Decor e tips

Warren Tucker

MGF, Master Grumble Framer
Jul 19, 2003
Wilmington, NC
Frame Works / Frame Outlet
If Decor has any validity in our industry, I can see how a lot of shops are in trouble. The latest tips for pricing strategy are prescriptions for disastor. Where in the world did the notion that a shop's cost of materials, cost of doing business, and the owners' hoped for profits have anything to do with where the shop should set its prices come from?

Individuals do not set prices, markets do, and that's an iron law. Cost of goods, labor, rent, needed income are all important considerations, but only in determining whether or not a shop can stay in business or whether it should open in the first place. The price a market is willing to pay exists externally to all those considerations.

Even in an imperfect market, and modern markets are tending more and more to perfection, it's a fools's game to assume that you can prosper selling a good or service for more than a competitor. And, too, and I sincerely hope this isn't news to anyone (especially the Editors of Decor) virtually all markets whether for picture frames, art, milk, steel, gasoline are elastic: the more something costs, the less people are willing to buy it. Yours can be the only frame shop in town (an example of a limited, less than perfect market) and still price yourself out of business by charging more for your products and services than enough people are willing to pay for them. I realize that these are hard and even cruel considerations but we need to face them. Decor and our industry leaders are doing us no good service by glossing over them.

As to "leaving money on the table" (I really dislike that phrase), has anyone who uses it stopped to consider that there is no way for us to determine accurately what the optimum prices for our products and services are? True, if we charge less than the optimum, we're "leaving money on the table", but if we charge more, there's a good chance we're hanging ourselves out to dry. Take it from me, it's far better to charge less than more. Charge less and we're making less than we could possibly squeeze out of our customers, charge more and we're out of business and members here will write us messages of sympathy,

One of the most frequent stupitities I've heard about our industry is that we framers have traditionally charged too little for our products and services; if that were the case, we couldn't handle the volume of business. Another iron law is if you want to make something scarce, charge less that it's worth; if you want a surplus, charge more than it's worth. Well, as any of us can demonstrate, there is a surplus of our goods and services or we'd all be working to capacity.

The notion that we can upcharge to prosperity is almost as stupid as the notion that a society can tax itself to prosperity. I'd rather be selling the best product at the best price rather than the best product at the highest price. That's a safer, and smarter, bet.
And from Decor January 1919

Pointers for Consideration in Making the Frame By R. Newbecker

The old proverb of saying that a cat is "blessed with nine lives could well be adapted to the various illeans and methods employed in making up frames. Some shops employ up-to-date methods and machinery and work up a good trade, while others persist in methods of long ago. Some make hard work of it and turn out a fair grade of. frames; others again. make easy work and turn out a first-class product. In the making of frames and making a success of it, it is not enough for the practical frame maker to know how to cut a joint, clamp up a frame or drive a few nails in each corner. Far from it. The practical frame maker must study the different woods used in the making of frames, their inclination to split when nails are driven in, the glue absorbing power of the fibers of the different woods used, and last, but not least, must know how to make up the proper glue solution for the frames in question to be made up.

This may all seem of small importance and little consequence to the ordinary frame maker, but when these little pointers are taken into consideration where hundreds, or possibly thousands, of frames are turned out daily or weekly, the waste of time resulting from more frames, the waste of time resulting from rerepairing bad joints or splits occurring in putting the frame together and the wasting of glue by using the wrong mixture of glue on different woods, mounts up^ to considerable in a week's operation of the glue expense and time.

As all frame makers well know; a glued up mitre corner, if made properly and glued right, will stick so tight that the glue will pull out fibers of the wood if pulled apart by force rather than break in the glued joint. In fact, the use of nails would be unnecessary in a frame made up in this way. Sad 4t is to relate, however, that too often frames are found in the stores, and expensive ones, too, with the joints pulled apart, which gives a bad appearance to the same. This is not the fault. of the wood, neither is it the fault of the glue, but it is the fault of the person who applied the glue, due to his ignorance in having the glue prepared out of proportion of the requirements of the wood used in these frames. Too often the slipshod method is followed of mixing glue just to such a thickness and using it on everything that comes along in the day's or week's work, little realizing that often hundreds of dollars could be saved in the annual glue bill, at present prices, and at the same time turning out a better product than is possible by the haphazard method.

Let us make this saving of glue a little clearer. Supposing five hundred oak frames are ta be glued up. Oak is a dense fiber wood, and glue will hold the strongest if mixed about 3 to 1; or in other words, when it is slightly thinner than linseed oil. Oak being hard grained, will retain the glue near the joint and give a first-class bond with the use of a thin mixture of glue. This also is true of birch, elm and other similar frame woods. . . . . Many frame makers seem to be under the impression that the harder the wood the thicker the glue must be. This, however, is wrong. I_- have been in frame shops and seen glue used on ~ak and birch frames that was nearly as thick as ordinary cottage cheese. Such methods of using the glue at present prices is almost criminal. The thicker the glue solution the less it penetrates into the end fibers of the hard wood. Consequently it will not hold, as glue cannot absorb and get a grip on the wood and the joints open or pull apart. If the glue had been thinned down to a proper thickness suitable for the absorbing powers of the wood used, the joint would not have pulled apart, unless a pulling stress of 200 pounds had been exerted on the same, as this is the stress of a glue joint made of ordinary glue. "Some glue joint!" you will say. Yet you can have every joint you glue up subjected to this pressure and hold.

On the other hand, supposing we have a lot of frames made from gum, chestnut, poplar or similar soft woods. Here the glue must be made somewhat thicker, as these woods are more porous and will absorb the glue more readily. You must have your glue of sufficient thickness to provide for this absorption and still have enough left in the joint to make a firstclass bond. :

As far as splitting of ends is concerned, this can almost be reduced to nil by the practical frame maker who will observe a split in a certain wood and thereafter set his nails at a small angle toward the run of grain, so that in driving the nail it will follow the growth of the wood fibers as much as possible, consistent with turning out a perfect joint.

.-.-.,.And -still another thing to guard_ against. the length of time a mixture of glue is heated before using. Not more glue should be mixed than enough for each day's requirements. Reheating of glue weakens it. A glue that cost forty cents ^- a pound having been heated for, say, 12 hours, will only be worth as much as a twenty-cent glue is, as far as holding qualities of the same are concerned.

In clamping up frames it often occurs that too much pressure is exerted on some of the corners, causing the frame to slip or pull over. To avoid this, take four pieces of ly_2 xly_2 -in, wood; or any, other convenient thickness at hand; make these two inches shorter, respectively, than the length and width of frame, and cut in a notch two inches from the end of each. The depth of the notches must be governed by the size of clamps you intend to use. This, will make a clamping dev~ce that cannot be equaled in preventing over-pressure on one`. cornet or the other, consequently first-class frames w ill result, and all frames will turn out to be squarew With no open joints.
I find your take on this industry very refreshing. Unlike most of the things I hear and read, you actually give me hope. I don't find hope in touting "conservation" this or that all the time. I don't get a warm fuzzy feeling when I "upsale" just to increase my average ticket. I don't desire to show 40,000 samples as a niche to compete with the BB's. I hate constantly paying supplier $4/ft for moulding I can buy at a show for .70.

I agree that this industry is very elastic. I think we should expand our customer base. But you would be absolutely amazed at how many framers wouldn't dare foul their hands with metal moulding or regular glass. You have no idea how many framers feel like they would cheapen their shop if they were to sell a $50 frame. Never mind their cost was $8.

I'm going to let you in on something Warren. I'm afraid you are giving the wrong impression of your shop. Many think you are peddling plastic frames to homeless people. I think you should be fair and please tell us how many of the coveted closed corner frames do you sell a year? I'm gonna guess that you sell more of these them than 90% of the "high-end" shops. Heck many of them pay 1000's of dollars just for the hope of one-day selling one closed corner frame.

I get the feeling that in someway your shop has become way more than what you even expected. You never set out to sell expensive frames and museum glass. However you have found yourself accidentally selling more high-end framing, than many of those that rely completely on that type of customer.
I don't mean to derail a good subject of yours.

"It is a well-known fact that a very small percentage of men in business are successful. The causes are incompetency, lack of capital, and a score of other reasons, among them sickness for Study which man is usually not responsible. The main cause is the lack of business ability. The great majority of men are not properly equipped with training and experience, consequently there is the inevitable result-failure. Business consists in something more than just buying and selling. Anyone can buy if they have money, but all do not use their money to the best advantage. And so anyone can sell, which too often means that they let the goods go at a price which does not cover an adequate profit. Business, to be successfully continued from year to year, demands that behind it shall be a knowledge of expenses, as well as profits, required for its maintenance. Now, how will the dealer get this? It can only be secured through careful study, and a correct list of every item, from A to Z, that figures in the expense account. To the cost of goods purchased there must be added a sufficient profit, and as some writer has observed-"And then some!" What finally comes to the dealer is his profit, and the money necessary for the continuance of his business. There are many modern business aids and helpers published, which are worth reading and studying, but on the top of all to be learned from books and trade journals the dealer must study his own business proposition. Eternal vigilance is the price of staying in business."

Sure it's generic, and could have been written in this months Decor, and not isn 1919. But it does apply. Pretty much don't be a moron, and change your buisness to fit the climate. Adapt or close the doors.
Warren speaks wisdom and he has the sucess to substaniate his claim.

Way too often, way too many that have never demonstrated that level of proficiency continue to speak the loudest.

I think Decor is extremely guilty of that

The problem is they repeat the same tired message and it then becomes gospel. Those that disagree are viewed as heretical. It's not as bad as it used to be, but there is still a stiff resistance.

I agree with Warren on so many issues and I agree that we all need to know our market and understand where the elasticity limits might be found.

To some, it might simply be that if it sells well, it is the "right" price. To others, they care not what the market is as long as they get "their" price.

The difference between those two prices might easily be the difference between greater profits and none at all.

And somewhere in the middle (the worst place to be in my opinion) is where the most money is left on the table.

That is another iron law of pricing

But we need to recognize that the shrewd operators like Warren have gotten to their position from two of the most basic of elements: Buying well to sell well and understanding how to understand the numbers

And Decor never, ever touches on anything even remotely connected
Warren said:
"...if we charge less than the optimum, we're "leaving money on the table", but if we charge more, there's a good chance we're hanging ourselves out to dry. Take it from me, it's far better to charge less than more..."

While I agree with most of Warren's comments, I'm having a bit of trouble with that part.

Until a few years ago we had three employees and we were busy. The business was growing at a good rate, but I wanted to earn more net profit dollars, so I started trimming. First I stopped discounting for no reason, which cost us almost 20% of our revenue. Then I started buying smarter, and tweaked our product offerings. I also changed my ways of selling, marketing & advertising.

Today we build fewer frames, but they are larger and more expensive. We stock less, but more of our sales are for stock materials. We have the same hours of operation, but we're down to two part-time employees. We have lower revenue, but earn more net profit now than we did then.

I'm afraid Esther might read Warren's comments and conclude that everything will be OK if she simply cuts her prices. I'm sure that isn't Warren's message, but it could come across that way, and that would be dead wrong.

Business growth does not come from cutting prices, but from buying, selling, and operating smarter. If all of that allows one to earn better profits with lower prices, so much the better -- but cutting prices is not the heart of the strategy.
Yes, maybe in a purely efficient market with commodity type products, market soley determines price, but.... it is hard to think of many products where cost is not a critical factor in determining pricing.

Look at the price increases we have experienced from vendors due to rising fuel costs and currency exchange changes. Are these market determined or are increased costs being passed along to us.

With products that may not be considered commodities, a higher price can be marketed and achieved whether through a sales process (sales technique, store environment, merchandising, locale etc). A distinct or custom product can gain higher percieved value through a higher price and market position.

Price is only one component, but creating a market for each's custom framing design and services would seem to be a stronger goal than competing on price alone.
I wouldn't be too pleased with the direction you've chosen to take, Jim. I think there is a real danger in that what you've done is made your customer base smaller in order to increase per sale prices. I've always held that the broader the customer base, the more stable the operation and to a small extent I've seen proof. If you have lots of customers and a few of those customers fall on hard times, you're ok, but if you have just a few customers and a few of those fall on hard times, you just might be in trouble. We have an upper end store and a lower end store. When one store's sales are down for a period the other seems to take up the slack. Now our business is very stable from year to year with no advertising and no marketing to speak of except very competitive pricing. Sure, we have 11 employees and that represents a big payroll but it also affords my wife and me plenty of free time.

If I believed that business growth didn't come from cutting prices, I'd have a hard time explaining Wal-Mart, Target, and Home Depot; need I name more? We buy, sell and operate smarter in order to be able to lower prices and increase sales and *customers*. Believe me it works. There are no free lunches; there's a price you pay for less work, higher profit. Sure it can be done, but there's a risk. Remember in my post I said the direction I chose was a safer bet; I didn't mean to imply it was the only bet. I've been making the safer bet for going on 30 years now and I've prospered beyond my wildest expectations. And, no, everything wouldn't be ok if a shop simply cut its prices. My point is that you have to structure your business so that lower prices are possible and the current business model of many small framers doesn't allow that option.

FF, you're kidding yourself if you think competition is going to come from price alone; good design and service are given; that only leaves price. If I can compete with you on design and service (and I can agrue I offer services to my customers that very few framers can) and you can't compete with me on price, where does that leave you? My point is that we need to start paying a lot more attention to price than we have been, but not to the exclusion of everything else.
Whenever price issues come up, rest assured that someone confuses it with a solitary strategy. As Warren suggests, it is part of an overall comprehensive strategy.

I have not been in Warren's shops, but I have spoken with those that have. I don't think that I am violating any company secrets, but he offers, in addition to great prices (lower than I would offer), but conveinence, selection, service and very fast turnaround

Let's assume that you offer all but great prices (most don't have but one or two) and your consumer has a choice, don't you think a significant "tipping point factor" might just tip in favor of Warren?

The problem comes from those that either refuse or choose not to make some committments to either inventory or location

Simply suggesting that we have "Great Service" or
that "my customers love me" is often delusional

A careful strategy of some great pricing can be a powerful tool, even if it's only a few key items
Gross Sales is vanity, whilst profit is sanity.

That would make an excellent bumper sticker. I'm not sure it would translate quite as well into a marketing strategy/business plan.
Originally posted by Warren Tucker:
...what you've done is made your customer base smaller in order to increase per sale prices...
Not quite. Increasing our per-sale revenue comes from selling more valuable products & services, not raising prices. Yes, some discount customers have gone away, but we have more retail customers than ever before. We're building fewer frames because the retail orders are for one or two, instead of larger commercial orders.

...If I believed that business growth didn't come from cutting prices, I'd have a hard time explaining Wal-Mart, Target, and Home Depot...We buy, sell and operate smarter in order to be able to lower prices and increase sales and *customers*...
Explaining the success of companies like Wal-Mart is not all that difficult. They are very good at marketing. They attract customers very well by promoting the perception of low prices, but their prices are not always lower.

Quite a few framers have lowered their prices in hopes of attracting more customers, but they succeed only in reducing their profits. Without effective marketing and advertising, low prices may never be known.

I contend that price cutting alone is a suicidal business strategy. It can work only if it is part of a complete marketing & operating plan that assures growth in profitable orders. Profit growth, not price cutting, is the heart of a sucessful plan.