Discount or not to discount

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5th corner

5th corner

CGF II, Certified Grumble Framer Level 2
Joined
Aug 23, 2005
Posts
303
Loc
Australia
Hi,

Am having real trouble trying to decide how to deal with discounts. Tough times and people seem to expect it in this profession and especially in these times.

What percent should one give regular customers if any and for what reasons: quantity; regular customer; trade; or wholesale?

Should freinds and family get retail less or cost plus and how much?

And even harder how much percent should business neighbours get?

Pensioners 10% should they all get it or do they have to ask?

Then there is trade discount and designer discount. Some shops I have worked in give 15% and 25%. There is a place round corner and they expect 15+% off or they go elsewhere.

Remember that our tax rate is 10%.(Or is that 20% pay on purchase of stock to make job and then again on the sale which can be offset if you spend money.)

I guess the big question is how do you make someone feel good about paying full price like at a resterant. People just pay the bill. Wouldn't that be nice?
 
Discounting is something that has to be integrated into your pricing from the beginning. You can't just slap a discount on the tail end and hope you make money.
 
Give discounts by all means but only you can decide if you can stand it.

With trade stuff there is sometimes an angle. For instance, if a trade customer orders regular batches of indentical frames, then you save setup and designing time. You might also get a break on buying the materials in quantity. So you can do them cheaper.

But don't be too rash. Things don't go smoothly all the time and when they don't it costs you money. If you are working on a tight profit margin, one foul-up can mean the difference between profit and loss.:o

Of course you could just raise your prices by 15% and give everyone an automatic 15% discount. A lot of businesses do this as a matter of course. same with all the year round "Sales".
 
Check out Kirstie's website. She has a great policy for discounts.

Why would you try to give so many people a discount though? For what reason?
Either your price is fair, and you give everyone the same price, or your pricing is too high compared to your competition, and then you need to review your pricing.
 
I've found that the salesperson's attitude has a huge effect on whether the customer feels comfortable paying full price. If you're not convinced that the price you're charging is worth it, they won't be either. It's like "Ask For Discount" gets written across your forehead when you're not confident in your price.

How much discount is something you have to determine. For customers, I determine discounts based on the customer's overall business value. For friends, family and neighboring businesses, it's a question of how generous you want to be with your time and materials for them.
 
Customers asking for a discount or expecting a discount became such a problem for me that I finally came up with this and framed it to hang close to the design table. It has worked wonders, and I am still free to discount if I choose to for quantity orders or "special customers".

"While the costs for supplies, materials, and shipping have increased, our competitive prices have remained unchanged. Please accept my first price as my best price."​
 
Look at it from a different angle. If you were working for someone and they came up to you one fine morning and asked if you would give a discount on your wages but in return they would give you lots of extra hours, what would be your reaction?


>>>>:fire:<<<<<
 
My granddad said, "If your friends and family don't think your prices are fair, how will you ever convince customers that your prices are fair?" That quote is a slight on the operator not the customer.

I am completely convinced that if you are faced with this request often, you have sent bad messages to your clients. In three stores with three different looks, I've had much different experiences with price resistance. The thing is my prices were the same for all three. If this request happens often, you have sent a confusing message to your clients. I suppose you could correct this miscommunication with a creatively worded sign or you could address the real problem.

As a side note I'm not opposed to discounting but it's for specific reasons. Appeasing a customer framing a one off piece isn't one of them. Fortunately that type of request doesn't happen often.
 
I'll never understand why potential buyers shop for high discount percentages, especially when they often end up paying higher net prices, due to inflation of "reference" prices.

If you believe your customers only go for the deepest discount, I suggest you triple your retail prices and offer discounts up to 66%. Or better still, quadruple your retail prices and offer discounts up to 75%. Who could resist such a deal?
 
Funny thing about discounts if you give to much they won't believe it, (to good to be true will take charge).
As Jim says you could adjust your Prices. Then advertise you accept big Box Coupons.
Then again you can always just advertise everyday Discounted pricing.... and leave your prices where they are.
 
This is an interesting one.

I think it is right that partly it is the message you give that begs the question.

I rarely ever gave a discount if asked and almost always still got the job. I think you need to speak firmly and in the correct tone when giving the price and not leave a question mark in the air. Be confident and see the request as a sort of insult to you and your work because that is what it is.

When i was asked, I perfected over the years a little laugh which said "very funny" in an inoffensive way as if I thought they were making a little joke. This was very successful in throwing them off balance and left them unsure whether to go further or not. It's all about psychology, and they almost never pursued it after that.

If perfected it leaves them the option to laugh it off as well, as though they just escaped offending YOU.

The other way out is to immediately offer cheaper alternatives which leaves them feeling like a cheap skate. Again it has to be done with care as though you sympathise with their financial predicament and are trying to help them. Almost 100% will then immediately say , no, they want the first option.

The key is not to take their question seriously it makes it very difficult to then pursue it. Once you start to talk discount you then have all the problems of what and how much. This should be your last resort.

I had a very nasty doctor pursue it once and I ended up asking her how much discount she gives in her surgery. At first she was quite put out because she had never thought about it in those terms. I still got the job.
 
The only discounts I give are coupon specials, and I don't do too many of those. I believe that my prices are fair and represent a good value for the customer.

My dad inadvertently taught me a valuable lesson about discounting. In his business, he'd often lowball his initial quote in order to close the deal, then not have the fortitude to raise his prices back to market levels afterwards. We found ourselves trapped in a number of bust-our-butts-to-barely-break-even jobs.

One thing that I did do to serve my price-sensitive customers was come up with special pricing on "value line" frames. These are standard size frames (no labor cutting glass) in a few profiles that are easy to join and no more than $1/foot wholesale. This allows me to offer a lower-priced alternative without compromising the pricing on my custom work.

Finally, I have had to perfect the art of delivering a quote with a poker face. When I started in the business I'd do up a quote and say something like "That comes out to $345, let's see what we can do to bring it down a bit". Bad move. In my area, there are customers for whom $345 is pocket change; I definitely want them to pay full price! So now I simply deliver the quote as though it's the most reasonable thing in the world and wait for the reaction :)
 
jim_p said:
Finally, I have had to perfect the art of delivering a quote with a poker face. ... So now I simply deliver the quote as though it's the most reasonable thing in the world and wait for the reaction :)
Click to expand...

Anyone paying attention to this thread will realize this is at least the 3rd time that this has been said. Like in our discussion of selling Museum glass, if you sound like you believe the what you charge for it, your customer is more likely to believe you. Day 1 of Frame Shop training told us that the customer comes in trusting the framer the make the right decision, right?

A good way to practice this is to pull down the closed-corner museum frames during a normal frame job. Tell them all the features, and give them the price quote (maybe 10x more than the other samples?) For me, the customer and I usually got a good laugh out of it. But I got practice in not choking on saying "Three thousand two hundred and forty one dollars and fifty three cents, please."

I do coupons and discounts on a standardized level, depending on where the discount comes from. Its lot easier to give everyone 20% off rather than one group 15%, the neighbors 35%, people that drive red cars of Thursdays get 10%... But inside the store, we do NOT advertise sales and discounts. That would say our prices are too high.
 
The only discount I regularly give is to designers who have steered business towards me.

Everybody else is shown less expensive alternatives if they exhibit price resistance.
 
jim_p said:
Finally, I have had to perfect the art of delivering a quote with a poker face. When I started in the business I'd do up a quote and say something like "That comes out to $345, let's see what we can do to bring it down a bit". Bad move. In my area, there are customers for whom $345 is pocket change; I definitely want them to pay full price! So now I simply deliver the quote as though it's the most reasonable thing in the world and wait for the reaction :)
Click to expand...


There is an old axiom, at least from my 'in-home' contractor sale days.

After you give the price, shut-up! He who speaks first, looses.
Let the customer speak first, they'll give you the direction you need to go.

Another alternative if you can't keep quiet after quoting the price, just assume they are going to say yes. Simply ask them how they would like to pay for that today. Always, always assume they are going to make the purchase, that is what they are there for. (accept for the tire kickers. :D )


To the original question regarding offering a discount. Most of my customers bring up the subject by asking if I am going to have a sale anytime soon. Then I tell them about our everyday fair pricing, and that I don't mark it up in order to have a sale every week. We also have some "value line" packages and will offer alternatives to the design if the first choice is too much. As most have said already, usually they will go with the first choice, unless it is really out of their budget.
 
Paul N said:
The only discount I regularly give is to designers who have steered business towards me.

Everybody else is shown less expensive alternatives if they exhibit price resistance.
Click to expand...

FYI, I have purged the words "cheap" and "expensive" from my shop's vocabulary. Museum Glass isn't "expensive", it's a "premium product". Our plain black frames aren't "cheap", they're a "value-priced option" :)
 
5th corner said:
Remember that our tax rate is 10%.(Or is that 20% pay on purchase of stock to make job and then again on the sale which can be offset if you spend money.)
Click to expand...
Mate,
You really need to get your accountant to explain our GST system to you! It's not that difficult. Even I can understand it!

Everyone has to work out their own pricing system according to their own costs and expectations and when you have done that, it will become clear whether you can afford to give discounts.

If you start out giving discounts, customers will expect them, so my advice is, don't start, but if you do, there has to be justification. Volume is a justification!
 
Thanks all for your imput re discounts.

Recently changed my mat boards. There are better quality boards in the same colour as the cheaper ones with this supplier. It really does get rid of that discount issue cause when you explain the difference they don't ask for a discount and I guess are somewhat redirected or distracted about persuing a discount and they just say go with the more expensive board or the cheaper one and seem to be happy.

And yes re assertive with saying the price (love the idea of first one who talks looses). I was down getting an MRI today and was specifically listening to the girl when she said the price. That will be xxx dollars and xx cents she said very firmly. Can't argue with that can you. Could have said to her, "can you only give the doctor half my brain photos," but she was not up for humor I don't think and my head wasn't working that fast at the time anyway.

Family and friends is a hard one and probably always will be. Probably no real right or wrong with that one. Whatever they want to pay might determin if they get a big or small xmas present???
 
Well, for what it is worth here is my philosophy on discounts:

My prices are fair and comparable with everyone else's so long as we make an "apples with apples" comparison. If everyone pays my asking price they will get fair value and I will continue to make a good, if not spectacular living.

If, however, I start discounting, my markup percentage will suffer and I will quickly raise my prices to get back into the profit zone. Effectively, this means that I am running a two-tier pricing system. The hagglers get their discounted prices while my regular loyal customers pay extra to keep me afloat.

How to deal with hagglers? It depends on your personality and theirs and how well you read the play and respond. Attending selling seminars and reading selling books is useful - there are usually a few useful tips and tricks to be picked up but the aim should always be to close the deal at full price.

A determined haggler is not someone I want as a regular customer anyway. They are hard work. If you give them 10% this time they will shoot for 20 next time and as soon as someone offers to do it for 10c less they are gone. If the only way I can close a sale is by discounting then I really don't want that business.
 
The bottom line is the Big Boxes give discounts, and most other frame shops give discounts, at least the ones I see in local ads.

Are the discounts real? Probably not, but they are perceived so it doesn't matter. I'm sure they bump the price up to maintain the profit margin, how else can Michael's offer 50% ??? So if your going to play that game that is the way to do it.

You can not deny the impact having a sale or discounts have, they bring in customers who otherwise would not step in the door. And the ones that are coming in, feel good they got a deal. We all want our customers to feel good about spending don't we?

On a side note, Lifesaver POS system's Web Reports will show on average the discount given is 25%. When I run a sale I typically do 20%, more if the customer is doing quantities that justify me passing along a vendor discount to them. Other shops around me run discounts in the 20 to 30% percent range.
 
I have been thinking a lot about this, too. Here's what I've been tossing around:

I did a promotion with another local business, if you purchased $100 with me, you got a $25 gift certificate to a neighboring store. That store gave me gift certificates at a 50% discount. It worked nicely.

Now I am running the same type of thing, but with a gift certificate to MY store for use at a later date.

Also, for regular customers, I will offer an upgrade on glass or matting, or sometimes throw in an inexpensive filet.

If an interior designer has a tax ID and a real client, I'm thinking of a finder's fee for them rather than a discount, because a lot of the designers around me don't like to chargeback customers, they prefer to have the customer billed directly. I think that might work to entice more designers?

What do all of you think of these ideas? I'd like to focus my customers more on value than percentage discounts.
 
I will give discounts when a client is framing multiple pieces, usually 10%, sometimes 15% if it is all the same mouldings and mats.
Family get cost plus, fortunately, I have a small clan.
Friends , again I don't have many that get framing done, 10%, and not always, depending on my costs and they do understand.
When an artist comes in to frame lots (10 plus) for a show, I base my pricing on wholesale costs plus a profit margin that I am comfortable with, or I will discount the retail price of materials and charge for actual labour time.
 
I don't generally do % off discounts.

That said, I DO advertise a "Frugal Framing" special, a "Poster Special" and a "Jersey Special." All of which are based on selected "value buy" mouldings and restricted mat selections.

I give verifiable designers 20% off and a designer with a track record with me can send in a client and I record a "store credit" equivalent to 20% of the client's final purchase price for the designer.

I DO have selected mouldings that have different %-off associated with them that are based on volume discounts I have received from my vendors. I have not externally advertised these, but do some in store.

Remember, if you have a 70% ($70 gross profit on a $100 job) and you give a 20% discount, you now have just over a 60% gross margin or a reduction of your gross by almost 29%! Can you prosper on a 29% reduction? Still pay your rent? 60% Gross margin except on "volume" or special jobs, is probably too little to actual run a business on!
 
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