Paying a Fair Price
In the many years were were engaged with the beading community as bead merchants, we were struck by the kind and caring nature of our many customers. Most seemed to be genuinely concerned about where their beads came from, who made them, and how they were being treated.
On occasion, however, we would meet a customer who seemed oblivious to the factors that affect the price of beads, findings, and jewelry or felt that the rising cost of silver, gold, and fuel should have no effect on the prices they were asked to pay.
Let's take a moment to consider why Bali beads cost what they cost, and why those costs can rise and fall considerably over a short period of time.
In this article we will focus on sterling silver beads. Consider an order of assorted beads and findings. What should you expect to pay per gram for such an order?
First, you need to consider the cost of silver. The primary cost of a sterling silver bead is the silver itself. On June 1, 2001, a troy ounce of silver cost $4.34. This can be translated easily into silver cost per gram: $4.34/31.1=$0.14. Fourteen cents a gram. Those were the days!
Move forward 10 years. In June 2011 the price of silver was about $35/ounce, or about $1.13/ounce. You can imagine our reaction to the occasional customer asking us to sell at "the old prices" or accusing us of price gouging.
Second, you need to consider the cost of labor. Silver beads and findings do not get made by themselves. Those incredible silversmiths need to be compensated for their work. Prices are usually negotiated based on how much effort goes into particular designs. Small, elaborate beads weighing a gram or less can actually take much more time to make than large, simple beads. For the sake of argument, let's say that the silversmith gets paid 25 cents a gram for their work. We are now up to $1.38/gram in costs.
Third, we need to consider energy costs. It takes a lot of propane to melt silver and copper to create the sterling alloy. It also takes energy to solder together the various components of a piece. Energy costs have bee rising steadily in recent years. Let's add, say, 5 cents per gram to the cost to cover energy. We are now up to $1.42/gram.
Fourth, there are infrastructure costs, such as the cost of food and housing for the workers, workspace rents, lighting bills, and so forth. There are also salary costs for supervisors, the cook, and packaging personnel. Finally, workers get sick from time to time and need to see a doctor. Health insurance is rare in Indonesia, so we would pay for their bills. We know that our competitors usually did the same as well.
Fifth, the owners need to mark up the price to pay themselves for their hard work. Owners have kids to feed and educate, mortgages to pay, health insurance premiums to cover, and so on.
Finally (at least for U.S. based importers), there are costs of shipping cargo (usually by air) to the U.S. In the U.S. there will also be labor costs (someone has to process those orders), warehouse costs, merchant account fees, electronic processing fees, website hosting fees, and the list goes on and on. This is why prices of U.S. based importers will usually be considerably higher than Bali-based companies. (At one point, we planned to move our operations to Bali, shipping directly from our production facility there. In the end, skyrocketing costs of silver led us to conclude that our other business ventures were the ones that needed to be cultivated.)
All of these factors have to be taken into consideration when thinking about what constitutes a fair price for a sterling silver Bali bead, finding, or jewelry piece. We hope this makes things a bit more transparent for the Bali bead buyer.