Wednesday, October 19, 2016

Flogging the sunk-cost pony

"In a heart there are windows and doors
You can let the light in, you can feel the wind blow
When there's nothing to lose and nothing to gain, grab a hold of that fistful of rain."

I did something new this week and it was fun.

I posted some of my beads for sale in a Facebook group called Bargain Box Beads. I've avoided it until now because all auctions have to start at one dollar. Not one dollar per bead in a set. One dollar is the start bid for any listing.

You can also have a buy-it-now option which can be any amount.

It was a learning experience. I started with auctions without buy-it-now prices. I got bids I was satisfied with because I'm considering this a clear-out, but I had to wait the 24 hour time period until the auction was over.

After than I included buy-it-now options and went for leveraging turnover. I have to say it was fun, hearing people bid, well, hearing the chiming sound Facebook makes when people comment or bid on my posts of any kind.

A lot of listings went like this. Person One would bid one dollar. Person Two would bid two or three or four dollars. Person One would then call buy it now.

I'd send them the listing info and photos and list another item.

I sold a lot of beads.

What else did I learn. People seem a bit reluctant to bid $12 for an 8 bead set. But they won't think too hard before bidding $8 on a 4 bead set. I wound up cutting apart a lot of my 8 bead sets. People will think even less hard about bidding $4 for a pair. Or $5 for a pair. I actually made a mistake and listed a pair for $8 and it sold. It was a nice pair. Haha. Mental note, next time more nice pairs with higher buy-it-now prices

It's more work for me of course. More stringing, more photography. More photo editing. More invoice updates to make, more beads to keep track of. Or should I say more piles of beads to keep track of.

I really sold a lot of beads.

Better yet, I sold a lot of beads that I'd had for a long time. I sold quite a few mismatched pairs (with full disclosure, naturally). I sold a few orphan strands of one-offs.

I also learned that focals don't do as well as sets and pairs. I want to push that envelope more. I have a lot of focals that I'd be happy to get $5 for, so if I get $7 to $10, I'll be even happier to see the back of them.

You don't have to tell me. I know. It's a slippery slope. The more of my beads that people stock up on at bargain prices, the fewer they are likely to want to buy later at my regular prices. One the other hand, I had a few purchases by former customers but most of these buyers were new to me. For the most part, I think a different crowd trolls the bargain basement group.

I have to be practical. For weeks now, I've sold very few beads at my regular prices.

People keep telling me it's slow for everyone right now.

I see that things are slow, but I also see people buying. Some people may be looking for bargains, but many people are looking for beads that they love. Mine obviously aren't tripping their switches. Maybe they will again. Maybe I'll find a style, a stride, a design that is mine and that sells. I'm a terrible judge and I have a lounge of lizards to prove that.

People keep telling me my beads are beautiful, my quality is first rate and my work is lovely. People keep telling me not to second guess myself, not to doubt myself.

And yet, I have all these beads just sitting here, and I keep thinking about sunk costs.

I took a class at work once about risk analysis or something like that, and this example was given. Let's say you spend $100,000 on drilling a well (I know they cost a lot more than that but set that thought aside for this example). You don't produce any oil. Your expert tells you that if you invest another $50,000 you are guaranteed a return of $100,000. Should you do it?

Most people said no. Their impulse was to think, it's not a good deal to spend $150,000 to make $100,000. I got it right away though. You start where you are. That first 100,000 is spent, gone goodbye. It's a sunk cost. By spending another $50,000 to gain $100,000, you are cutting your total loss from $100,000 down to $50,000.

So in bead terms, if I was now setting out to make these beads I want to sell today, I know it would not be profitable to make and sell them for the prices I'm letting them go for. But since they are already made, the cost of making them is sunk. Anything I get for them cuts my losses.

It also gets them out of my care and feeding, it gives me the ephemeral sense of earning some bucks and, the cherry on the sundae, it makes others happy to get my beautiful beads at a steal of a deal.

Yes, it's a little embarrassing to be a beadmaker with more than eight years of experience reduced to selling in the bargain basement, but I did notice that I'm not the only one. I see several familiar sellers who have been making beads for as long as I have. So it is what it is. And one purchase morphed into a nice custom order for more beads in Christmas colors.

I have to admit, it was a little addictive to post and sell, post and sell. Clearly I am a buy-it-now junkie.

Because we're leaving on another trip on Thursday, I had to put a hard stop on my listings last night. The last few end tonight if no one calls BIN. That gives me tomorrow to coax everyone to pay their tab and get the beads wrapped up for shipping and dropped off at the post office.

I've already restrung a lot more of my bead sets into single pairs, double pairs, and sets of four. I've picked out a bunch of focals that I will experiment with to see what buy-it-now prices the market will bear. I'm feeling pretty pumped about this. As many beads as I sold, I have three times more in inventory.

If I have to restring everything into pairs to move them, I will, with a smile on my face.

Who knows what will happen. Doubtlessy this new market isn't infinite. Maybe I'll saturate it with a few weeks of bargain buy it nows.

But until I do, I'm riding that pony as far as its little legs will carry me.

Just some of the beads I sold in three days.

You can dream the American Dream
But you sleep with the lights on
And wake up with a scream
You can hope against hope
That nothing will change
Grab a hold of that fistful of rain

When your grasp has exceeded your reach
And you put all your faith
In a figure of speech
You've heard all the answers
But the questions remain
Grab a hold of that fistful of rain

And when diamonds turn back into coal
Grab a hold, children, grab a hold
When the mountains crumble
And you're ready to rumble
And roll like a runaway train

In a heart there are windows and doors
You can let the light in
You can feel the wind blow
When there's nothing to lose
And nothing to gain
Grab a hold of that fistful of rain

Grab a hold, grab a hold, grab a hold
Grab a hold, grab a hold, grab a hold of that fistful of rain."

(Warren Zevon & Jorge Calderón)

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Thanks for your comment! I will post it as soon as I receive it. Liz