pass on the discount.....

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canada framer

canada framer

CGF II, Certified Grumble Framer Level 2
Joined
Dec 31, 2008
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271
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Montreal
We almost all get are mouldings in lenghts instead of assembled and it costs a lot less and we obviously all get discounts , and even bigger discounts when buying box quantities.
My question is : Do you pass on the discount to your customer since you are buying cheaper (so sell cheaper?) or you just make more profit? If yes do you always do it or on special occassions & events?
Are you very competitive or a little in your area (on pricing)?
A lot of the times i am able to compete with super store Wal-Mart at 10$cdn for a frame and let the customer know that in the future if they need another one of the same or even bigger to make a set i will have it because chances are at wal-mart they will have brought in other styles but with custom framing thats not the case unless you fall in a unusual situation and the moulding is discontinued.
 
Canada Framer,

This is a good topic. In the old old days we would buy well and keep the profits.

Times hae changed. We pass it on and are grateful for the sales.

If you are a smart operator you can do both: buy well, pass on the savings, and in doing so make more money on volume.
 
In general, I order length and cut and join in the shop. The lower price I get vs. buying chop or join is my profit. I pay my bills and myself with that. In a few cases, I buy boxes of moulding with the express purpose of (1) getting a lower price, and (2) passing those savings to the customer via a value package. I just took in 400+ feet of gold and silver moulding on Friday for that.
 
I always pass the discounts on to the customer. I use one price framing and include items that others would sell in the $20, $30 and even $40 a foot range in the special package pricing. I have been selling to wholesal buyers of length and joined frames as well.

I now have a few frame shops buying length moulding and one that I cut and join his frames. Several home based businesses have been buying from me as well. There are several artists that have been buying ready mades from wholesale suppliers that also sell to many here that have shifted over to buying from me. They no longer need to keep inventory, save money on shipping and I will cut and joins frames in minutes while they wait.

My business is based on volume and as long as moulding is leaving the building I am making money. About 2/3 of my moulding is boxed quantity that I can buy on an ongoing basis with the balance being discontinued items that I get insane dicounts on because other framers only buy this stuff in chops.
 
Long ago, Rob Markoff, in a Decor magazine article, counseled: "Never leave a discount on the table". I think I got that quote right. If you get volume discounts, the extra margin is yours, not the customer's.

Like a lot of you others out there, I buy by the box, selecting what I think will sell, and taking advantage of whatever opportunity comes along in the way of promotions. Frameguild, Neilsen-Bainbridge's distributor up here, is having a clearout promotion this month, and I picked up some really good stuff.

If I pay less than $2/ft, I still mark it up as if it cost $2/ft. Why? Because it originally cost at least $2/ft, and because a markup at, say, $1/ft doesn't capture enough overheads to make it worthwhile. The exception to this is if I have to discount for volume jobs.

Kirstie is right: we have to get prices down, but not at the expense of margin. We don't have her volumes, so margins have to be maintained.
 
I could be wrong but I believe that some of Rob's more recent posts address adapting to the economy rather than capitalizing on extra margin. Every market is different but many have found that they can increase traffic through offering more affordable options. The economy can not be ignored and now more than ever there is a proliferation of bargain hunters out there. The customers that you are counting on for those increased margins may be shopping for more affordable options.

My location is one that the wealthier customer would not have traveled to a year ago but they make up a very large piece of my customer base now. They are also now sending many of their wealthy friends and neighbors to my store because quite frankly many of the wealthy got that way by being business savvy.
 
tedh said:
Long ago, Rob Markoff, in a Decor magazine article, counseled: "Never leave a discount on the table". I think I got that quote right. If you get volume discounts, the extra margin is yours, not the customer's.
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Yes, despite what I said below, I agree with this. Our POS marks up each manufacturer by a certain amount times base lineal, and whatever discounts we earn from our suppliers are ours to use to pay overhead and earn profit. As Bob Carter has always said, earning money is about buying well.

That said, in order to buy for a value line or a poster special line or a temporatry discount stock line you have to buy well, keep a decent mark-up, then pass the lower cost along. But you have to move the merchandise. Volume is key, but from what I read, more and more of us are buying in box quantities for lower cost value lines.

We do good volume but we are a one shop business, so there's no comparison with even a small chain operation that can buy in container quantities. We have good volume for a one shop operation but we also have multiple framers to pay and a lot of overhead.

Now, this question has been asked before. How low can you go? There is a point at which you just can't make enough profit on a frame to make it worthwhile, no matter what you paid for it. I used to think it was higher than I do now, but the frame package prices I see here for the wide variety of mouldings I see here give me pause. I know this is the trend, but I agree with tedh, you have to be very careful to protect margins to stay in business.

So what's your lowest priced moulding per foot? Not your temporary barking spiders sale stuff, but your lowest price on, say, your regular value line?
 
I go $3 ft with no quantity required. With a double miter saw and v-nailer I can turn these out at 150 pieces in an 8 hour day.
 
Very little waiting on customers at that price point. They point to the one they want and I make it. Had an artist in trying to decide on one the other day. They are a customer of one of our oldest wholesale suppliers. 16x20 oil painting and the husband and wife bickered over whether it was the right choice. While they argued I made the frame since it was a standard size. 2 minutes later they were handing me the money. If they had not taken the frame it would have gone on the ready made rack. They took 2 other ready mades as well.
 
I think we have to realize that there are different types of operations. Jeff runs an operaton that survives on volume. Not all of us are in the position to be able to compete in that arena. There are space issues, varying overhead from very low to very high depending on location etc.

We realized a long time ago that we could not compete in price. There is no way we could bring in the volume needed to keep up with high rent, keeping employees from 12-20+ years etc. With that in mind we decided we had to set ourselves apart in a different way than price. Being in a very design oriented area we cater to the people who need just "that" frame by offering a tremendous selection whether it be moulding, fillets, fabrics, mats etc. Most of us have an interior design background which helps these type of design oriented customers and we do spend time with them. That is what works for us and that doesn't mean it works for the next. Each business has to evaluate what works for them as there are many avenues out there to take.

Of course in economic times like these we have to adapt. For us that means developing a poster special and value line for clients who want to spend on the important things and save on things that are unimportant - like for their basement. It also helps attract a different type of customer who likes nice things but can't afford to spend much now. Hopefully they will be back to upgrade or frame the next thing when times change for the better.

To go back to the original question - we specifically shop for discounted items for our value line and do pass them on to the customer.
 
The "customers Running in a Panic" thread is running concurrent to this one with a lot of the same issues discussed.

I think in some ways we are in uncharted territory. For over three decades we have offered custom and DIY and somewhat lower prices. Others have operated thier shops at the higher end and are now adding a poster special and value line. Others are like Jeff, who has a short time under his belt offering price by size framing, and Warren, who has run his whole Outlet shop as a value shop for at least 30 years. But the rest of us are now trying something new and I admit I am uneasy.

Now we have a predicted, protracted economic downturn and many are lowering prices, selling more and more mouldings at value prices and expanding poster packages. We certainly are. It seems like a good thing, the customer likes it, and the framer likes it because more customers come in.

But I have to be honest in saying that every time we consider adding another moulding to the very small poster special line we get nervous. I will be the first to say that the lower priced specials and ready mades do not seem to have hurt the higher end business, but profit margins are something else to keep reviewing. It's basic math. When you make much less per foot on a stick of moulding, and when you slash the prices of the rest of the package, you make less per sale, a lot less. No matter how well you buy, you still make fewer dollars per frame. I think what we all have to look at, given the nature of the shops we have, the equipment, the staffing, is can we sustain this type of pricing and maintain healthy businesses or should it be limited to a smaller variety of low price options for the customer to choose from.

I don't want to turn 32 years unpside down. We had a formula and now that formula seems to be changing. I can go with that to a point. We have changed in the past in order to meet market conditions, so this feeling is not new, believe me. But while we all charge forth with these new pricing practices I think we would do well to keep a very sharp eye on the bottom line and to keep sharing our experiences both good, bad, and unsure.
 
We use several formulas. ie... If the moulding is a plain jane, easy-to-use style, we buy in bulk and pass on the discount. If it has a delicate finish, and is also a bulk purchase, we might have to factor in a little extra labor. So we might keep the discount.

However you buy, chop/length/bulk, etc., you must cover your labor. So regardless of your material cost, there has to be a base sale price to cover that. Some mouldings are just a bear to work with, and time is money.
 
Now with prices rising & inflation.
It is not what you paid for a moulding now.... It is what it will cost you when you go to replenish your inventory..... Be competitive .... But also Think ahead.

just my $.02 worth of 33 years of experience.
 
Some good wisdom here from a variety of perspectives - here's mine. Protecting margins is always a good idea, but most of us are in business to make dollars. So, while it might be necessary to charge $5-6 for a moulding you paid $1 per foot for, it's much more profitable to spend $10 per foot, even if you end up selling it for $20.

The $1 moulding is sometimes more difficult to work with, so the 5-6x multiplier may be necessary to compensate for added waste, labor, etc. and make it worth your time and energy. The end result is that you give the customer a satisfactory job and you make $4-5 per foot on the moulding. By upselling the $10 moulding, you generally (not always) have fewer quality issues, turn out an extraordinary product and, even at 2x markup, put more dollars in your pocket. Your reputation can be about superior design and quality, not just lowest price.

This is certainly not the only way to survive and prosper and won't work in every situation or demographic, but if you don't show the customer how beautiful their piece can be, they'll never know, and you might be losing dollars in the process. I think we should always start with the best design for the artwork regardless of price (high or low), show it, let the client decide if it's within his budget or not, and proceed from there.

Don't get me wrong, volume is a wonderful thing, but if it's just not there perhaps a higher average ticket might help make up the difference. It's great to have low-cost alternatives, but I don't think we should assume that this is what the customer is always looking for.
 
GUMBY said:
Now with prices rising & inflation.
It is not what you paid for a moulding now.... It is what it will cost you when you go to replenish your inventory..... Be competitive .... But also Think ahead.

just my $.02 worth of 33 years of experience.
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Yes. If you got show specials at WCAF, make sure you plan ahead for your reorder, because the prices will be higher. We marked some patterns to discontinue after they run out in the value line so we are not caught with higher costs. Others were low enough to continue with a lower value price. I'm checking bills with a fine tooth comb right now and contacting suppliers to double check our discounts and reorder prices after show specials.
 
MJ Don't get me wrong said:
Your post was well put, MJ. Nice to see you at the show.

There are ways to show both options and often the more upscale design wins, but when it doesn't, it's good to have a fallback position.
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MJ The Romaboy said:
...volume is a wonderful thing, but if it's just not there perhaps a higher average ticket might help make up the difference...
Click to expand...

Excellent point.

Unfortunately, many framers are in exactly that predicament. No matter how low their prices may be, customers simply do not come through the door. One framer on another thread mentioned that she has not seen a customer in a week.

Lower price is not always the answer. In fact, for a small shop with declining revenue, cutting prices might only make matters worse, because that further reduces net profit.
 
Investing in more inventory may be a good way to earn lower costs from suppliers, but when a poor economy causes declining sales, that could add debt and take needed working capital.

Instead of trying to save money by buying cheaper woods, knock-offs, or buying more than the budget will bear, I have found good success using poly mouldings. For example, a 2" wood moulding might cost me $2.50/ft. in length, but a similar-looking poly moulding costs about $0.90/ft.

The wood moulding gets a 2.0 markup and sells for $5.00/ft., so I make $2.50 gross margin per foot. The poly moulding gets a 4.45 markup and sells for $4.00/ft., so I make $3.10 gross margin per foot. Meanwhile, the customer saves 20% on the moulding. All other costs are the same either way, so that extra gross margin amounts to almost 25% more net profit.

For framers who can afford to overlook poly mouldings because they are not made of wood, this added profit may not be important. But in my business it has provided a significant boost. Customers like the mouldings and love the lower prices, and I like the higher profit -- there is no downside.
 
I don't know how I overlooked this thread, and since my name came up, I think I should go on record- is that you, Ted?

If it is something I said in a DECOR article, it was a LONG time ago- but I did write a monthly column called, Focus on Business. I'm not sure I said, "never leave a discount on the table" per se- but I do understand the intent of the message. And, while it was a long time ago, and the dynamic of the framing business may have changed (see Kirstie's posts, she and Jeff have been doing this as long as Barbara and I have), basic business fundamentals have not and I believe the rules are still the same.

What was meant by never leaving a discount on the table was-

At the time, we bought glass by the pallet, probably paying about 28 cents per square foot. We also bought fome-cor on a skid with no boxes, paying about $1.35 per sheet. We also bought a LOT of metal moulding and paid around 34 cents per foot. And, we bought posters at 50 less 50, meaning we paid around $6.25 for a poster with a $25 retail price. I think those were some very aggressive prices and others in town were probably paying more.

Just because we bought well did not mean that we became the least expensive framer or capitalized on our buying by branding ourselves as a "discount" framer. We made very good money then and justified the prices we charged by selection, aesthetic of our stores, and most of all by having the most talented and well educated staff in the city. All of my staff attended continuing education, trade shows, and were offered to take the CPF test after a year of employment (which we fully paid for including transportation to the test venue.) They were paid a "living wage" and had health benefits and paid vacations (like a real job). We funded a retirement plan and Barbara and I lived well, put away money for our daughter's college education and for the bad times that we had seen come and would come again.

None of this could have been done if we operated on low margins and I firmly believe that advertising/marketing/catering/pandering to the clients who are price shoppers attracts exactly that type of client base, and my years of experience have confirmed (to me) that that is not my favorite type of client to serve.

If one buys well, (and as Jim has shown in his last post) you can still have excellent margins while offering well priced goods. Bob Carter shook up this industry when he brought the "just because you buy well doesn't mean you have to sell for less than what the market bears" philosophy- which paraphrased what I had been saying in my articles. Even if it means that your mark-ups are SIGNIFICANT.

If I was paying $1.80 for a 24 x 36 piece of glass (6 square feet at 30 cents per square foot) and everyone else in town was buying by the box and paying/charging more, why did I have to charge less? That is what was meant by leaving a discount on the table. We charged what the market would bear.

A good friend of mine once told me he was tired of competing with people who had no desire to live well. I think that for many framers, they always felt that PROFIT was an evil word and that if somehow they suffered a little (financially or otherwise) the framed art would look better.

In today's market, it is important not to price yourself out of business, either by being too expensive and not having sales as a result, or too inexpensive by not having enough net dollars left after the transaction.

It takes the same labor (about) to do a framing job with less or more expensive materials. If you "pass on the discount" to your client, what is left for you? And even if you buy aggressively, business is about margins, not gross dollars.

The trouble is that if your volume goes down (in tough times) and you reduce your selling price to increase/attract sales, are your margins going down as well? Or, conversely, even if you make great margins, are the net dollars after the transaction(s) enough to meet expenses? Having boxes of "value" moulding in stock will not pay rent/salaries if the product is not converted into cash.

I am teaching "Proven Pathways to Profits" at the PPFA Convention which reviews the formulas (oh no, he's gonna make me do math) and gives the nuts and bolts on how it "really" works. Remember, zero is a larger number than a negative one. Do you really know what Jim is talking about when he says the word, "margin"?
 
Jim-

Posted in a separate reply so as not to get co-mingled with my prior response.

Do you really only mark up a wood moulding 2x? Or was that just for illustrative purposes?

We buy one (actually many) wood moulding for $1.09 cents per foot. It is 1-1/2" wide and looks exactly like another from a different vendor which costs $2.09 per foot.

Using our mark-ups, the $2.09 moulding would retail for $7.95 per foot. Does that mean that we should sell the $1.09 per foot moulding for $4.15 per foot or could we get more?

Even if we sell it for $6.50 per foot, it is a good "value" and our margins are even better. So we sell it for $6.50 per foot. (actually Barbara just looked over my shoulder and reminded me that we sell no wood moulding for less than $7.50 per foot regardless of cost, so that moulding would be $7.50 per foot but it also gives us some wiggle room on pricing volume jobs).
 
Rob, while your insights about margins and pricing sound persuasive, they are mostly based on a false premise. They only make sense if you assume that the demand for picture framing is inelastic, that there is a static market. The demand for framing is very elastic and lower prices will lead to increased demand. "Charging what the market will bare" only makes sense when you have a near monopoly. In almost every facet of our economy, the efficient competitor wins. Historically, there have been few efficient competitors in framing, but that's changing.
 
Excellent topic Canada Framer. As I said below, I am wary of the discount trend, of converting too much space to value mouldings, and even more cautious when adding moulding to the poster special. Even if we pay well under $1. for a wood moulding, if I don't mark the moulding up to at least $6. pf we can't make enough margin to make the job worthwhile. We have a staff of 10 to pay, and that staff do have health benefits, vacation time, and a decent wage for the work they perform. We have rent and all the other overhead you are all familiar with.

Because of the economic situation, I am aggressively promoting the lower priced options, but I am limiting the value line to one column of well chosen woods (We aren't set up for poly.) purchased in volume, usually at trade show overstock prices. And, for now I am limiting the poster special framing package to a couple of black woods and to three OEM metals. On the package, I have to discount the whole job and I can't let this be an even larger part of the business if I am to survive.

The rest of our business, both custom and DIY is based upon more normal markups and margins that sustain our operation. The 2x $10. example that MJ made is not the usual alternative to a discount line. A moulding selling for $16 with a $12. margin plus your supplier discount might be more accurate for many. Compare that to the $5.50 margin made on the value moulding, and it's obvious where your living lies.

This really is uncharted territory for us. We brought the value line and poster package in just a couple of years ago. We are still testing the waters, but because these products are so popular we are promoting them and so far are selling them in good volume. Those customers then often buy normally priced framing as well.

It's all about options for the customer, but unless you are completely set up with warehouse space, production equipment, and buying of the sort Rob mentions below, an all value line shop of the sort Warren or Jeff R has may be unsustainable for most frame shops.
 
Warren I agree that lower prices can lead to increased demand. Offering a discount coupon is a way to "lower" prices. The difficulty comes with the question, discount off of what?

In the past, many framers have deferred to a suggested charges sheet furnished by a vendor. A long time ago, on the West coast, it was the Victor Moulding chart. Then it was the Larson Juhl chart and it was "reinforced" by the DECOR pricing surveys, which when I was writing for them, proved to be nothing more than framers burping back their prices that were based on those charts without any manipluation.

At least here on the Grumble I have seen reference to "bottom up pricing" where actual costs are calculated into the selling price.

My question still remains, if you have set your prices that after paying yourself (and your employees) a living wage to have retained earnings of 8-11%, and you offer a "discount" coupon of 25% off, where does the 25% come from?

Or how about this, your sales are down, you are not making enough money to even pay rent (or you are paying rent but not taking anything home) so you decide to LOWER your prices? Lowering your prices can be through a discount coupon, a general price reduction, or lets's say buying a box of moulding (and let's hope it's the right box - and how are you going to pay for it?) so you can offer "lower" prices?

Even with high margins, while a lower gross may yield a higher net profit, the volume may not increase enough to cover expenses. AND you may be selling more and doing more work for less return.

Charging what the market will bare does not necessarily mean being expensive. In an elastic market, when times are "good" maybe the market will bare a slightly higher price. When times are bad, perhaps you need to be more competitive.

That still does not mean one has to be foolish and not maximize the profit potential of everything sold. My point is that a "standard" multiplier for a given product leaves profit potential on the table and the actual selling price needs to be massaged based on the elasticity of the market.

Nonetheless, there are still framers taking home (or not) what is "left over" and lowering prices to increase sales is not the way to improve the take home potential unless the lowered price will allow for profitability. Nor is buying a quantity of moulding/product so that you get a great price if the inventory does not turn, your capital is tied up (or you don't pay your vendor).

I remain steadfast in my theory that just because you buy well, or got a good deal on something, you have an obligation to pass that savings through to your customer.
 
Rob Markoff said:
... lowering prices to increase sales is not the way to improve the take home potential unless the lowered price will allow for profitability...
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Amen to that.

It makes sense that lower prices would stimulate more sales, and the greater revenue would compensate for a lower margin of profit. This premise assumes an abundance of potential customers.

The trouble is, some of us do not have an abundance of potential customers. Price is not the limiting factor in my market and in many other markets. That is, no matter how low our prices, we could not seduce enough additional customers through the doors to make up the difference. And in that case, lower prices simply mean lower revenue and lower profit on about the same number of orders.

Rob Markoff said:
...I remain steadfast in my theory that just because you buy well, or got a good deal on something, you have an obligation to pass that savings through to your customer.
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Uh, Rob, I hope you meant to say you do not have an obligation to pass on that savings. I'll keep all of it that I can, thankyouverymuch. I call it "administrative profit".
 
Corrected Post:

Warren I agree that lower prices can lead to increased demand. Offering a discount coupon is a way to "lower" prices. The difficulty comes with the question, discount off of what?

In the past, many framers have deferred to a suggested charges sheet furnished by a vendor. A long time ago, on the West coast, it was the Victor Moulding chart. Then it was the Larson Juhl chart and it was "reinforced" by the DECOR pricing surveys, which when I was writing for them, proved to be nothing more than framers burping back their prices that were based on those charts without any manipluation.

At least here on the Grumble I have seen reference to "bottom up pricing" where actual costs are calculated into the selling price.

My question still remains, if you have set your prices that after paying yourself (and your employees) a living wage to have retained earnings of 8-11%, and you offer a "discount" coupon of 25% off, where does the 25% come from?

Or how about this, your sales are down, you are not making enough money to even pay rent (or you are paying rent but not taking anything home) so you decide to LOWER your prices? Lowering your prices can be through a discount coupon, a general price reduction, or lets's say buying a box of moulding (and let's hope it's the right box - and how are you going to pay for it?) so you can offer "lower" prices?

Even with high margins, while a lower gross may yield a higher net profit, the volume may not increase enough to cover expenses. AND you may be selling more and doing more work for less return.

Charging what the market will bare does not necessarily mean being expensive. In an elastic market, when times are "good" maybe the market will bare a slightly higher price. When times are bad, perhaps you need to be more competitive.

That still does not mean one has to be foolish and not maximize the profit potential of everything sold. My point is that a "standard" multiplier for a given product leaves profit potential on the table and the actual selling price needs to be massaged based on the elasticity of the market.

Nonetheless, there are still framers taking home (or not) what is "left over" and lowering prices to increase sales is not the way to improve the take home potential unless the lowered price will allow for profitability. Nor is buying a quantity of moulding/product so that you get a great price if the inventory does not turn, your capital is tied up (or you don't pay your vendor).

I remain steadfast in my theory that just because you buy well, or got a good deal on something, you DO NOT have an obligation to pass that savings through to your customer.
 
Rob Markoff said:
Corrected Post:

I remain steadfast in my theory that just because you buy well, or got a good deal on something, you DO NOT have an obligation to pass that savings through to your customer.
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No, you don't. But sometimes it is smart to do so for marketing purposes, to give the customer the choice of a special value line or poster line, or other promotion. Offering choice in the competitive environment that Warren references is smart business.
 
great thread. there are certainly many viewpoints on this deal. Dad (aka the boss) isn't quick to jump to 'value' type mouldings either, and I tend to agree. Lots of our business is repeat business, and twisting our image to something that isn't what has worked for how long? seems risky. seems like we'd just be undercutting our own margins and diluting the product that has kept us viable in our market.

sure, sometimes i think a 'poster deal' would be great to offer, but i've also really had SO few walk outs from a pricing issue what would the benefit be?

once again, great thread...i'll be studying it as it grows.
 
MJ The Romaboy said:
The $1 moulding is sometimes more difficult to work with, so the 5-6x multiplier may be necessary to compensate for added waste, labor, etc. and make it worth your time and energy.
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Quality vendors sell quality moulding so if you know your moulding there is no additional effort, waste, etc.
 
Thanks, Rob

Hey Rob: Yes it was a Decor column. The two messages were:

- don't discount. Discounts are profit killers (my words)
- if you don't discount, you work less for more (my words again)

I can't remember what I ate 5 minutes ago, but there are some things that never get forgotten, and that one column was really important. I re-read it a couple of times, and kept the message.

But times change, and what's important now is

- watch out when you upsell, because you want repeat customers in today's economy. Don't scare off new customers;

- offer a value line, but maintain the margins to capture overheads;

- buy really smartly, because you can max your margins with an intelligent purchase. Plastics are part of this.

- read the Grumble
 
Kirstie said:
The "customers Running in a Panic" thread is running concurrent to this one with a lot of the same issues discussed.

I think in some ways we are in uncharted territory. For over three decades we have offered custom and DIY and somewhat lower prices. Others have operated thier shops at the higher end and are now adding a poster special and value line. Others are like Jeff, who has a short time under his belt offering price by size framing, and Warren, who has run his whole Outlet shop as a value shop for at least 30 years. But the rest of us are now trying something new and I admit I am uneasy.

Now we have a predicted, protracted economic downturn and many are lowering prices, selling more and more mouldings at value prices and expanding poster packages. We certainly are. It seems like a good thing, the customer likes it, and the framer likes it because more customers come in.

But I have to be honest in saying that every time we consider adding another moulding to the very small poster special line we get nervous. I will be the first to say that the lower priced specials and ready mades do not seem to have hurt the higher end business, but profit margins are something else to keep reviewing. It's basic math. When you make much less per foot on a stick of moulding, and when you slash the prices of the rest of the package, you make less per sale, a lot less. No matter how well you buy, you still make fewer dollars per frame. I think what we all have to look at, given the nature of the shops we have, the equipment, the staffing, is can we sustain this type of pricing and maintain healthy businesses or should it be limited to a smaller variety of low price options for the customer to choose from.

I don't want to turn 32 years unpside down. We had a formula and now that formula seems to be changing. I can go with that to a point. We have changed in the past in order to meet market conditions, so this feeling is not new, believe me. But while we all charge forth with these new pricing practices I think we would do well to keep a very sharp eye on the bottom line and to keep sharing our experiences both good, bad, and unsure.
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Hey Kirstie: this also is a memorable post. It, and Rob's of today, are thought-provoking. (between us, I can't believe the prices Rob was paying back then. Holy mackerel!)
 
Jeff Rodier said:
Quality vendors sell quality moulding so if you know your moulding there is no additional effort, waste, etc.
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The point I was trying to make is that you'll usually expend at least as much energy constructing an inexpensive frame as you do a more costly one, and the profit potential is much greater if you can sell up and charge appropriately. Cheap doesn't always equate to better profits or even better value for the customer.
 
MJ The Romaboy said:
Cheap doesn't always equate to better profits or even better value for the customer.
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I guess you are talking about using cheap moulding. I know that when I sell an Italian made 4" wide gold leafed moulding to a customer for $8 a foot rather than the $40 a foot that others charge that is a better value for the customer.

Yes I could charge more but I don't have to do so. My customers have become accustomed to my pricing and therefore bring in armloads of art to be framed. I took in 6 pieces this week that were prints from M's with the 50% stickers on them. She was looking for the cheapest metal frame money can buy. I pay less for most of my wood mouldings than the cheapest metal frame out there. She framed all 6 large pieces in proper wood frames that will reflect the quality that our store offers for less everyday.
 
I think we will all have to face the fact that consumers will become spoiled by the constant and massive markdowns they are enjoying at large and small retailers. It's everywhere they look. Moreover, they will get used to lower priced offerings as retailers bring in bargain merchandise to replace more expensive goods. Also, people I talk with seem to be proud of the fact that they are shopping more wisely, buying what they really need, being more sensible in their decisions. It's a new mindset. Frugal has become cool.

I don't think the consumer will go back to full price easily, and buying luxury items may be out of style for a long time. Buying good quality does not seem to have been affected. I read that people are still buying thier Starbucks, but they are buying more coffee and less of the expensive blended drinks. They still want thier quality coffee, thier little bit of luxury, but with a smaller price tag.

As framers, finding the right product mix will be key. Pricing with lower mark ups, passing on the discount, and buying lower priced mouldings may be a way of life for years to come. I think we should be prepared to live with that any current changes we make for a long time. And therefore I think we should make those choices with great care.
 
Jeff Rodier said:
I guess you are talking about using cheap moulding. I know that when I sell an Italian made 4" wide gold leafed moulding to a customer for $8 a foot rather than the $40 a foot that others charge that is a better value for the customer.

Yes I could charge more but I don't have to do so. My customers have become accustomed to my pricing and therefore bring in armloads of art to be framed. I took in 6 pieces this week that were prints from M's with the 50% stickers on them. She was looking for the cheapest metal frame money can buy. I pay less for most of my wood mouldings than the cheapest metal frame out there. She framed all 6 large pieces in proper wood frames that will reflect the quality that our store offers for less everyday.
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I get it, Jeff. You do a lot of volume.
 
Heard a story on NPR re: the "new" luxury- A Harvard Prof was being interviewed and she said that what people are going to spend $$ on are things that last and maintain intrinsic value. They aren't looking for cheap, they are willing to spend $$ on quality and will spend the money if they have a sense that what they purchase will provide lasting value. High end purses, shoes, and clothing didn't fit her criteria- jewelry and watches did.

I sense a new marketing opportunity.
 
Rob Markoff said:
Heard a story on NPR re: the "new" luxury- A Harvard Prof was being interviewed and she said that what people are going to spend $$ on are things that last and maintain intrinsic value. They aren't looking for cheap, they are willing to spend $$ on quality and will spend the money if they have a sense that what they purchase will provide lasting value.
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One thing to remember, is that ALL framing is "luxury". That is why we don't get a lot of 20 somethings with 2 kids who were the first in their family to graduate high school. In the eyes of most there is no such thing as "cheap" framing. I'm not sure we can alter our prices in such a way to change that fact.

BUT I do agree with the premise. I have noticed in a down economy that people take better care of their stuff. For example my grandmother had lived in the same house for 65 years. It was a new neighborhood when she moved there but it's far from it now. A few years ago, I started noticing people buying dilapidated houses and tearing them down. Also houses that looked really bad started cleaning up. New window signs and vinyl signs litter yards.

My theory for this is that when people think, "forget this house, we're going to get a new one next year", they quit painting and landscaping. However when they think, "we're going to be here a while", they tend to take better care of what they have.
 
Rob Markoff said:
Heard a story on NPR re: the "new" luxury- A Harvard Prof was being interviewed and she said that what people are going to spend $$ on are things that last and maintain intrinsic value. They aren't looking for cheap, they are willing to spend $$ on quality and will spend the money if they have a sense that what they purchase will provide lasting value. High end purses, shoes, and clothing didn't fit her criteria- jewelry and watches did.

I sense a new marketing opportunity.
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Wow! NPR and a "Harvard" professors opinion! I'll certainly start carrying jewelry and watches. :D:D
 
I guess if Rush Limbaugh and Pepperdine University made the same observation it would be safe to follow? The best approach is to get a variety of views from resources we trust and make our own informed decisions.
:popc: Rick
 
Instead of nitpicking about jewelry, perhaps we should do as Rob is probably doing right now: work out a marketing plan to promote lasting value.
 
I think Jay has hit on probably the most lucrative opportunity out there -- people who realize they are not just going to be in their house for a couple of years, but they are going to be spending a lot of time at home, too. So we need to help make them an attractive environment.

I'm ok doing mat and glass makeovers to help pay the rent.
 
We have always passed on the discount to our customers; it's the nature of our business. We have a competitive advantage because we buy length in quantity.
 
Since my name has been brought up kindly in several threads, may I offer my opinion?

I have long suggested that when you have a "Buying Advantage" it is an advantage and that we ought to turn that advantage (leveraged) into a "Selling Advantage". If you do buy well, why wouldn't you use that as a method to "distinguish" your self with some aggressive pricing while maintaining increased margins

But, where we often lose that concept is to think that blind discounting is an answer. If you pay "regular" cost then to protect your margin, you "MUST" sell that at "regular" retail. But, if you do buy at a "reduced" cost then you have the ability to sell that at a "reduced" retail; not a requirement

Now, today's environment is different, yet

Those few that can extract a premium price, I say "Great for you". So many of us all think we are that "great" where most of us are really pretty pedestrian framers; certainly in the eyes of the consumer

These are not new rules but so many "old" rules simply no longer apply

Our friend, Warren, has found a system that works for him, yet, I doubt that many are able to duplicate his model. While he may not be unique, he is certainly alone (and Warren, that is meant as a high compliment)

My friend, Rob, has made the most salient post of all when he indicated making a very good living as a standard. That too many competitors are simply not of that mindset.

Generating margins and volumes and such discussions are designed much more for a rationalization of exactly how we do it ourselves. In reality, most framers do not have a sufficient grasp of the dynamics to make those types of statements

Bottom line: Decide on a plan that makes sense and discuss it in great detail with your CPA. Create models and "What if" scenarios (so simple with so many simple software tools). And, set reasonable (no, elevated) goals

We have done very, very well for many, many years but those days are simply gone for us and we will soon leave this industry where we can generate levels of income that reflect our abilities

If I were starting over today, i wouldn't. But, if i were, I might find a small market and adopt Warren's model. It sure seems the best fit in this environment, but with a few differences (like market pricing)
 
Kirstie said:
Instead of nitpicking about jewelry, perhaps we should do as Rob is probably doing right now: work out a marketing plan to promote lasting value.
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At least Kirstie gets it.

Sometimes I wonder why I even bother to post on this forum at all.

And I now know why I felt the WCAF show was so successful-

People who were there attended because they wanted to be there, did what they had to to make it happen so they could be there. Instead of being a "pittyfest" they were looking for new strategies or ideas to make it through these tough times. That's why the Chinese dinners are so beneficial. Framers talking to framers. Interesting that in another thread some attending the PPFA Convention said that having dinner with other framers would trump the Beach Boys.....

And I am confident that the PPFA show will have the same level of enthusiasm. And at the PPFA show, there will be a lot of old timers who recognize the importance of a trade association and have been through difficult times before. The synergy of ideas may yield one or two things I haven't tried, and one of them may just be the one I was looking for.

Instead of discounting an idea because it came from a Harvard Professor or was broadcast on NPR, how about listening to the message? I wasn't saying that we should be selling jewelry or watches - but where are there similarities between the two products?

What properties of lasting value does a watch and a beautiful shadow box of memories have?

To those of you who made the snyde comments re: my post(s)- were you at the WCAF Show and if so, what classes did you take? Care to share any POSITIVE feedback? Are you going to the PPFA Convention? And, how's your business? Care to share a POSITIVE idea of what is working for you?
 
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