3/05 PRICING DISCUSSION/POLL: How often do you adjust your prices? (NEW)

[Mike Labbe]

MARCH 2005 POLL & DISCUSSION - HOW OFTEN DO YOU EVALUATE AND ADJUST YOUR RETAIL PRICING - AND WHY?

Your input and discussion are greatly appreciated!

PLEASE NOTE: POLL RESPONSES FROM evening of 3/2 and morning of 3/3 were lost due to an unfortunate happening. If you participated during that time, it will be necessary to vote again. The system will only let you participate once, so if you're unsure - click on VOTE NOW and the system will know if you have already voted or not. The start of a great discussion was in the previous poll, and I've copied it to this new thread.


RESULTS from previous surveys: www.custompictureframing.com/poll_results.htm

Mike

Note: your poll answers are confidential. (discussion is public) This is strictly for entertainment and discussion purposes and shouldn't be used as a primary business planning tool.

 

[Mike Labbe]

THESE ARE SOME OF THE RESPONSES FROM THE ORIGINAL (broken) POLL. PLEASE KEEP THE POSTS COMING. THIS IS A GREAT TOPIC!

Once again, sorry for the inconvenience for those who already voted.

Mike


Jerry Ervin posted 03-02-2005 04:21 PM
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This may just be a good discussion Mike! Another question or option could have been 'When my POS software updates are available'.

So far no one has answered daily. You would pretty much have to be constantly thinking about it to adjust daily.
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Cliff Wilson posted 03-02-2005 04:38 PM
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Hmmmm, for moulding, I let the POS update based on cost everytime there is a price change. But, I check markup rates and such every six months or so.

For glass and mats I evaluate quarterly to six months or when I get a notice that the cost is changing.

If a customer complains or I see a competitor's price that is very different from mine, I evaluate the differences or the complaint and may or may not adjust.

For mounting and specialty items, I evaluate if I "feel" a little faster, or have a PITA problem. (very random)

If I notice my COGs % is varying from what I expect, I try to "get to the bottom of it" and adjust prices if that is warranted. This has happened a couple of times in two and a half years.

I said six months on your survey.
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Bill Henry posted 03-02-2005 05:07 PM
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I said, “other” on the survey.

I don’t have a POS so I have to adjust my price increases manually through a printed spreadsheet. Since different manufacturers/distributors have their own peculiar “season” for increases, I may end up adjusting prices monthly (Decor just jacked up theirs on March 1), or I may not have to go through the process for 8 months or so.

To keep or increase my slice of the pie, it is not uncommon for me to give myself a dollar or two raise each time the wholesale costs go up. This seems to make up for the PITA of having to go through the whole process of printing new spreadsheets and making new labels for the corners.

I never lower my prices just ‘cause I get a temporary “bargain” from a supplier.
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Kevin Colbert posted 03-02-2005 09:57 PM
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Price changes are both done automatically (Lifesaver) to keep up with price increases, and by management decision to adjust for changes I make in my market position. The first is obvious and is done by changing my costs without adjusting markups. The second is based on competition in conjunction with my profit management and is done by changing my markups on cost. Whenever I change markups on cost, I do it because I recognize I have offered a different mix of service that requires a change in my margin. (For example when I started including delivery on any order over $350.00 I needed to have more margin to stay profitable, but the extra service sets me apart from other framers, and I can get the extra margin without loosing customers.) I would recommend never changing your price by more than 5% a year. If you need to have a larger increase, do it in steps.
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Bob Carter posted 03-02-2005 10:44 PM
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What a pleasure it is to read Kevin's thoughtful responses
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Baer Charlton posted 03-02-2005 11:31 PM
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Kevin,

So what do you do when LJ raises the bar twice in one year 7% and 4.5%? Take it in the shorts; or just order more longs (length)?

I hear what you saying about large jumps, but I also have been watching a price creep on moulding that is only obvious when you print out any changes to prices that you download monthly......

It's why we are now watching everybody closer these days.
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dave moen posted 03-03-2005 12:04 AM
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that is a good point to consider about price jumps, seems that has been a concern in many industries.

how about other moulding vendors. how often is the market seeing price changes?

thanks for your insights.

best regards,

dave moen
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[Mitch]

Who is this giggles person?
Mitch

 

[danny boy]

"If at first you don't succeed...

 

[Kevin Colbert]

Baer,

”So what do you do when LJ raises the bar twice in one year 7% and 4.5%? Take it in the shorts; or just order more longs (length)?”

Good point.

I was using the 5% to be safe. The theory is that people don't recognize any change less than 10% (this comes from a guy named Fishbein who did some famous studies on how people make buying decisions). The key to Lifesaver updates (and I’m sure the others as well, I just happen to use Lifesaver) is that they are incremental and they relate to increases in cost. ALL retailers are either keeping up with the increases or they are decreasing their gross margin and losing profit.

You asked what do I do? I do my best to control all my costs, but I always keep my gross margin the same to the best of my ability. The number one cause of bankruptcy for manufacturers is declining gross margin. (When cost of goods goes up, but price does not increase to match.)

SO.... I doubt that the increases are truly that sharp as to be noticed just because of the cost increases, but if they are, I know I am still competitive, because everyone is subject to the cost increases as I am.


”It's why we are now watching everybody closer these days.”

I also shop around and add in higher margin items where I can.

 

[Kevin Colbert]

Bob,

You're such a nice guy. You're making me blush.

 

[JFeig]

Now, if we could only keep the price increases of fuel(gasoline, heating oil, diesel) to a 5% increase.

 

[David Waldmann]

Originally posted by JFeig:
Now, if we could only keep the price increases of fuel(gasoline, heating oil, diesel) to a 5% increase.

Actually, the key to fuel supplier price increase "success" is that they change them very often, so that they are never 5%. Just because you wait a whole week to buy more gas and the new price is 5% more than the last time you bought it doesn't mean they raised them 5% - just a 1/2% a day will do

 

[FrameMakers]

Around here it seem like gas prices raise 7% then go down 2% then down 2% again then up 7%.

 

[JFeig]

my corner station is now $2.09..........it was $1.92 Tuesday

 

[Lance E]

ugh, fuel prices have just had another 5 cents of tax /litre added, not happy campers here...

This will have a marked effect on the cost of freight here, it will be very interesting to see how many others increase their prices as the moulding value does not reflect this cost.

 

[Mike Labbe]

Fuel here was $1.83/gallon Thursday and jumped to $1.99 Friday, after the $57/barrel hit the news.

I do some computer consulting work on the side for frame shops and it's alarming how many shops skip this important task. I have seen shops that have never adjusted their glass or labor prices in a decade, or left them at the POS (example) amounts since day one. Money is being left on the table/design counter(?)

While mats and mouldings will automatically adjust based on a pre-set markup(from cost) matrix, this is not the case for other components and labor. Some mats and mouldings may have a higher or lower earning potential, and may require manual price tweaking/review.

POS automation is an extremely powerful and flexible tool, and I wouldn't run the shop any other way. It does, however, require the same periodic review as a manual system. This survey will hopefully stimulate some thought and discussion. I think it's an important issue.

Mike

 

[Le]

It would be nice to have the luxury of raising your price in 5% increments, but when you only raise them by 5% a year you will eventually face the choice of raising them by 25% or shutting down. I have been living in fairyland.

 

[David Waldmann]

Maybe it's because of the way the question was worded, but I have a hard time believing that the largest single group of people (29% at this time) evaluate and then adjust their prices "every month or so". If so, somebody has too much time on their hands. It's a challenge for me to do it every year, and I'm not so sure I do the best job of it.

I'd like some input for justification of evaluating prices less than once a quarter. I hope what I hear is that the people who gave that answer really meant that they download the POS updates every month or so.

 

[Kevin Colbert]

Dave,

My input was meant as you have suggested. Not that I evaluate every month but that the POS is updated regularly and the result is the prices adjust regularly based on cost changes.

Actual price CHANGE is when I choose to CHANGE my mark-up against cost. That happens when I evaluate the way my business has changed and the way it compares to the market and is much less frequent than every month.

 

[Baer Charlton]

Actually David, we do more than just knee-jerk down load the updates.

We have three weighted "orders" that are tattle-tales of what the venders are doing... we run re-prints of all three, download, update, then re-print again.

The printouts are of very stacked mouldings that give off the per/ft charges, they also have multiple glasses and mounts...

("Now why would he have multiple mounts and be talking about vendors....?")A: comparing different mounts suchas print transfers, and plaking vs. glass is a great way to feel out your low-hanging fruit of the bottom end.

ie: we have noticed that summer is a better value time for print transfers....gas is higher, but power is cheaper???

 

[Melinda Tennis]

I use FrameReady software so every time the manufacturers raise their prices, I download the updates to my system. I raise my labor cost every year and increase my set prices on frame assembly and usually increase my markup every year. When I had to re-price moulding by hand it rarely got done more than once every two years.

 

[Mike Labbe]

Bumped to top

Just a reminder: This ends in less than a week and most people haven't participated yet.

If you voted in the first 2 days, your vote was lost and you'll need to do it again.

For those who Celebrate Easter, have a great holiday!

Thanks for your participation in advance
Mike

 

[Cliff Wilson]

David,

I evaluate "something" every month. But, not everything. For example, this month I was studying specialty mat cuts including v-grooves and multi-openings. How much time does it take? Design time? assembly time? selling time? Do I charge enough? Do I sell enough? etc.

Last month it was pinning. Double checking my time and charges. In January I went through a "Do I have the right breakdown for mounting options?"

I kind of try to pick one thing to study. It may take more than a month for some things or less for others, but I try to "have one thing on the table (or top of my mind)" all the time.

 

[Mike Labbe]

Last chance to vote on the March poll.

Discussion welcomed! This is a great topic, just needs some participation.

Mike