Outsourcing?

2400

CGF II, Certified Grumble Framer Level 2
Joined
Oct 3, 2004
Posts
242
From
Santa Fe
There is a new gallery opening in my town and the owners came to me to do their framing. They would have all the samples, they would take the orders, however they don't want to do the job. I would pickup the orders, take'em to my shop, do the work, and take'em back to their gallery. Any ideas on how should I price this type of work? Thanks for all inputs.
 

Framerguy

PFG, Picture Framing God
Joined
Apr 12, 2001
Posts
7,261
From
Destin, Florida
That would depend on how you have your customer database set up. They are wanting to become one of your customers, right? Then, I would determine where in my customer database they would best fit.

1. Full retail customer

2. Full retail customer, free pickup and delivery

3. Commercial account, afforded some sliding discount that is given according to volume sales

4. Wholesale account, given the standard discount that my other wholesale accounts get

5. Whatever other breakdown you have for charging your customers

This is simply an example of what I would consider if they approached me for framing. I would NOT give them any blue light specials nor would I cut any deals on them buying all the materials and me doing all the labor, .......... things like that have a way of coming back to haunt you.

Are you expected to set up their retail pricing for moulding and matboard and all the other incidentals like glass and fillets? You will have to coordinate with them how much they should charge their customers so you get your fair share. Another way to charge them is for them to call you for an estimate in advance, they tack on whater up-charge they might feel they need from their customer, and then they would contact their customer to finalize the order.

If they become efficient at writing framing orders, I see no reason not to afford them some kind of discount for doing all the leg work for you. That could turn out to be a sweet deal for you if you lay it out correctly and put some thought into how it will work after their framing volume builds.

Good luck.

Framerguy
 

FF_Hoboken

Grumbler
Joined
Aug 15, 2005
Posts
46
From
NJ
Are they asking you to bid?

Did they give you any idea on how this relationship would price out in their eyes?
 

JPete

SGF, Supreme Grumble Framer
Charter Member
Joined
Jan 1, 1997
Posts
1,993
From
Huron SD USA
Are they providing all of the materials? Are you making profit from any of it or are you doing just the labor? Either way, make sure you charge enough for the extra space and the rush time they will expect. What ever you charge, make it payment on delivery.

How will this affect your gallery?
 

D_Derbonne

PFG, Picture Framing God
Joined
Jul 12, 2001
Posts
5,345
From
Middleburg, FL
Proceed carefully.

How many orders per month do they anticipate?
Your materials or theirs?
If you don't make money on the materials then you are in essence their employee.
At least that's the way I see it.

Do they know how to frame?
What happens if they design something that has to be redesigned by you to make it workable?

Ask lots of questions of yourself and of them before you take this on.

I had a similar offer from a nearby gallery and
after careful consideration and some advice from someone that had been down that road, I turned them down.
Of course, only you can decide what will work best in your situation.

Good luck!
 

Ron Eggers

SPFG, Supreme Picture Framing God
Joined
Jul 6, 2001
Posts
16,932
From
Wisconsin
Oh, you're talking about INSOURCING.

I had a "wholesale" relationship with a local gallery many years ago. I lost money on every order but made it up in volume. :confused:

Be careful about anything beyond a modest discount that allows for the fact that they are doing the selling. Most retailers are not set up to make money as wholesalers.
 

AWG

SGF, Supreme Grumble Framer
Joined
Jun 12, 2003
Posts
1,021
From
North Carolina - Picture Framing Capital of the Wo
Be vewwy, vewwy careful in how you proceed. These relationships seem to rarely, if ever, turn out to be profitable. for the frame shop. It may just be a twist on the "I've got a LOT of framing to do - what's my best price?" - bring it all in and we'll talk. If there's lots of volume I'd probably cut them a standard designer discount. If it's a piece here and there, then I'd question any special deal.

Determine who's who - supplier, reseller, laborer - and price accordingly. DON'T give it away on the promise of "lots more" until there really IS "lots more".

Just my 2 cents....

Tony
 

Whynot

SGF, Supreme Grumble Framer
Joined
Dec 16, 2000
Posts
1,277
From
North-East US
2400,

You're ripe and ready to learn from your own mistakes, ain't so?

Asking for grumblers' opinion on this particular case makes me believe that you badly need answers to more dilemmas than price alone. Can you PROFITABLY handle a suddenly increased work volume (twice your present one)? Have you sat on twice as many workers, machines, tools and space than needed in hope that such a (toxic) deal will soon come about? If you are a retailer yourself, I strongly doubt that you can take someone else's business on your shoulders without extensive preparation. If all those orders were yours, that increased volume would most likely ask for expanding your business, right?. Are you willing to invest in expanding your capacity based on that new gallery's performance?
You come to me like still being very young and hungry a framer. Are you sure that your eyes aren't bigger than your mouth is?
I hope I am wrong, and in reality you are an experienced framer who’s just pretending to be hesitantly pricing his job and in need for help.
 

stud d

SGF, Supreme Grumble Framer
Joined
Jun 17, 2003
Posts
2,382
From
next too you
I got a kwestion? Has anyone every done this in a different way? Like what about rebates? Say you set up a scale. And they have minimums that they must meet, if they meet it you apply it to an oder or two. So you set it up in three month incriments and after that you say ok you hit $1000 and this means you get $400 back, now you apply this to the next order or two until you are straight? They pay you after each order, but then they get the discount they deserve instead of allowing money out the window.

And if this works over a year then you can determine who to work with them down the road?

Sorry for thinking

Patrick Leeland
 

Jeff Rodier

SPFG, Supreme Picture Framing God
Joined
Jul 28, 2005
Posts
19,217
From
Myrtle Beach, S.C.
I did this many years ago with several different framers. What I learned is that the only way to be profitable is to determine a discount based on your retail pricing. Determine the best discount you would give a large volume customer (decorator, etc.) on an ongoing basis. Let them know that if they do not live up to monthly sales expectations the pricing will have to be re-evaluated. This will force their pricing to be higher than yours for them to be profitable. Good luck and kill the deal if it becomes too much for you to handle.
 

Paul N

SPFG, Supreme Picture Framing God
Joined
Jun 10, 2005
Posts
17,354
From
CT, not far from the LI Sound
You have to keep in mind that in many cases, designers, galleries and whoever, will just want to turn around and make a profit. And this happens while you provide the space, time, labor and material.

Your profit will be minimal unless you are doing a HUGE volume of work with them. Even then, it may not be that much.

I have seen many designers who want me to do everything, while they pick up the piece and mark it up %300+ and make a very nice profit. This is not a good business and is not worth it.
 

Dave

SPFG, Supreme Picture Framing God
Joined
Jun 11, 2004
Posts
13,355
From
Edwardsburg, MI
I can see so many pitfalls in this type of arrangement...why not work out an agreement whereby you would give them a kickback for any referals they send to you? It could be modest (10-15%) and in the form of a credit for any framing they need in-house for their gallery. It would be no money out of pocket and serve to expand your customer base.

Dave Makielski
 

Val

PFG, Picture Framing God
Joined
Nov 21, 2005
Posts
6,729
From
Carson City, Nevada
I think I'd rather get the credit for my own work, instead of being a "stealth framer". Why not just ask the gallery to refer the clients to you instead (I know, they want part of your profit, or in this case, most of it). I agree with everyone so far. Your business, your clients, your profit or don't do it.
 

Elaine

SGF, Supreme Grumble Framer
Joined
Jul 9, 2001
Posts
1,569
From
Skaneateles,NY USA
I like Dave's idea
thumbsup.gif
 

Jim Miller

SPFG, Supreme Picture Framing God
Forum Donor
Joined
May 19, 2000
Posts
19,079
From
Suburban Central Ohio
If all you have to do is the framing work according to their expert designs & order write-ups, then offer them a fair discount to compensate them for their sales work. I have done that kind of work for 25% off retail.

But if you are asked to set up their design area and train their staff, I suggest you collect a negotiated fee for your time and sharing of your knowledge. If I were doing it, my shop labor rate of $60 per hour would apply; deposit of about 50% of the expected up front, and the balance payable immediately on completion of the work.

Too often such proposals amount to a future-potential competitor angling to get something for nothing. If you give them anything free up-front, you may not ever be compensated for it.

Several of the respondents here seem a bit bitter about such arrangements -- me, too. We've been there, done that, and suffered the consequences.
 

Tim Hayes.

SGF, Supreme Grumble Framer
Joined
Aug 31, 2001
Posts
1,077
From
Virginia
The fact that they are a NEW gallery gives one a cause for thought. You really need to set down in writing all the parameters of what each of you will be responsible for providing. Do you want to get a deposit with each order? Do you want to extend payment terms - 30 days? What conditions would warrant switching them to COD? How credit worthy are they? Will you accept credit card payment from them? Will you both be using POS software? If they underprice a frame job what happens?
 

J Phipps TN

SGF, Supreme Grumble Framer
Joined
Jul 14, 2004
Posts
1,423
From
Kingsport TN
Remember that 80% of all new business fail in the 1st year.

I would treat them like any other customer. Discount about 20%, just like an Artist or Designer with a tax ID#. Then require 50% down and balance at pick up. Set your ground rules up front and don't budge.

If they see that you are firm in what you have to have, then what they price it at after they leave your shop is thier business.

Make sure YOU make money, and anything after that is thier deal.

Don't get into net 30 or any of that. It's just too risky. If a business fails the suppliers take a hit. MAke sure you get at least 50% up front.

It sounds like a good set up, but only if you make money.


Jennifer
 

Dave

SPFG, Supreme Picture Framing God
Joined
Jun 11, 2004
Posts
13,355
From
Edwardsburg, MI
If you do decide to go forward and let them take orders part of your arrangement (which needs to be in writing) would be a non-compete agreement. They may just want to test the waters to see if there is enough of a base to warrant them opening their own framing operation. After you get them set up, trained and all, they could pull out the rug and hire a framer and cut you out. Make the non-compete for 5 years.

Dave Makielski
 

Ron Eggers

SPFG, Supreme Picture Framing God
Joined
Jul 6, 2001
Posts
16,932
From
Wisconsin
Non-framers are often not very good at framing design and order-writing. They want to build 30x40 frames out of fillets and frame paper art without glass.

Sometimes they don't even know about WallBuddies! :eek:

Is someone going to train the gallery staff?
 

2400

CGF II, Certified Grumble Framer Level 2
Thread starter
Joined
Oct 3, 2004
Posts
242
From
Santa Fe
Follow up: first of all thank you all for the great insides.
Here is what happened or happening.
After a couple of days of consideretaion I'd decided that I will do it.
Here are the details. Whenever the gallery gets an order they call me. They'll take the orders on their own orderticket, which looks good to me, clean and clear. They collect the money upfront and cut me a check once a month for 70% of the total.
I pickup the order, take it to me shop (the gallery is located between my house and my shop, do the work and take it back.
They only deal with 3 moulding companies, and have 1/2 as many samples as I do. However the gallery is in the best possible location in towm. I do not get credit for the work.
Some of you probably think that I am probably crazy.
What makes the "deal" sweet to me is that I have very little overhead, so I can afford it. If I had to dish out several hundreds or thousands of dollars for rent / month I would not taken on this job. I think if I manage the ordering right I would probably do pretty well. We'll see... A year from now I will give you yet another update on this, for the sake of new and upcoming framers.
 

Rick Granick

SPFG, Supreme Picture Framing God
Forum Donor
Resource Provider
Joined
Jun 30, 1999
Posts
20,562
From
Cincinnati, OH
I hope this arrangement works out well for you. However, I would issue a couple of cautions. First- as Ron alluded to- make sure they know how to properly evaluate what needs to be done and to properly write up the order including everything in the pricing. You don't want to be in the business of giving free upgrades on jobs because of their improper or insufficient instructions or desires. Second- have a written contract (approved by your attorney) specifying who is responsible for the property being worked on, both in the shop (yours and theirs) and in transit. Although the location may be convenient, transporting other people's property is a big responsibility. How will the items be packaged for transport to prevent damage? Also, any pre-existing condition problems should be noted on the work order and initialed by the customer. You don't want any surprises when you get to the shop with their pieces, nor when they claim you damaged something which you did not damage. Work all this out in advance.
I'm not trying to scare you or dissuade you from the deal, but just to encourage you to consider all the elements.
Good luck.
kaffeetrinker_2.gif
Rick
 

Dave

SPFG, Supreme Picture Framing God
Joined
Jun 11, 2004
Posts
13,355
From
Edwardsburg, MI
Good points, Rick. I would also check with your insurance company to make sure they cover the work in transit or other concerns or, if put into the contract, you would be absolved and their insurance would cover "misunderstandings" or damages claimed, but not noted.

I know it's obvious, but don't neglect to get their tax exmption certificate either in case you are ever audited.

Dave Makielski
 

Jim Miller

SPFG, Supreme Picture Framing God
Forum Donor
Joined
May 19, 2000
Posts
19,079
From
Suburban Central Ohio
Yes, damage to customer's property is a big liability. Good insurance is a must; you might want to have an attorney review the proposed policy before you buy it.

Another issue, perhaps a more common problem than insurance liability, is confusion about order specifications between the customer, the order writer, and you. Sooner or later something vague will happen. Who pays for the fix when it isn't clear who is at fault? If it happens on 1% of the orders, maybe it's no big deal. But if it happens on 20% of the orders, it could get costly.
 
Top