Pricing 1%???

[Amy]

I was just visited by my Tru vu salesman who has always been upset with our way of pricing, because, it's not their way. He said, "just price it like you do your frames", assuming that we use a sliding scale. I told him that basically we did, the mark up is the same on the 5 inch gilded Roma's as it is on the Oxford 1/2 inch Canada series. This REALLY got him going and he told me that "no-one does that" and then correcting himself said "well, maybe 1%" I know Jay Goltz is in that "1%" How many of you grumblers are too????
I'm feeling very segregated http://www.thegrumble.com/framer/ubbs/cry.gif

Irronically the next day the Den Glass Salesman came in, haven't used Den glass in years. http://www.thegrumble.com/framer/ubbs/wink.gif


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Amy, CPF
CBF Portland,Maine
right on the Bay

[Mike Leonard]

I use a slight slide in my pricing but with the AR CC or museum glass I feel it is very important to have a margin that alows for breakage etc. The frame can be marked up and a joining cost associated based on time creating the curve in pricing but I dont see reason for this in glass.

[Jay Goltz]

If the rep thinks I take a straight markup on everything, he is wrong. Suggest he take my pricing class, or at least call me. I factor in labor costs into everything. Since the labor is the same regardless of glass cost, taking a straight markup on glass cost will result in the more expensive glass having a much higher gross profit %. I want my gross profit % to be consistent, no matter what I sell. Again, have the rep call me. 773-880-8800. Come to Las Vegas!

[lise]

I think you'll find that 1% of framers are really making the kind of profits that most of us wish we were making. I can't believe the gall of that salesman. Our percentage mark-up is consistent and if a salesman has a problem with it, that's his problem!

P.S. Tell him you are upset with his pricing!

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Lisa Kozokowsky C.G.A.H.
Frameswest Inc.

[From the sidelines]

How many of you have Aaron Brothers near you?

They are now selling Tru-Vue Conservation glass at regular glass prices. How, well tru-Vue is selling it to them at regular glass cost (nice deal). It makes me mad that the independent framers build the market for Tru-Vue and then they cut a deal with the big box framer. I was told that if we purchased what they purchase, we could get the same deal. This is the same thing the big framing companies told us when they made deals with the franchise. Do we have to form a co-op like "Ace", "Tru-Value" (etc.) to get these deals? They are independent owners who purchase as independents under the group name. What would it take for us to form the same type of group?

(I know this was not the subject of this heading, but it has to do with how we price.)

[JRB]

You are never going to get those kinds of deals, there is no point getting your dander up. Put yourself in the big box shoes, your purchasing several THOUSAND boxes of glass per month from these people, why should you pay the same as a guy that purchases five boxes per month?

Trying to compete with the big box pricing schemes is just plain stupidity, your just flat not going to be able to do it.

The only way we can compete with those people is through quality and SERVICE.

If the big boxes started to burn down one of their stores per month for the advertising potential, would you burn your shop down?

My advise to you is forget the big box stores and concentrate on what you can do with the business you have. My shop is a few minutes from Tijuana, prices are one third what mine are, yet I still remain in business.

You either have buying power or you don't, it's just the way it is.

John

[Bob Carter]

Jay-You know I respect your ability and from our conversations, we both know our numbers.But, I would hope you would clarify your "labor added" component to establishing pricing. Without divulging confidentials, would you use hard numbers to show how you price glass.

Please show with hard numbers the difference between a 18x24 reg glass with a 24x36 reg glass; then with the same analysis the same for conservation clear. It might clear up some of the confusion we see.

We don't use a labor added component, and frankly, I've never seen it successfully explained or used it anywhere. I think there are too many variables to make it an effective tool, yet it is always mentioned in most people's pricing strategy. There was even a lengthy version on HH that started off by saying that no matter how you derived your pricing, it was wrong. Then had about 8 steps of variables. Our good friend Marc and I were working on a project together and that method came up and neither of us could make it work.

So, in hopes of me learning an approach that has never been taught to me, could you use actual hard numbers? If you aren't comfortable with using your numbers, I'll gladly offer mine in hopes of a better understanding.

I've always been taught to understand my numbers, do my homework, know my market and then make an educated projection on the maximum price I should charge. Perhaps a more mechanical approach can save me some time. Your success speaks for itself, and maybe you could teach a old dog some new shortcuts that I never learned in Business School or in the corporate arena.

Respectfully,
Bob

[TRACY ART & FRAME]

We use Cost X Mark-up + Labor.

Your cost is fixed buy the best deal you can get from your suppliers or there straight catalog price.

Labor to cut most glass sizes takes the same amount of time.

Mark-up, this ones a little tougher to come up with but at the minimum teed to include overhead and PROFIT.


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Diver Dave

[Bob Carter]

Hi Dave- Thanks for sharing your formula. But could you put some hard numbers in the equation so we can see how it works in your pricing strategy. I'm curious how the labor variable inpacts the final price; if it becomes static or varies from size to size since you indicate it takes about the same time to cut most glass. Does it change for Cons clear or is that also static.

And I guess the final question is do you adjust or "tweak" this number to reflect your market or to reflect your pricing strategy.

Thanks for your input

[Amy]

Thanks you all for your response. It's obviouse that glass is a very gray area. Jay, our store was represented at your class in Las Vegas last year. You could teach a whole separate class on pricing Glass and other specialty items... How about it?
As far as the sales rep...Over 20+ years, I've known him (with three different companies) He's an old dog who agrees to disagree... They insist on doubling the cost of AR. If it breaks, you break even. I told him when they come out with unbreakable, unscratchable glass then maybe. No, then someone would cut it wrong!
As far as the box stores, I'm not worried. Design integrity and customer service, to say nothing about knowledge! is why we all have them beat! Let 'em cut those 1" suede mats and surround them with a 1" moulding, we'll see them at lawnsales and bizzarres in a few years. While our designs will hang until the walls come down. http://www.thegrumble.com/framer/ubbs/wink.gif

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Amy, CPF
CBF Portland,Maine
right on the Bay

[JFEIG]

One thing many manufactures forget about pricing (in defense of JAY) is that we are not just selling a "wiget". We are buying a "raw material" and processing it into a finished product with "added value". Many salespeople (mentally oldtimers) just do not that concept.
If I wanted to buy a widget and sell it at a consistant markup (lets say 50% for example) I would be like a dollar store or Target. They do nothing but place the goods on a shelf and have a cashier at the front door to take your money. We offer a custom product, manfactured to their specified requests and not an off the shelf item. We have manufacturing expenses, scrap, setup expense and heavy design/sales time in every sale. What would a Target or Home Depot be if they had to spend one hour for every sale of $150 (as an example). Their markups would be more like the picture framing industry.

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Jerome Feig CPF ISA
Field Art Studio
Pleasant Ridge, MI
248-399-1320
248-399-7018 fax

[B. Newman]

I read this somewhere (you may already have a copy of it) I use it in my newsmailer, and have it on my wall in the shop.


"Quality custom framing will outlast the carpeting and furniture in your home, as well as all the cars, clothing, sound systems, televisions and household appliances you’ll ever purchase.
It can pass from generation to generation and still look as good as the day it was created."
(And then I added)
"It becomes an heirloom, and it’s an investment in the future."

Betty

[Frugal Framer]

Bob, etal,

Maybe this is what you are talking about. I was initially confused with labor being constant, because mine varies. Labor to cut, clean, catalog, trash, etc varies between regular, conservation, Oversize (my definition), AR/Museum. If not, then I am still confused just as others.

Regular glass = $10 per lite @ 4x markup + 15% waste + 6 minutes of labor.

Conservation glass = $20 per lite @ 3x markup + 15% waste + 8 minutes labor. (takes greater care in handling & to put on gloves)

Oversize regular = $12 per lite @ 4x markup + 15% waste + 7 minutes labor. (takes longer to wrestle big lites)

AR/Museum = $125/lite @ 3x markup + 10% waste + 20 minutes labor.

POS calculates labor at cost based upon expenses. The above examples are for 36x48 lites and Oversize examples are for 40x60.

Rick Bergeron - CPF
Coeur d'Alene, ID

[tgfu408]

For those of us unable to attend Las Vegas or other shows where Jay Golz may be teaching, I was wondering:

Has anyone bought the Decor book on pricing? I believe Vivian Kistler is the author?

I'm wondering if anyone has read it, is this approach similar to Jay's approach.

Or, Hey Jay: You gonna write a book on pricing? Love "Street Smart Entrepreneur" and would love to read a pricing book by you as well.

We've reduced those LJ-type sliding scales down to three or four "scales" BUT still feel that perhaps there's a better way to do it.

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Michael LeCompte CPF

[Bob Carter]

Hi Rick-Thanks for your post, but what I was hoping for was something more like:

18x24 cost $1.42
markup x3
waste (15%) .22
labor 7min@60/HR
FINAL PRICE $11.48

Is this what you're trying to do? I love the mechanics of pricing schemes and this one looks like it might be easy to disect. But my real question is if this is really what most of you do and does this work on all components? Hard numbers will tell me all I need to know if anyone is willing to share.

[Frugal Framer]

Yes Bob, Thats what I was saying, though it was for a 36 x 48 piece, since glass cost me the same per square inch for any size up to 36x48.

6 minutes of labor @ whatever rate you use. Specialty uses labor calculated on a per minute basis at cost and I am diligent about updating expenses in the software. If it is in Quickbooks, its figured into the expenses.

Realistically, the markups & costs I used are hypothetical since I am not willing to publically post them. Waste is pretty close to actual. The only other factor that the software will allow me to includes is a Percentage markup for interest lost due to inventorying the item vs having the money in the bank.

The structure is very similar for matboard.

Rick

[John Richards]

As a distributor it really irks me when sales representatives come in to a shop and claim that you're not pricing things correctly. If you go on Tru Vue's web site I believe they still have a little macro spread sheet for "Pricing for Profit" that let's you play around with the numbers. If your rep would look at this or try to understand it, I believe it is also on a sliding scale (but I don't believe it truly factors in labor or waste). The next time a rep tells you how to do your business without being solicited for advice, ask him when he's/she's going to start paying your bills.

John

[Framar]

Hey Betty, I like that quote! I am going to make play with it and frame it for my shop. Thanks!

[ArtLady]

This true vue guy sounds like a Nurre rep I had a few years back. Told me I would make more gross margin if I sold their more expense mouldings for lower markups.

Or how about the local artist that told me I could sell her work if I lowered my commission. She is the same one who sells at Gallery wholesale prices at the local art festival. Clueless, clueless, clueless!!!
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Timberwoman
AL
I cut the mat, I pet the =^..^= cat.
Dahl Fine Art & Frame Design (http://www.DahlFineArt.com)
Shapahl Fine Art (http://www.Shapahl.com)

[This message has been edited by ArtLady (edited November 20, 2001).]

[ArtLady]

I think 15% waste factor is a bit low. Interesting, after I started adding in waste factors I didn't feel bad about tossing those scraps.

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Timberwoman
AL
I cut the mat, I pet the =^..^= cat.
Dahl Fine Art & Frame Design (http://www.DahlFineArt.com)
Shapahl Fine Art (http://www.Shapahl.com)

[mbshir]

I'm confused on the waste charge. Are you selling glass based on united inches? If we sell a 18 X 20 piece of glass, our program looks at what size glass needs to be used and we would charge for 18 X 24. The customer has already paid for the entire piece - if the scrap is a piece large enough to resell, it's a bonus for us.

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Maryann

[Bob Carter]

I'm glad that Rick offered a limited glimpse of his pricing strategy on glass.I'm still not sold on the idea of a labor component being an accurate or useful tool in determining pricing.

Every expense we have has to be accounted for to ensure profitable pricing. That includes lights, phone, rent, benefits, etc. But we don't include any of those components in our pricing formulas.

But what I was hoping for was some hard-core, real world numbers to see how this component really works for most of you.I'm just dissappointed that we don't get to dissect this important data; it's probably the most important daily decision we make.I was really hoping Vivian or Jay would expand on their pricing startegies on this sharing forum. Maybe a glimpse of this component might encourage more people to buy her book or attend Jay's seminars. But at some point, we owe to the industry those benefits and advantages that we have gained. Sharing is good; and to the many, many people that have asked for my help in those areas where I have a little more knowledge than most, my fee remains the same:zero.

I guess my feel for pricing comes from what must seem to be a wasted education and wasted years of training by some of the best retailers in the biz.That's because the most important element in pricing continues to be ignored. And worse than ignoring, is the fight to the death attitude on how we set prices.

That component, that we feel has to be included to ensure maximum profit, is WHAT SHOULD WE SELL IT FOR. You can formulize the numbers till the cows come home. But if you're leaving money on the table or pricing yourself out of the market, you need to look for a more effective method. And folks, there ain't a formula in the world that can answer those questions. If the numbers come out to $12.23, wouldn't $12.50 ( a more logical price point) be better? Or how about if everyone else sells that same product for $14 or more, is $12.23 still the "right" price, simply because the formula says so?

I think these formulas do serve a purpose. They make you look at the numbers(if they are accurate or not, that's a different story). But market adjustments, done well, will get more profit than any formula. My advice is to use whatever number crunching you feel answers your needs, but the final step has to be a conscious decision on what price to set. And that comes from knowing your market and reacting accordingly.

But I would love to see some real number breakdown on pricing. I could always change my mind

[R Markoff]

"How many of you have Aaron Brothers near you?

They are now selling Tru-Vue Conservation glass at regular glass prices."

I have a new Aaron Brothers that opened about 100 feet from my new store. Their "Tru Guard" prices are within pennies of my regular Conservation Clear prices. My "regular clear" glass prices are even less.

Don't be fooled by their ads stating that they sell Conservation Clear at "regular" glass prices, it is the PERCEPTION of value that you need to compete against.

I buy Conservation Clear from my supplier at attractive prices that allows me to compete. You can too.

Come to Las Vegas. Take my "Developing Your Competitive Edge" class and learn how to make the experience of doing business with you transcend price.

[Frugal Framer]

Regarding waste factor: In my case, using a waste factor of 15% yields the same price as if I had priced the piece by lite size and not had a waste factor. I chose not to modify the POS to price by lite size.

Regarding sharing detailed knowledge by experts: Since I pay to attend training seminars, buy books and am a FramerSelect member, I would feel cheated if the same level of knowledge were shared publicly as was provided in a structured seminar; especially in the financial realm of things. Financial specifics really have no business being discussed in a public forum in which my customers or competitors can lurk anonymously. The same goes for technical fundamentals, design basics, etc. If I pay to attend a class presented by Nona, Vivian, Jim Miller, Rob Markoff, etc, I would feel cheated if the details were available at no cost.

Regarding pricing formula: I agree with Bob, the formula might get you in the ballpark, but the final result will always need to be tweaked a bit so that the least amount of money possible is left on the table at the end of the day.

See you in Las Vegas

Rick Bergeron - CPF
Coeur d'Alene, ID

[Amy]

Rick, with all due respect, if there are consumers reading the grumble, who are not (past,present or future) framers... They need to GET A LIFE!!!! And pricing strategies can be discussed without bottom lines. Which is how this all started. Pricing is a science and most of us are artists, although the two can mingle, they only mix when shaken well. That's shaken, not stirred. Peace.

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Amy, CPF
CBF Portland,Maine
right on the Bay

[Framar]

Betty, I said I was gonna play around with your quote and I did. The part about furniture bothered me, since folks around here have lots of well-made antique furniture, and I thought I would update the rest of it, while I was playing. This is what I ended up with:

Custom Framing

Quality custom framing, like quality furniture, will outlast the paint and wallpaper, and the carpeting and window treatments in your home.

Quality custom framing will outlast all of the clothing, vehicles, technological systems and appliances you will ever purchase.

Quality custom framing can become a family heirloom as it passes from generation to generation, still looking as good as the day it was created.

Quality custom framing is an investment in the future.

I was quoting parts of this to a customer today, and the next customer in line commented, "Custom framing will outlast us!"