Jay and the Wonderful Wizard

tnframer408

SGF, Supreme Grumble Framer
Joined
Dec 11, 2001
Posts
1,506
Loc
Knoxville TN
Just downloaded the pamphlet Wizard's been promising for several months written by Jay Golz. It's titled"How to Become a Business Wizard Using your Computerized Mat Cutter"

In typical Golz fashion, he walks you through how to market the Wizard, how to sell it and how to maximize your returns

All in all, a great read.

One thing puzzles, though, and I brought this up months ago here: how does one determine CoGS? On page 13, Jay says : "..when someone says cost of goods sold, they are usually talking about materials only. This confusion doesn't help any when talking to an accounting professional. The cost of goods sold for framing (materials and labor) should generally run about 40-42%"

OK--I'm confused. Am I to understand Jay wants us to include labor in the cost of goods scenario?

anyway, get on the website (www.wizardint.com) and download your own copy. A great read.
 
Thought I would take a second to chime in here.

These guides were developed for Wizard Customers only. If you are a Wizard customer you simply enter your Wizard Customer ID and a password is automatically sent to your e-mail address. You are authorized to download one copy for free, subsequent copies will cost $25.00.

There is some very specific language on (and in) the guide regarding copyright, reproduction, and distribution.

Clearly significant effort and expense went into the development of this guide and we want to ensure that it is reserved for our customers only.

The personal attacks may now begin.
 
I'm sure ArtLady was just making a little joke and forgot the smiley graemlin. She has a very dry sense of humor and she's always kiddin' around with us.
 
Sheesh, Edd... treading on eggshells a bit, are we?

It seems a reasonable decision for Wizard to make. I'm sure that this wasn't an inexpensive thing to put together and it's a nice bonus for your Wizard clients.

Sounds fair enough to me!
 
You not only need a password but you need your Magic Wand and also a Wizard Hat and Cape just to read it. If you do copy it or read it the magic spell that is cast on it will ward off all your customers and your chief framer will turn into a Lizard. No not a Wizard a LIZARD. I think Jay had them put that spell in there. But if you really want one I am sure ED will send you one if you will just sign on a dotted line to lease a Wizard. Right Ed? So come on folks belly up to the bar. I have had mine since 1998. Works great.
I love these green guys :D :rolleyes:
:D :D
Jim
Ohio
 
I may have shot a little quick, sorry.

ArtLady, I just couldn't bring myself to charge you for the guide. In fact as soon as I receive your rental contract, I will deliver you a (free)signed copy (Jay's signature not mine).

Jim, careful about the wizard craft jokes, the supreme Wizard has a pretty powerful wand.
 
Since my husband has been transferred and we are in the process of moving to Atlanta, I do not know what I would do with a Wizard. But you never know what I will be doing when the move is behind me. In the meantime I would love to read what he has to say and consider it in my future plans if they go in that direction.
 
And if you DON'T have a Wizard (or equivalent ...sorry, Edd, I gotta be fair) then why not! I got ours (#1543ish) after talking to a guy in North or South Dakota (you know how my mind is) who said that he had over 125,000 corners "in the bank" but that it was the best employee he ever hired... Now you will have to pry my Wizard from my cold, dead hands.
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You all know I'm real respecful of copyrights so i could bring myself to spend the $25 bucks if Mike says it's a good read even when you haven't been drinkin bourbon. I can't buy the wizard. I know it's a fine machine, but I have a competitor's cutter and don't have enough work yet to keep both busy.
 
This could go on for a very long time, so I will presume to restate the obvious here: </font>
  • A single guide is available at no charge to Wizard users </font>
  • Subsequent copies are available for $25 <U>for Wizard users</U> </font>
  • No copies are available at any price to non-Wizard users </font>
I think this is a perfectly reasonable and understandable policy. And unlike WizardEdd, I don't have to be nice.
BTW, I'm not a Wizard user, but the fact that they have gone to the trouble of producing this guide might influence me if I were in the market for a CMC. The only guide I expect to see from the manufacturer of <U>my</U> CMC would be "How to Get Rich by Filing Bankruptcy."
 
Nope Zippy, you're gonna have to do better than that!

WizardEdd will never buy that glowing endorsement as a reason to send you a free copy of the manual.
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Framerguy
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(woof)
 
I’m not trying to stir things up but my understand that in Europe at least if a manufacture/supplier has something for SALE, the Wizard/Jay guide would appear to be for sale, it must be available to ALL (including competitors) who would like to purchase the product/service with NO restrictions or conditions other than the ability to pay being imposed, we have very serious equal opportunity sales/purchase law’s in Europe, in other words everyone must be allowed the opportunity to purchase something which is for sale regardless of the distribution channels.…………I have a feeling that the same type of law applies in the US or something very similar.

The only exceptions to this equal opportunity law are for licence products, for example pharmaceuticals.

If Wizard were to apply the sales restrictions on this guide that they are applying in the US, that is if it is for SALE in Europe they could find themselves getting into deep water, I’m presuming that it is available in Europe they do sell their CMC over here.

Edd I fully understand where you are coming from with this one but beware of can’s of worms.
 
Gee, it's a shame those of us who bought something other than a wizard can't read the booklet. I'll bring the heat on myself here by saying I almost (wish I knew how to bold that almost) bought a wizard. But when I spoke to them about their machine vs. the fletcher, they convinced me to spend the big extra bucks on the fletcher. I like my fletcher so I'm not complaining about wizard convincing me to spend more money. I just thought reading the booklet after seeing that great recommendation might help me earn some of it back.
 
Not to "dis" anyone on here, but the original point of my post was the cost-of-goods-sold issue.

Once again, I'm not sure if Jay is saying to include labor in COG or just materials.

anyone have any ideas on this???? I included the quotation from this brochure at the beginning of the thread.

thanks for any help on this subject.
 
Michael

My understanding from an accounting point of view is that COG is only the material, labour would come under variable cost heading or if you are very sure of your labour cost it can be put under a fixed cost heading, I consider my wage/labour cost that I apply for my labour as a fixed cost to the business it is the same every month, if I had someone on commission or paid per job it would go under a variable heading.

Now it gets tricky if you make say some ready-mades for sale ie. a finished product which you put on a sales shelf, then the COG would include the labour cost and a operating profit this is the finished goods cost on an in house manufactured product prior to putting your normal sales mark up on that you would put on a bought in readymade.

This is a very brief outline of my understanding of how this works and I have taken the course on accounting twice in my time, it is also from an Irish viewpoint though I did work for a US manufacturing businesss at one time and they used the same method.

If my recollection of when you asked this question before is correct you had indicated that your accountant had suggested that your COG was quite high perhaps he is applying the finished goods costing to goods, which you have in stock at the end of year ie. say framed art that you framed on the walls, ready-mades etc. in other words things that are ready for sale….just wrap them and send them out the door.

BTW you can also add goods in progress (part made up goods) to the above this is another area of accounting and I never quite got my head around that part of the courses.

I hope this is of some use but I would check with your accountant the transfer from raw material to finished goods is somewhat complex.

Hope this helps a bit.

Dermot
 
Dermot--

My understanding of COG/fixed/variable is consistent with what you said, but I am wondering why in the ready-mades example you would include labor and an operating profit in COG. Shouldn't the operating profit be part of the sales markup or are you suggesting booking separately for manufacturing and sales operations?
 
Katman

Yes I do feel that manufacturing and sales are two sepreat functions and should be accounted for separately (I don’t at present) my feeling is that although it is more work untimely it would give a clearer picture of your business and you would be able to see exactly where you are making your real money, manufacturing or sales, I know of one gallery/framer who stopped his framing operation and contracts it out now and is making more money on framing than before and has more time to devout to selling in the gallery..

I have eluded to this subject a few times before on the G but there were no takers, it would be interesting to get some feed back from some of the more experienced people/bigger operations in the framing business.

Dermot
 
Mike ---In manufacturing, DIRECT labor is included in cost of goods sold. Think about the words," cost of goods sold"; if you pay someone to put a custom frame job together it makes sense because the goods in this case is the custom frame job. The cost of the frame job does incur some direct labor. Sales time, management and other various labor components are not included. In a typical frame shop, the Direct labor, (again, only the labor needed to frame the piece) is probably about 1/2 of the labor in the store. When you want to talk about only the MATERIALS component of a frame job, it is cost of materials. If you purchase a ready made frame and sell it to someone who is going to frame it themself, you are NO LONGER MANUFACTURING anything, so like any other retailer, your cost of goods sold is what you paid for the frame. The point is this: If you want to talk about how much the material cost, call it COST OF MATERIAL. Your accountant will be understand. Also, please note my last name has a T in it. Goltz Thanks. Jay
 
Jay

Many thanks for the clarification. As I told Edd in a previous post, much of the math in this business is oftentimes quite confusing.

thanks again for clearing this up for me--and maybe others too.

Sorry I excluded the "T" ;)
 
Well, it's not unusual that you had to jerk the thread back to your original question, Mike Lecompe.


Anyway, the copyright issue that katman is discussing has turned into an important sort of sideline one, too. Wizard certainly has the right to expect us to honor the conditions which have been put on this work.

Dermot, I can't say for certain but I would be shocked if laws in the US forced a business to sell something to whom it didn't wish. I must comment that I'm not surprised that the EU has taken that tack, but I think Wizard (in the US, at least) is perfectly within their rights to define the distribution of their product.

You certainly bring up a good point of which they may not have been aware in the export market, though.

Do you notice how we in the US talk about a company as a single entity... (Wizard "is") as opposed to most countries which acknowledge that a company is a group of individuals (Wizard "are" would be the correct UK grammar)?

Interesting juxtaposition for a country (the US) which supposedly celebrate(s) the freedom and sovereignty of the individual, don't you think?
 
Jay

Thank you I have a much better handle on this whole subject of Cost of Materials, Cost of Goods etc. and how labour fits into the picture, this one has bothered me for some time, my problem sometimes is I know I have a problem/question but I cannot word the question well enough to get a correct answer from my accountant etc.

I love your book and your ability to pack so much information into so few words (like your post on this thread) and point the likes of me in the right direction, thanks again.
 
Dermot, You know I think of you as the brother I never had, but how many posts have you started with something like
I’m not trying to stir things up but
and then spent the next week apologizing?

Would the laws you are talking about require a vendor or manufacturer to sell an item to everyone at the same price? If not, I'm sure Wizard would be happy to sell you Jay's booklet for about $16,000. They'd probably even throw in a free Wizard CMC.

BTW, I fight frequently with the sister I <U>do</U> have, mostly by email and IM. She still says, "I'm telling Mom!"

Mom will be 90 in a few weeks.
 
Wow Michael, you opened a real can of worms here.

Dermot, I may have misled you. Our guide is not for sale to anyone ... Wizard Customers included. An existing customer can download one copy for free on our website. To discourage multiple copies being downloaded we charge a $25 service fee for subsequent copies. Future Wizard customers will receive a hard copy when their Wizard is delivered, and would pay $25 for a subsequent copy.

Clearly we developed this guide to help Wizard Customers become more profitable with their Wizard mat cutter, not to educate the industry in general on the benefits of CMC's. General education about mat cutters we do via Trade Show presentations and seminars, and our marketing literature.

Now I will climb down off my soap box.
 
Edd

Thanks for the clarification, sometimes you need to stir the pot to see what’s in it, you would not want to find anything in the pot that should not be there.

To repeat I understand your marketing approach with this guide and wish you every good luck…………..it an interesting approach.
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Ron

Get down off your high horses as far as my memory will allow the only time I have EVER started a post with “I’m not trying to stir things up but” ………was the above and that was in an attempt to get some clarification…………….which by the way I did………I have found that if I present something from where I’m standing that I will get better feed back rather than trying to second guess what someone else is trying to do, unfortunately or fortunately I’m a very open sort of guy and tend to ask lots of questions and give what feed back I can………..yes you are correct I do make mistakes sometimes but then again the person who never made a mistake never made anything, I have learned some of the most valuable lessons in life having things that I got wrong explained to me………………and yes I do apologise when I get things wrong that’s the way my Mum and Dad brought me up……….. BTW my Dad is 80 this month. :rolleyes:
 
It is amazing How many people want something when they are told they can't have it. Even when it is of no use to them because they do not even have a CMC. LOLOLOLOLOLOLO :D :D :D :D :D
I love these green guys.
Jim
Ohio
PS. Hey everyone I have Read mine Three times already. snicker snicker
 
My good friend, Jay, brings up a good point about CoG. Unfortunately, most of us either don't or can't extract that amount of direct labor on our P/L's (Statement of Incomes). My suggestion is that if you don't have that ability, don't change.Keep your system consistent.

If your aren't sure,look at your Statement of Income. If the only components deducted from Net Sales are costs of (goods/materials) and freight in, then you don't include any labor in this result (the reciprocal of which becomes your Gross Margin or Gross Profit Margin). Look in the listing of Expenses. If all of your labor costs (salaries and wages)are included here, then you shouldn't add any labor component to the Wizard formula either.

I don't care which way you do it, just keep it consistent.

But as Jay correctly suggests;Ask your CPA and do it however he suggests.

But the important thing is to understand the numbers and make them work for you. But if some of us are maintaining a CoG around 30% (the magic number we all seem to strive for) and that includes all labor costs to develop the product,I tip my hat to you.

Most of us aren't any way near that good
 
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