Warren Tucker
MGF, Master Grumble Framer
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.
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.