A Friendly Tutorial on those Vexing UPC Codes
In my work with makers and product designers, I field questions each week about those mysterious UPC codes…
What is a UPC code?
Do I need UPC codes?
What does a UPC code do?
Where is the best place to get UPC codes?
I decided it was high-time that I rolled up my sleeves and pulled together a UPC tutorial to shed some light on the subject. I hope it proves helpful!
WHAT IS A UPC CODE?
UPC codes are unique, globally recognized numbers assigned to products to provide critical information to retailers. Think about when you’re checking out at a grocery store: the clerk scans the bar code of an item and both the product name and current price pops up on the screen. As that item is scanned, it’s also deducted from the retailer’s current inventory count so that the shopkeeper can track sales and keep accurate stock counts.
Through this system, a gallery in San Francisco can scan a UPC and immediately identify the product and maker. A boutique in Baltimore could scan the same product and derive the same information. So could a spa in New York or a department store in Ontario.
Every product registered for a UPC code is assigned a unique number. If you’re a jeweler with 43 different designs, then that tallies up to 43 codes. Your split fringe necklace will have a different code than your brass arc necklace. If you’re an apothecary maker with 8 varieties of sugar scrub, then you’ll need 8 different codes: one for each scrub formulation.
Each of these UPC codes is tied into a central system managed by GS1, an international nonprofit organization charged with developing and maintaining standards and issuing codes.
ANATOMY OF A UPC CODE
All GS1 codes contain twelve numbers, but understanding the nature of those numbers is critical. Each company registered with GS1 is assigned a unique company prefix and this series of six numbers is always placed at the beginning of every UPC code. The series of numbers which follows the company prefix identifies the actual product from the company. Freeze that information into your brain for a moment because you’ll need to recall it in just a minute.
DO I NEED UPC CODES?
If you simply need an internal system for tracking how much inventory you have on hand, then you don’t need UPC codes.
If you plan to sell exclusively direct-to-consumer (whether that’s through Etsy or your own website, or at farmer’s markets or crafts fairs), then you don’t need UPC codes.
If plan to wholesale to small, independent shops, then you can likely skip the UPC process.
Most of these types of stores don’t require UPC codes, though some may. Many shops who are accustomed to working with smaller, independent brands may actually send their own barcode stickers which are exclusive to their store and not tied into the global UPC system. You’d then apply these stickers to their orders before shipment.
If you have aspirations to sell nationwide or through large, corporate accounts, then UPC codes will be all but mandatory. Department stores and grocery chains expect these codes. So do big national retailers like Target.
My recommendation? If you believe that you’ll need UPC codes in the next 12-18 months, then it’s wise to secure them for your products right now. Why? Because it’s expensive and a time-consuming pain in the tuckus to retroactively fit these codes onto pre-printed product packaging.
If you don’t already have UPC codes, but imagine that you’ll need them on your next run of packaging or printing, then go ahead and get them squared away now. Doing so will save time and money in the long run.
WHAT DO UPC CODES COST?
For many years, GS1 required companies to purchase a minimum of 100 codes at a cost of $760. That put these codes out of reach of many small businesses. However, in 2013 GS1 restructured their packages and the new offerings are delightfully small-business-friendly. You can now reserve a UPC package based on how many codes you ultimately need without meeting that 100 code minimum. Remember that each individual SKU will need its own code, so if there’s a variant in color, size, fragrance, etc. then each product will be assigned its own UPC.
If you have a petite collection, you can get started for $250 with just 10 codes.
While it’s important to note that you can’t “add capacity” to a UPC package, you can reserve an additional company prefix if needed and grow our collection that way. However, if you envision launching a substantial number of new products in the future, then it would be wise to do the math and see what will ultimately be most cost effective…
a) Secure one company prefix now and another as you grow the collection
b) Buy a bigger-than-you-need-right-now package under one company prefix
HOW TO SECURE UPC CODES
The process of obtaining UPC codes is fantastically simple.
1. Begin by filing an application with GS1 and submitting your payment. The entire process can be completed online in just a few minutes.
2. Next, GS1 will issue a unique prefix which is specific to your company.
3. Registered users can access GS1’s free “Data Driver” software to simplify barcode creation. I promise I’ve done it many times and it takes nothing more than a few clicks and virtually no knowledge… it’s deliciously straightforward.
4. A UPC code is then automatically generated and you can either print this bar code on a small label that you attach to the product or you can incorporate that UPC code into the printed product label or tag itself.
You’ll want to make certain, though, that you renew the codes annually. If you ever fail to renew, then you’re legally obligated to destroy all packaging which displays the codes. Make certain this is a commitment that you plan to honor moving forward.
THE PROBLEM WITH UPC CODE RESELLERS
The internet is awash in sellers of inexpensive UPC codes which can be purchased one-at-a-time. Prior to GS1 repackaging their codes to be more small-business friendly, many makers went the way of these resellers.
Innovative, forward-thinking companies purchased bulk codes through GS1 and resold them individually to small businesses for as little as $25 each. Prior to August 2002, there were no annual renewal fees, making this a pretty lucrative business venture for resellers.
The major advantage of purchasing single UPC codes was obvious: small brands needn’t tie up their cash on codes they didn’t need at the moment. Remember: the old standard was a 100-code minimum to play in GS1’s sandbox.
However, there are several disadvantages to using these companies and I strongly advise against them.
1. Several large national retailers require that the company prefix belong to your company, which rules out the possibility of using resold codes. These companies include: Kroger, Macy’s, Bloomingdales, Wal-Mart, Sears, and JC Penney. Other companies may adopt the same requirement, which would immediately invalidate your codes.
2. You could inadvertently be given a code that’s already been issued to someone else. What would happen if two people were each given the same code by a reseller and you built that code into the design of a label, box, or hangtag that’s professionally printed in a large quantity? Would the UPC code reseller own their flub and step up to the financial plate to rescue you and cover the reprinting expenses? I don’t know. And I don’t want to find out the hard way.
3. The internet is, unfortunately, populated by opportunists and I’ve heard more than a few stories of young brands who purchase codes from a reseller that turn out not to be genuine codes. Which means that they’re absolutely worthless. If you spent $100 on 4 fake codes, then eating that $100 would be irritating, but likely not fatal. If you had to reprint thousands of labels or tags or boxes, then that financial pill could be intensely painful to swallow.
If you’re buying more than a few handfuls of codes, then the cost-per-code from GS1 is now much less expensive versus going through one of these resellers. Forty codes at GS1 will set you back $750. Forty codes through a reseller at $25 a pop will run you $1,000.
When in doubt, go direct to GS1.