Industry Discount??

FraminGal

CGF II, Certified Grumble Framer Level 2
Joined
Apr 24, 2002
Posts
376
Loc
Pittsfield, MA - The Berkshires
I had a couple come in to my store yesterday. They are summer residents from NYC. She grew up in the family frame shop. He is apparently 'in the industry'. I think he may be into the printing aspect. The do attend the Expo. She had two items framed and for both she asked, 'Can you do a little better on the price?'. These were two larger items and they will be bringing in additional items to be framed. I told her I would give her 10% off. To that she said that the 'industry discount is 50%'. I don't think so!!! Then I must admit that I took the 10% discount off of the total...after tax and labor. ARRRRRGGGGHHHH!!! I was in a not so good mood the rest of the day. Although taking the discount off the total, I do tend to glaze over when customers throw numbers at me.

Anyway, the point to this post is....is 50% off the industry standard? I think not but just checking.
 
Woops, I left out a bit of this sentence.

Although taking the discount off the total was my mistake, I do tend to glaze over when customers throw numbers at me.
 
You are a retailer, aren't you? Only manufacturers with retail outlets do offer a large discount to the industry. Practically they sell at wholesale price to the industry and at retail price in rest.
You've been abused and you are rightfully angry.
Do not fall for it, unless you want to meet some day a parasite (from the industry) doing nothing but prosper by reselling your discounted work for its regular price. Those clients of yours, if qualified, must order with manufacturers in order to enjoy a 50% smaller cost.
 
People have a lot of GUTS.

We are talking apples and oranges here. A trade discount is a Wholesale level discount, not a retail sale level activity. Wholesale discounts are formulated based on the fact that the base is a "retail figure" and that there is a profit bargin for the wholesaler after the discount is given.

These people should consider themeselves lucky to have a retail framer offer a 10% discount.
 
Framingal,

Just out of curiosity - did they request the discount before or after you did the work?

Cyndi
 
This will actually be the second and third order from them. They asked for a discount at the time of the order was placed. No discount was asked for or given on the first order. Yesterday, they came in to pick up their first order, place an order for a print they brought in and they also purchased a print and odered framing. Unfortunately, there was a mistake made on the first order that I will have to fix. My framer ordered the correct Bainbridge mat but when it came in it was one of those mats with no numbers on the mat at all. She unfortunately assumed it was the correct mat.

I was more mad at myself I think. I've learned my lesson. Usually in these cases I try my darndest to use materials in house. I'll find a scrap piece of glass, etc.
 
My question is 50% off what? One of my competitors is so high that they could give 50 off and be right in the ball park with the rest of us. As a retailer, it is easy to tell people I will give them a 10 or 15% discount and then give them a quote that is 15% higher than normal and mark it back down. Not entirely honest and I don't approve but I know it is done.
 
I am in the "industry" myself. If you would be willing to consider a 50% discount to me I would be more than willing to load you up with orders!
 
....is 50% off the industry standard?
Certainly not for most of us independents. However, it does seems to be common practice for the big box framer's e.g. Michael's to offer a running, continuous 50% off sales.

Some Grumbler's believe that even after the supposed 50% off, they are a few dollars more than the "normal" retail for most of us.

Normally when folks ask, "Can you do a little better?", I just say that if their order was, say, for 10 frames, "I could buy my supplies at a discount and pass it along. Otherwise .... " [with shrug and a smile].
 
We both knew they weren't going to get 50% off. I'm not exactly sure what my reaction was but it was a little like taking a drink of water and then spraying it out. My prices are definately not jacked up so I could afford a 10% discount.
 
I always enjoy these discussions that indicate that somehow we honor bound to not make much money by keeping our prices low.

As it is in virtually any other industry, the market rules the prices. If most everyone else sells a certain widget for $1.00, then why wouldn't you?

Does it really make any difference if your costs are lower, or your needs are lower?

So, we all seem to agree that Michael's regular prices are higher than ours (although, I doubt if many of us really know this first hand). How smart is it, then, that our regular prices should be that much lower that even after 50% off, our prices are still lower? Is that really a sound pricing structure?

I would not be bragging about being lower priced than Michael's to us. If it were truly accurate, and it were profitable (and I have to question both assumptions)then you have the perfect marketing strategy to capture the market.

Cheaper Than Michael's. What a great catch line! I would answer my phone with it, I would use it in every ad, It would be plastered in my front window.

We all know how deeply ingrained Mchael's promotional efforts are. The 50% factor so richly resonates with many, many consumers to the point that even their competitors have adopted similar promotions.

So, again, what is so distasteful about jacked up pricing? Do you really want to see who has the higher level of consumer approval?

Run a test survey: Ask your clients if they have a more favorable response to A) 50% off a Michael's or B) that you multiply your costs by 4 times?

Jacked up pricing? Get over it. Figure which concept might yield higher sales and profits or which one matches your sensibilities?

Of those two responses, are you trying to sell to consumers, at large, or to consumers just like you?

Hey, it's your business and you can gain the self imposed "high ground". I'm just afraid you might get a little lonely at the top.

It is your business, and I have no reason to tell you which direction you should take. Just understand the very predictable results you are forcing your business into if you ignore the real forces in the marketplace.

To me, the high ground is to capture enough profit to turn that profit into whatever can do the things that accomplish something really worthy of the "high ground".
 
I usually respond to that kind of request with something to the effect: "I keep my prices reasonable for my costs and overhead." & "With a small one man shop I can compete with most folks in the retail business."
shrug.gif
shrug.gif
 
Is there some reason why some feel it necessary to offer an explanation as to why they can't have a discount? I simply say "no, everyone pays the same price".

Unfortunately, now your customer will expect 10% off everytime they come in. If they send in friends, expect to do the same with them. I think sayin "no" would have made your life so much easier.
 
They is not such thing as an industry standard discount. Only when you buy a print you may receive a standard discount of 50% but you would still need to consider your feight cost. All framing should be marked up form the price you paid for it. If you do not mark your product up enought to give a 20% discount, when needed to keep customers that brings you mulipal frame jobs or contract work then you are under charging. Your profit margin goes up when you can be effient in ordering or get extra discounts for your distributor for bring him larger jobs. If you work with designer that expect a discount of 30% then your framing must be marked up 30% high. They is not rule that says you need to work for free or give anything anyway. This industry we are in (Like the car busines) has become about cutting deals with customer. We have all been though it. The way to win is to be rerady for it, expect it and set a plan to be able to offer it in a way that you will always make money. Because a framer out of business will never be able to make any more deals. Good luck all and be strong and make money.
 
Eric,

I wish Jay Goltz was right but, surprise, he isn't quite so. Custom frame-making is somewhat larger reality than cutting and joining pre-existent finished molding to precise dimensions. Designer's one of a kind, closed corner, or antique picture frame reproductions are custom made too, aren't they?

Along my competitors I am making a living by producing the above custom made frames for framers like you. And you bet my prices are wholesale to you.
Is it possibly that Jay Goltz had never been in need for a higher end frame, and this is why he was so casually misinforming his audience? I doubt it. Beside, like much of his audience he certainly heard and used Inlineovals frames (which by most people's standards is quite a mid-stream frame manufacturer), and their business is just another instance that would discredit Goltz's assertion.
Now, I haven't been there, but I presume that you had and you were paying attention at his classes.
Don't get me in a fight with Goltz over custom made frame's pricing. ;)
 
Be assured, CR, I won't.

Maybe I was unable to do the statement justice by using it out of context.

Perhaps I should have just claimed the words as my own.

I do believe in the situation presented in the first post of this thread, the Grumbler is in no sense a manufacturer of frames. I am not sure how your examples add to the subject.

I do have to agree with you that they are fine examples of a manufacturer offering a quality, custom crafted product at a wholesale price and distribution.
 
I've got to respond to Bob Carter's 5/23 post. I know I'm less expensive than Michaels' 50% specials. Am I bragging about it? No; I'm relieved. We've worked at being less expensive than our competitors and it works for us. Much of Bob's argument is bassed on the misconception (I think) that the demand for custom framing is inelastic when in fact it's very elastic. Take Bob's widget example. If widgets are selling all over town for $1.00, he claims that there is no reason to sell them for less because clearly a market exists for $1.00 widgets. But Bob doesn't take into account that if 10% of the town is buying widgets at $1.00, maybe 40% would buy them at $.75. Not only would the merchant selling $.75 widgets capture customers from his competitors but he would also get the new customers his lower price created.

Now, of course, it doesn't make sense to sell widgets for $.75 if you can't make money at it, but if you can, it makes a heck of a lot of sense.

Now, I know I can sell framing at prices lower than Michaels and make money, a lot of money in fact.I can also add 11 well paying jobs to the community, jobs that well might not exist at higher framing prices because there would be no demand.

Our empahsis has always been "how can we make this cost less?" not "how can we make the most money from each customer?"

I know this post has little to do with the title of the thread but in a way it does. If there is a perception that picture framing can be discounted 50%, then, clearly, people feel that framing is too expensive; and they're right.

I'd like to add that, at first, I completely misread Bob's first sentence. I thought he meant that framers felt honor bound not to make a lot of money by lowering prices (I think they can)when, I later realized, he meant that they felt honor bound not to make a lot of money by raising prices (I don't think they can if they have competition).
 
I believe Jay is right - there is no such thing as wholesale custom framing. Inline doesn't offer framing - just frames! They offer the supplies, you offer the service that is the big part of framing. You deal with the customer - and since every part of the process is unique (custom), it's not discountable like most wholesale products. The only discounts I beleive we should be giving is a quantity disc if someone goes with 5 of the same frame (because it costs us less to do the job) or with a markup/markdown discount like Michaels does to keep people happy - what they want is what we should offer!
 
I really like Warren and most of us can learn a lot from him. I think his model is very sound.

And I would not typically offer advice to someone at his level of ability.

And I am not now.

The widget example is directed more to those that do not have any/many of the economies of scale that Warren clearly does.

My point was many feel that they can undercut market prices with the hope of attracting more sales, yet, they have no advantage to recoup the predictable loss of margin.

There is absolute elasticity in pricing. It is the reason there are stores like the Big Boxes. Consumers have routinely rejected our pricing models in favor of these very strong (and getting stronger) competitors. Warren recognizes this and has parlayed that shift into a very successful operation. He should be proud of his efforts.

It's the rest of us that haven't quite developed our plans as effecctively to whom my advice was directed.

Way too many of us penalize ourselves by inferior locations, inferior buying strategies, inferior management-the list could go on for a long time. But the point is a simple one and that is you better have your ducks ina row or you will suffer the consequences.

To ignore market based pricing opportunities is just one more brick in the wall keeping us from profitability.

But if you truly do have the ability and capacity to underprice yourself from the market in an attempt to garner more market share (Sam Walton did it), you better have all the other tools to make it work.

I go back to my prior statement of shouting it to the rooftops. If it is true, then it does absolutely no good to keep it a secret
 
I doubt that Warren discounts to his customers, however. His prices are set at the level he feels enables him to make a decent profit, cover his overhead, and pay for materials. That is exactly why I don't discount. The prices have been calculated to cover materials, overhead, and reasonable profit for me. If I discount, the all that is altered is my profit, which I don't want to see happen. The only place anyone could discount and not alter the bottom line is on the materials, if one can buy better like Warren does, and perhaps the labor, if the work is all identical.

You may think you can give something up on the bottom line, or that a decrease in profit may not make much a diffence, as long as you have work to do and are keeping busy. (Hey! the "g" is working again!) But, if you have any thought on selling your business in the near or distant furture, your profit margin is very, very important. Food for thought.
 
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