Thousands of hopeful women begin on their entrepreneurship venture with Mary Kay each year, the company that’s still famous for its classic pink Cadillac and door-to-door sales approach. While some believe it’s just another marketing scheme, others continue to join forces with this world-renown company in hopes of generating a lucrative income. Mary Kay businesses account for a significant portion of the $100 billion direct sales industry, and encourage women to earn rewards and enlist other independent beauty consultants as part of their venture.
While the $100 upfront investment attracts many budding entrepreneurs into the system, it’s not always easy to recognize how much money and time this type of venture actually costs. From stocking enough inventory to coordinating recruitment parties, here’s how much it really costs to start and operate a Mary Kay business:
Upfront Costs for a Mary Kay Business
The initial Starter Kit for all consultants is $100, and this is actually a sign-up fee that registers you in the network. You’ll be given a seller’s ID and other information to set up your online storefront, along with catalogs of all the products you can purchase to begin your inventory stock-up. So far so good.
Inventory Costs for a Mary Kay Business
Mary Kay doesn’t require you to purchase product upfront, but you do need enough to sell to clients directly if they choose to buy on the spot. Since you don’t know who will be interested and at what time, most reps stock up on at least a few products from each segment of the catalog. The average price of each product ranges from $10-$15, and reps can purchase these at a 50% discount after reaching an order minimum. If you plan to fill a minimum of 30 orders in your first month (one order per day), you’ll need to stock up on at least $300-$450 worth of product. This equates to an added cost of $150-$225 for your first month.
If you don’t sell all of your product this month, you can keep it on hand for the following months. However, some customers may want to order products directly from the catalog after review, and you’ll need to place orders throughout the month – to save on shipping and time, you’ll need to start placing larger orders. You may double your original order the subsequent month to include the chosen products from customers. This time around, your order can cost upward of $400.
Each month, the cycle continues. You need to stock up on inventory to have it on hand for immediate sale (or your customer jumps online for replenishment), but you also need to maintain an order minimum to keep up with your agreement.
You do have an option to purchase an entire inventory case, an assortment of recommended products that generally sell out faster than others. The Pinking Shears, a website dedicated to supporting ‘Mary Kay Survivors’, suggests that women should start small, and stick as close to the $200 wholesale order minimum as possible until their business begins to grow (Source: thepinkingshears.com).
Monthly Recruitment Party Costs for a Mary Kay Business
Building a team of independent beauty consultants is not a requirement to run a Mary Kay business, but it works as an incentive program – the way to pick up that Grand Achiever Career Car. Recruitment involves educating new consultants on the benefits of Mary Kay, advising them about their options, and recommending inventory sets to purchase. If you host a bimonthly meeting and dedicate approximately 5-10 hours per month in recruitment efforts, you are ‘spending’ approximately 10-15 hours of billable work time towards your efforts. Open houses ‘cost’ you in much the same way; you need to calculate the amount of time and effort you are putting into hosting these parties, and whether you really can make sales from customers who stop by.
Total Average Monthly Costs for a Mary Kay Business
After the initial $100 signup fee, your monthly costs to keep enough inventory on hand, coordinate hostessing parties, and spend time on the administrative side can easily cost between $600-$800+ – sales or no sales. This can be a considerable amount of investment for any woman trying to build a successful business.
After calculating each element of owning and operating a Mary Kay business, it’s clear that you need to invest a significant amount of money towards inventory, and spend a considerable amount of time keeping up with your customer requests so they don’t turn online, or to another rep, to pick up their order. Mary Kay does offer a buy-back program for 90% of the cost of inventory, but you will incur shipping costs for each shipment in order to get your refund.
Bottom Line: While many women do experience success with Mary Kay, it is not a home-based business that can run on ‘auto-pilot’ without a significant amount of monetary investment and building a strong customer base. Taking a realistic approach to the actual costs each month may help you make a wise decision.
