Pricing Philosophy

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HarryGMCPF

MGF, Master Grumble Framer
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Nov 15, 2004
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Northborough, MA
What is your philosophy or what logic do you use when pricing a large quantity job?

For example: A customer walks in and wants a quote for 30 pcs all the same single mat, FC back w/hinge mount, regular glass, and a Neilsen 11 Matte Black frame, fit and wired. FYI(The frame size is approx 14X21)

How do you go about pricing this job? Do you offer a discount off regular prices? Do you work it cost up? Or some other approach and Why?

Or is the answer, "Well it depends." If so, what would make it fall outside of your normal method of pricing such a job?

Thanks,
Harry

[ 05-26-2005, 09:27 PM: Message edited by: Grumbler F.K.A. Harry ]
 
psssst......F.K.A. Harry, you can go back in and edit your spelling error. I think you have like an hour after you post......
 
It's the icon that looks like pencil & paper ... but filosofikally speekin y bother?
 
I would go with 20% also. I'm figuring that I have a built-in allowance for 10% discounts for my artists and seniors and clubs and non-profits and schools....etc. The extra 10% I can recoup by using a production line assembly process, and maybe a volume discount from my vendor.
 
I'm a cheap bass**** (fish), I would go 15% untill they hit 50, then I can go to my suppliers for a 20% on materials....

But the labor doesn't change. Maybe a hair faster, but you still have a lot of hidden costs that creep up on you with large jobs.

I would be a little more forgiving if LJ would cut my mats and backing at JoAnne's price as well as the 50 chops that I will need.

But as for philosophy??? Make sure you make money on the job. If you only clear $10 an hour on a job that takes two days.... how long are you going to be in business?
 
Part of the price of a custom frame job is the 15-30 minutes we have to spend helping them pick out the frame. Multiply this by 30 frames and you've got some time invested.

Since all the frames are the same and you only spent 15-30 minutes picking them all out - there should be a pretty big saving for the customer.

I would recommmend NOT looking at the pricing guides because they only reflect a single frame price that include selection time.

I can't imagine that you are going to get much special pricing from your suppliers on 30 frames - 300 frames may be another story.

Do you really know how long it takes to do one of these frame jobs? Neither do the folks who print those "Suggest Pricing Guides".

I would do a time study and charge labor + materials +overhead +profit.
 
Your labor on the project you described shouldn't be that much. 30 metal chops the same size shouldn't take longer that 30 minutes to cut (or are you ordering chop?) 30 single mats cut with production stops 30 minutes (unless you sand your corners like I do, then 45 minutes). The only real time consumers I see in this job is the fit. If you production line it (don't know how many employees you have) a 3 man crew can put that out in less than 2 hours. So that arround 8 man hours labor. 14 x 21 is an awful size btw, can't you do it 14 x 20? You can get an extra mat out of each board with 14x20.

It seems to me that you can easily provide a large discount on this job. What you have to ask yourself is why are you offering it? Are you doing it to be nice or are these clients shopping the area for the best price. In most cases you shouldn't discount unless they ask for it or if you are affraid that they will go somewhere else if you are to high. I am always willing to work with clients on price if it is necesary but if they don't have a problem with your regular pricing why change it. You are just throwing away money.
 
I ask because I am bidding along with a couple of my BB neighbors. I know I can beat their everyday price, everyday. (Wait, do they really have an everyday price?)

Anyway, I know for a fact that one of them will give some agresssive pricing so I want to be competitive. No actually I refuse to loose any order to them if I have the option. They will never do it at a loss so I know I will always make something and gain a customer. I know I can buy well enough to make it work and I know my crew can produce the stuff in few enough hours to make money.

For those of you, (Bear) that would give little or no discount, are you competing with any others? If so, how do your prices compare on a daily basis? Or would you not even be interested in this type of job so you would take the appraoch that, "Hey if I get it I will make what I want to make?"

I would obviously much rather make another 20% proffit on this order, but hey even at the price I quoted, 40% of my list, (a smidge below to LJ's catalog) I still grab 70pts (includes labor). Oh and a job from a local college and the Dean who now loves my store.... worth it I would say...

Like I said before, I want the job! and ultimately the customer. In this case, I gott'em both.

As an asside: I upgraded them to a wood frame for the same money. Much easier to work with and a lot kinder to the saw blades.

Thanks all for sharing. Any other thoughts?
 
I use QuickBooks Pro 2004. It can do price estimates for me. Lets me see how much each job will "cost" as well as show the "typical profit". When an artist asks for a Huge Volume discount I use the estimate feature and try to get a good idea of what it'll cost me.

That lets me decide how much the job is worth, and how much I can afford to bend on the price.

Just remember to add a good profit for yourself, because chances are you are going to have to "ignore" other jobs to get this one completed!
 
Which brings up several other other points that make me respond..."It depends".

1.) Are you getting a deposit or have to charge the business on an in-house charge? In other words, are you going to get payment in a timely manner?

2.) Do they need it NOW or do you have the time to work on it between other jobs?

3.) Are they easy to work with in other ways?

4.) Do you expect or anticipate that future business rests on this order?

The better way to price quantity jobs is cost of materials + labor + overhead + desired profit, but in reality I would probably give a 15% discount which is what I normally give interior designers for sake of ease. If your normal price structure is set up properly you should be fine with this. Since it is being bid though, you may want to be a little more agressive.

If you really want to fine tune your bidding, call the big boxes and ask for a quote on a single same job. Then ask if they have any quantity pricing policies. If you act ignorant of framing terms but clear as to what you want they won't catch on and you may learn quite a bit.

The point that LJ's or other pricing guidelines take into account design time is interesting. Is that formally factored in in some way? The point that you save a ton of time from start to finish is the biggest point brought up.

Less design time.
Less ordering materials time.
Less accounting time.
Less scrap material storage for some future job.
Less measuring time... and on and on and on.

As recently discussed in another thread... make any discounted price predicated on payment terms.

Dave Makielski
 
Originally posted by Grumbler F.K.A. Harry:
...I am bidding along with a couple of my BB neighbors...I refuse to loose any order to them...They will never do it at a loss so I know I will always make something and gain a customer...
Click to expand...
Harry, your ambition is admirable, but I suggest a bit of caution here. I don't mean to rain on your parade, but clouds may be forming over this business opportunity of yours.

It may be dangerous to refuse to lose any order. If your refusal really is as emotionally-charged as it seems, you might might be tempted to overlook critical factors. Profit, for example.

Let us not assume "They will never do it at a loss". I'm sure they would at times, by mistake if not on purpose. Bid busines is not their core kind of business, and they may bid unwisely. For one thing, I'm not sure those who would assemble their bid are privy to their actual costs of labor or materials.

Beefing up revenue dollars might seem attractive for them, if their strategy-of-the-month calls for that. For a BB, the loss from one mistakenly-low bid might never be noticed, although the same loss might severely pinch a small shop.

Also, their slightly-profitable bid price might be a major loser for a smaller player like me (or presumably, you). They have the economies of scale. We don't.

I suggest you examine your costs carefully and make sure you have accounted for everything in your bid -- win or lose. If you base your bid on anyone else's numbers, you could be in for unpleasant surprises.

Finally, bid-job customers aren't known for their loyalty. Next time around -- if there is a next time for this customer -- you'll have to win the bid again.

Your desire to "gain a customer" certainly is good, but I respectfully submit that only the profitable ones are worth gaining.
 
This is interesting and it reminds me of a meeting summer last in San Diego between two well known framers and myself.

We were at lunch at the SD framer came in late because he had just passed on a bid for a project similar to this. He said the client wanted to pay $40 each.

The other framer and myself jumped on that price like a dog on a bone. $1200 for a two-maybe three hour project?

All depends on what you have in house and how you buy. Being able to get 4 up out of each sheet (I would make it 14x20 in a heart beat)just made that deal too sweet.

I will suggest that if you are buying chop, you probably will not have much of a chance if it is a competitive market. The advantages are simply against you.

Frankly, in this market, it would go for much less than $40 ea. $30 might be a tad high here
 
Originally posted by Jim Miller:

....bid-job customers aren't known for their loyalty. Next time around -- if there is a next time for this customer -- you'll have to win the bid again.

Click to expand...
I totally agree with Jim. I have some of the NASCAR teams that I bid on. Also several furniture stores. I win some, I lose some. Just because you lose the bid this time doesn't mean that you will not be asked to bid on another job later.

On volume work I price from cost up. Also, my bid will depend on the time of year and how busy I am. A quote in November or December would be very different than a quote in June or July.

Finally, unless they absolutely demand CC glass and Nielson, I would submit two bids. One with, and one with plain glass and OEM moulding.

I win a lot of plain glass bids.
 
I absolutley appreciate the input. You have all brought up a couple of points that I may have not considered completely. I think by luck I may have dodged a couple of potential bullets. FWEWWW !

Jim, You are somewhat correct about my desire to not loose a job being somewhat emotional. I will tell you that I would like to think that I would not make totaly stupid decision and not make enough to make it worth my time, but hey, we're only human.

I know exactly how the competition that I was most concerned about would price this job as I wrote their operating procedures. And knowing the SR. management of the company, I KNOW they would never do this job for less than 80+pts. So based on that, I know I can almost always match if not beat their price on this type of thing. They could do it for less, but simply won't. One of the reasons they are in the process of quickly killing a once wonderful and seamingly unstopable chain.

I will tell you though, that I did get this job, and got 50% up front and will get the balance on delivery. Part of the deal for the customer to get the price they got. $40 each. Because they liked the price so much I also got an additional 70 pcs to shrinkwrap on FC for them. A nice little addition to the sale. My name goes on the back of everyone of these and I get my name listed in the Event Booklet. These are being given to the school's 30 major financial donars. Again, part of the deal.

As for the time, I have 2 weeks. That does not put a strain on my production capacity at all. Infact, it helps me work closer to full capacity.

Now if I could only get them 4 up on a sheet of matboard instead of three. Oh how happy I would be........ if I only had one of those fancy art shrinkers, or even a matboard stretcher.... ooooooh the possibilities.....

Thanks again.
Harry
 
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