If you match the thread as closely as possible to the appliqued piece, do you have to have 50 or 60 colors of thread? How do you keep your thread costs down?

I only use Bottom Line thread for applique.
It's so thin it doesn't matter what colour you use.
The only concession I make is I usually use a light colour BL on light fabric and dark on dark.
I appliqued circles onto 8 quilts using 1 spool of light green on background squares of dark green, yellow, navy blue, ecru, etc. No stitches showed.

http://www.superiorthreads.com

i have about 10, a couple very light, a couple very dark, and several med. tone of neutral colors, they blend in with most colors very well. i use 100 weight silk thread, it is pricey but goes a long way

I don't really think you really need 50-60 (although I'm guilty of having almost every color of TIRE silk 100 wt).

I would think the most inexpensive way to have the largest variety of quality threads for applique would be to buy prewound bobbin sets (at least to start):

Like this:
http://www.superiorthreads.com/shop/...ut-1/products/

Superior has numerous different prewound sets. NAYY.

I use 100 weight silk. It can be expensive, but you only need two colours, a medium brown and grey. the thread is so thin it literaly disappears into the fabric.

ANd this is absolutely true.....the 100 wt just melts into the fabric and hides a multitude of lousy stitching.

I do the buttonhole stitch on my applique, and use lots of different colors. I use only DMC thread.

DMC embroidery thread? That's a great idea. You can sometimes buy a little skein for about a dime. More than enough colors for $10!

Same here. :) This thread is amazing and I don't usually try to match the colors, although you can buy nice color assortments of Bottom Line pre-wound on bobbins at reasonable prices.

I usually use Silver, Grey, Cream or Taupe - those four colors blend in with just about anything. Light and dark warm and light and dark cool.

I have six or eight different thread brands I've tried for applique and this is my absolute favorite over YLI Silk, Masterpiece cotton and several other high quality threads - the Bottom Line handles like a dream compared to silk and is much slower to fray than any of the cottons. :)

I use a verigated thread that matches most of the fabrics. Only use it on top and use a generic beige in the bobbin.

Oh, wait, are you talking about hand applique or machine? For hand, I do have a lot of different colors and try to either match or complement.