income. That means that this project will not take primary importance where it comes to what I do on a daily basis…but that’s OK, I think! Prioritization is a useful skill.