Hey everyone,
I’m starting a jewelry/craft business and am in the VERY beginning stages. I have a bit of experience when it comes to tracking inventory and figuring out the cost of goods but I’m working with a partner and they don’t feel it’s necessary to have a count of beads used in a product due to the time it takes. I understand it’s tedious but personally believe it’s necessary to have an accurate cost of goods so profit is accurate. I think this is important for tax purposes as well but I’m not too knowledgeable on that.
If you have any knowledge to share or opinions please let me know! I don’t want to waste time if we don’t need to have a count of beads but I’m more of a numbers person so in my head it feels necessary when it’s possible that it isn’t.
How much does each of the beads cost?
Although accuracy is important, materiality is as well. It makes no sense to spend $1 in staff time counting $.05 worth of beads. If these beads are individually very high value - $5 each for example - it would make sense to hand count them to the one. If they’re $.03 each, do not waste your time; estimate instead.
Another solution is to get a digital scale. Small dollar value parts are often “counted” by weighing the batch then dividing by the weight per unit.
Accuracy but also consider big picture costs. You never want to hire a bookkeeper who brags they keep their accounts balanced to the penny. People like that spend inordinate amounts of time chasing down amounts that do not matter. You do not want your $25 or $35 an hour bookkeeper spending 15 minutes figuring out why an account is off by $.02.
Thanks for your advice! What if we have beads ranging from $.01 to $.10 each? Should I take an average and use that instead?