Monday, September 26, 2011

Addicted to Spinel

You must have wondered: how much more spinel can she list on her Etsy site?  Well, instead you should ask: how much spinel does she buy?  A lot, apparently.  I’m addicted to the stuff.

Spinel is its own mineral, but it is often found together with corundum – sapphire and ruby in other words.  Spinel comes from Sri Lanka (Ceylon), Myanmar (Burma), but also Vietnam and Cambodia, Madagascar, Nigeria, Tanzania and Thailand, to name a few.  The spinel I’ve dealt with has been from Sri Lanka, Myanmar, Vietnam and recently, Tanzania.  I’ve not seen other origins on the market.
I like spinel because it is very sparkly and because right now, there are no known treatments or enhancements for it, so it is not that tricky to buy.  Spinel is a fairly sturdy stone with a hardness of 8, and it always totally natural. (There is synthetic spinel, of course, but I’m not talking about that.)

Spinel comes in red, pink, purple, blue, and sometimes orange, yellow and green.  The value is determined more or less in that order as well, though there are exceptions, depending on origin.  There’s also black spinel, but what is sold under that name can also be garnet, and sometimes even black onyx. 

Red spinel used to be confused with ruby but if you’ve ever seen red spinel, this is hard to believe.  Most ruby nowadays is more pinkish, and usually more included.  Spinel is very crisp and clean.  Word has it that there used to be rubies like that, but they are now exceptionally rare.
Red Spinel, Diamond and 14K Gold Ring - Custom Order
The rarity factor: yes, spinel is rarer than corundum, and some people think it is therefore more valuable.  Well, value is determined by demand, and there’s much less demand for spinel because it is less known and not used in the mass jewelry market.  So the cat chases its own tail: because it is rare, spinel can’t be commercialized, and because of that, it costs less.

I think spinel will probably never be as costly as sapphire, but it will also retain its value.  Some say it might move slightly ahead of inflation.  But right now all gemstones are ahead of inflation because many people are looking to invest in something other than stocks.  So as gold and silver go up, diamonds go up, and then colored stones go up.

So what’s the most valuable spinel?  Probably Burmese red, if it’s clean and large enough (1 carat at least).  I’ve never seen any that size.  Some websites offer Burmese reds at over 1 carat, but they’re lightly included and darker color.

The next most valuable spinel is the neon pink stuff from the Mehenge mines in Tanzania.  That material is really really bright.  Mahenge spinel has an absolutely phenomenal color, it’s almost fake looking.  It is also rare, and it already trades at high prices.  I only know one dealer that carries it.
Mehenge Spinel Currently on my Site

Sri Lankan stones, which are mostly pink, purple and blue, definitely cost much less (about 80% less on average) than Burmese or Tanzanian.  They come in bigger sizes, though, and are equally clean. 

 There’s one other very important factor to consider when you buy spinel.  You must look for “open color”:  a red stone, for instance, should be bright and sparkly, it should pop out at you.  It should not look like garnet.  In other words, you are avoiding what is sometimes called “grey mask”.  This doesn’t make the stone look grey exactly, but as any graphic or interior designer will tell you, adding grey subdues a color.  So a stone with grey mask has less presence, it looks a little lifeless.  When I browsed the web for this blog entry, I came upon a site where you can see the grey mask in some of the purple and blue stones:  I think you’ll see it clearly.
Ceylon Spinel Ring

Wednesday, September 7, 2011

Can You Live off Etsy?

Everyone in my craft group has an Etsy shop, one is even an Etsy co-founder.  Some have been in the Indie craft scene for over a decade.  But everyone is a hobbyist.  At one of our recent meetings, someone asked if you could actually make a living with an Etsy shop.  There are no studies on this, so we all took our best guess: unlikely.

I could not stop thinking about this.  I have an active shop, but I don’t think that the number of sales a shop has necessarily determines your income.  You can have a lot of sales, and still not make any money.  You might be putting way too much time and material into the shop without calculating the required return.  So let’s talk about that.
Let’s start by asking how much money you want to make.  $50,000 before taxes, working 40 hrs a week, would not be an unreasonable figure.  Here in NJ, you can’t raise a family on that, but you can make a single living.  And I want to look at the possibility of making a living, not “contributing to family income.”  (If this figure sounds too high or too low for you, just make a mental adjustment.)

Divided by 50 weeks of working and taking 2 weeks off for vacation, this means that you have to make $500 each week.  How much is that in sales revenue?  I’m going to say $2000.  Here’s how I did the math for this:
Income                                                             $500 / 25%
Materials                                                          $600 / 30%
Fees (Etsy, Paypal, Listing Fees)                 $140 / 7%
Equipment, Tools, Packaging, Printing     $200 / 10%
Overhead (Electric, Internet)                       $100 / 5%
Wasted and extra materials                          $100 / 5%
Breakage, botched designs and orders       $100 / 5%
Growing inventory and materials                $200 / 10%         

That’s 97%, with 3% wiggle room.  I am here falsely assuming that you sell ALL the items you list.  I am also assuming that you already have a running Etsy shop with a good number of listings.  This is not a startup calculation.
How many items do you need to sell to make this?  If your average item is $50, then that’s 40 items.

Anecdote: I recently ordered a dress on Etsy for $88.  I am not a taylor, but friends estimated it took about 3 hrs to make that dress.  Can the seller make 20 dresses in one week?  No because that’s 60 hours just spent dressmaking.  Her dresses are seriously underpriced.
But let’s say it takes you an average of 1 hour to make an item and your average item costs $50.  That means you need to make 40 items in any given week.  Can you do that?  I doubt it.  Why?  Because we’ve only taken account of the time spent making the item.  But that’s hardly all that’s involved.  What else takes time?

1.      Photos (for 40 new listings, that’s 200 pictures minimum).
2.      Writing up 40 listing descriptions.
[Observation: if you make 40 different items, you will kill yourself just taking photos and making listings.]

3.      Other internet time: convos, blogging, promoting …
4.      Packing and shipping (for international orders, trips to the post  Office).
5.      Shopping for supplies.
6.      Bookkeeping, working out pricing for custom orders etc.
Would it be fair to say that items 1-6 will fill up to half your week already?  Then you can make only 20 items and your math is way off.  You need be faster or you need to double your prices. 

Somebody said this to me once: if you want to make money selling crafts, remember that you will spend up to 60% of your time selling, and 40% of your time making stuff.  Seems right, doesn’t it?
If these observations have you pondering, or worse, have you worried, do this: next week, keep a log of all your time spent, sorted by the categories above.  Better, do it for a month because no two weeks are the same.  If the math doesn’t add up for you, you need to rethink your shop.