What would you rather be: Most expensive or the least expensive?

I can't imagine you would want to be either to be successful. I want to be in the middle somewhere, so as to appeal to the most people possible. I try to have something to fit everyones needs.....
 
Sorry, I did not make myself clear. Middle of the road is not an option, just the most, or least, expensive.

Who would be in business the longest, why?

John
 
John:
If you're talking an individual shop as opposed to a chain/bigbox, I would have to go with the most expensive. You could never compete with massive corporate buying power on costs, so you could never undersell them, esp. with their scam coupon specials.
Therefore I would go for the expensive side and offer plenty of gorgeous finished-corner options, wrapped mats, gilded mat liners, etc. so it would be obvious that you were offering something completely different. I might even locate in an unexpected location and/or operate by appointment only, for true exclusivity. Charge a lot, but give a lot for the money.
This way you're not constantly busting your butte to make a small margin, but instead selling fewer frames for more money. Of course you would have to market to the creme de la creme of your local society, and get involved in their pet causes, the opera, etc. It would probably help if you joined the country club too. (Better learn to play golf.)
That's my theory.
Having said that, I agree with Kathy's approach, which is what I do.
:cool: Rick
 
Well John, first of all, I'd have to move to an upscale, metropolitan area other than Clayton NC (alias Podunk Holler). Then I'd like to only deal in the high end stuff. But, you better know your biz up one side and down the other and be able to do only the absolute top-notch type of framing. And, it would be really nice (since we're dreaming here) if my overhead was extremely low and my customers liked going to the poor side of town to get these gorgeous framing miracles performed for them.
 
I may already be the most AND least expensive framer in Two Rivers, WI.

If I had to decide, though, I'd wanna be the most expensive so I could brag about it on The Grumble.

Hardly anyone brags about being the least expensive.

Okay, there are one or two.
 
I'd rather be the most expensive becasue if the least expensive I could put myself out of business fast.
 
an exercise in futility?
Both are doomed, so why not end with a bang, not a whimper?
Sorry T.S.
 
Wally, why are both scenarios doomed? Why would not one or the other succeed?

Also, let's face it, every city or town has the most expensive frame shop, the least expensive also exists. Every other shop is somewhere in between the two extremes. Most of us have one of the in between shops, why not be one of the extremes?

John
 
I would love to be middle of the road but it hasn't happened yet and it is not going to happen! We end up being on the expensive side, possibly most expensive.

In our area the key is "discount, discount, discount". We don't want to run our business that way and can't. In order to offer the selection we do, have experienced framers and designers and offer the quality that we do we just can't discount. And if you don't discount you are expensive!
 
This is truly interesting. Given an alternative choice every framer would favor the "most expensive shop" avenue, the oposite being synonim to certain death. In real life many framers would however slide and accept less and less demanding and expensive jobs under their compulsion (perhaps more than that) of taking every oportunity at making more money.
I guess that John's next question would be how low is too low for you? Where would you draw a line in the sand, and why there?
 
Lack of flexibilty. Both shops, in order to maintain their position, will naturally become more and more marginalized.
There's a lot more to consider, but I am assuming you are using your own business as a size model. The advantage to being relatively small is that you can play either end of the market. I want to be able to sell the client something when they come through the door, and I offer (I think) the widest range of closed corner frames in the area, as well as some really well priced box moulding.
But if I had to choose, I would rather go out with a bang as a high end framer than starve slowly as a the best deal in town.
The futility of the exercise is that the point is not what you are, but how you are perceived.
 
This is an interesting conundrum.

In every market, somebody has to be the most expensive and somebody has to be the least expensive. If both are doomed to failure, they will each be replaced by other shops, who are doomed in turn until there is only one left. That one will assume both positions simultaneously.

Clearly, this doesn't happen because, as Wally mentioned, the reality is not as important as the perception.

We don't normally see shops advertising as being the most expensive. Their clients probably think of them as "pricey, but worth it."

There is a shop in my market that consistently advertises themselves as the least expensive in the area and they may be. It doesn't look like they're at any risk of going away soon.
 
Most important in these two scenarios is the publics perception. You can be the least expensive, but perceived by the public just the opposite and vice versa.

An example of the publics perception of inexpensive...

Michael's and Hobbly Lobby. When I've compared, they are not inexpensive for the services they offer. Very limited in offerings, generally inexperienced framers doing the work...yet the public has a perception that they are less expensive than a regular independent custom framer.

About 25 years ago I conducted an experiment. Framing was about 20% of our business with art materials and gift items making up the balance. We were known as the quality framer in the area and were perceived to be very expensive..."If you had it framed by Makielski's, you must be rich."

Decor's polls indicated that we charged approximately 20% less than the prevailing scale. I did a "yellow sheet" accounting of the frame dept. and figured we lost approx. $ 20,000 that year in framing.

My knee jerk reaction was to start an ad campaign to erode this "quality, but expensive" perception of the public. Duh? Spend good money on trying to change perception? It dawned on me that maybe it would be easier/cheaper/wiser to live up to the existing perceptions.

I made a decision. I would raise prices 50% on framing that very day. If this excercise failed, I would quit the custom framing business. At the end of the year I pulled out the same yellow pad, plugged in the numbers and found we made approx. $ 20,000 and produced more units during the year.

I learned several good lessons:

1.) Framing can be very profitable if you allow yourself to charge appropriately for your services.

2.) It is much easier to live up to than to change the publics perception on pricing when you do quality work.

3.) Customers wanting quality craftsmanship consider price last. Far ahead of price is:

- They trust you with their art/keepsakes
- Your reputation
- They feel comfortable in your shop
- Your location is somewhat convenient
- You don't give off any offensive
odors and a multitude of other factors.

Way down near the bottom of the list is price when doing top quality work for discerning customers.

To answer this threads question, I think I would rather run an operation that is either the cheapest-bare bones-limited offerings-production type framer with low overhead, or alternatively, the highest priced, best quality, nutured reputation, service oriented framer in the region I serve. Either one can be profitable. I chose the latter. Being in between is much more difficult.

Dave Makielski
 
I think the question can only be answered after answering two other questions.

1) What is your personal objective. (I am not trying to be funny.) Do you want to maximize money or pleasure. Either anser could accomplish either objective. It depends on the answer to the next question ...
2) What is the market you are attempting to enter. This includes but is not limited to a) demographics and b) existing competition.

Depending on the answer to 1) and 2) either being the lowest priced or the highest priced can be rewarding. Either could be the most fun or the most profitable. If you got lucky either could be both, but you need to understand yourself, your objectives, and your market to determine which will be right.

Sorry for the "non-answer" John.
shrug.gif
 
There's no question in my mind that I'd like to be the least expensive ("cheapest" has unnecesary negative conotations). I'm pretty sure that we are the least expensive and we strive to be. Just about all our decisions are based on lowering costs to us and our customers.

BTW, I know we're the fastest (we can produce a job in any one of the over 900 moldings we stock in under two hours). I'm pretty sure we're also the best. We frame a lot of pictures and practice leads towards perfection. We join frames other shops can't. We're the only shop I know of that can cut and join 10" wide molding.

I've never wanted to be anything but the lowest priced shop from the day we started 27 years ago and I can't think of a better business model.

There is a mistaken notion that an independent shop can't compete on price alone with the big box shops; we can easily and we do.

Think about it; there's nothing that a high priced shop can offer that we can't at a lower price. On really big ticket jobs like closed corner precious leafed frames, we're probably the same price as most shops (it's hard to get quantity discounts in this area) but these jobs make a small fraction of our business (but probably a larger number than our competitors). People who can afford custom framing don't throw their money away and a lot come to us for every day framing so we get their top end jobs, too (preception is everythihng, right?).

We're also not suffering financially because we're low priced. We have very healthy margins on everything we sell. The idea that the lowest priced shops are heading out of business is silly. All things being equal, I'd bet on the low cost guy every time and there is no reason why all things can't be equal. As an example,we have three designers in each store all the time; customers get prompt and expert help. We'll call someone from the other store if we get tied up. We can spend time with customers because we don't have to worry about other customers waiting. Another example, out frame maker does nothing but cut and join between 20 and 50 frames every day, and she's been doing just that for us for 15 years. You can bet she's good at it. She has the best equipment and tools and she can reject a leg and cut another one from stock immediately, no delay.

Unless fundamental laws of human nature and economics are overturned, low cost will beat high price every day (again,all things being equal). I'd just hate to base my livelyhood on the thin notion that I can persuade customers to buy from me what they can get better and quicker at a lower price from someone else.

I want to repeat this: there is no reason to assume that low cost means low quality; in fact, I'd argue that the opposite is true. Low cost means more business and more business means more practice, more experience.

Sure, the occasional guy will make it selling high cost frames, but there aren't many of them. There are more opportunities to succeed by offering value and quality.

You can be the best, the least expensive, and the fastest. Who would want to compete with you?
 
With out hesitation I would say low end.

The expensive shop has a much smaller fraction of the market share than the cheapest guy does. If there is an economical shift the high-end shop just lost its base. The cheaper shop looses their poorer customers but has a wealthy group ready to move in and replace them.

And what about the “high end” customer who wants a poster framed? They certainly wouldn’t go to the most expensive guy in town for that. They didn’t get rich by being stupid!

Also, the cheapest store in town can have their customers trust, a good reputation, a comfortable environment, and on and on. That stuff doesn’t increase costs so much.

In this months PPFA hand out they have 3 ways to grow your business.

Increase sales – Can they most expensive guy raise his prices more? Not forever!

Increase the number of sales – The most expensive shop in town had better have trick up their sleeve because the other guy might just offer a dreaded “SALE” to increase their sales.

Get More Customers – What would prevent the cheapest guy in from going after the most expensive shops customers. This is double win because if they do get the high end shops customers they Get More Customers and will probably Increase the number of sales at exactly the same time.

The challenge is to be able to buy effectively enough that you can sale in such away that makes the customer really notices how darn cheap that was.


Carry on!
 
Dang Warren posted while I was writing...

Let me just change my answer to "What he said" and leave it at that.
 
Well, This is a great discussion and I would agree with many of you that the middle of the road (skewed to the high end) is the right answer. As we all know, not every customer is looking for the closed corner frames any more than they are all looking for a "Poster Special" for $29.

That said, I worked many years in Ops Management for one of the "Big-Box" chains, (since back out and on my own) I would like to take the argument of the other side. Just for fun. Sort of "A Modest Proposal" if you will.

I preface this entire argument with the following: Toyota lives in the middle of the raod in the car market and I doubt anyone would argue that they don't have an exceptional reputation and business) So here you go...

All of my signs and advertisig SCREAM the message: BEST PRICES IN TOWN!! NOBODY BEATS OR PRICES! CUSTOM FRAMING 60% OFF EVERYDAY! BUY MORE, SAVE MORE! etc...

My store is located in a busy regional shopping area with tremendous customer traffic. I pay a little more for rent, but I need the traffic. My store looks nice, nothing great, but has all of the required merchandising components, my employees all wear aprons with my company logo, provide mediocre service, and produce a decent product at a great price. Or at what appears to be a great price. ( more on that in a minute)

I buy and sell only closeout or box program moulding in large quantitity and offer a limited selection of matboard colors that way I can maximize my scraps. I sell primarily regular glass, and buy it by the pallet. I have driven my COGS down to 18% or better. I encourage my employees to write orders for double mats, drymount, reg glass, and a 2" gold wood moulding all day long. We have an average ticket of $120 at 82 points of margine.... again, all day long thank you. Oh, but I do need alot of them. 15-20 per day. Therefore I need to spend another 15-18% on advertising to keep my message in front of my customers. Now, if I consider my advertising and my higher rent to be part of my COGS and get a combined number of 30-40% I am no worse off than nearly all of the middle of the road framers. In many cases still better. Where I win is that I drive volume by constantly telling my customers that I am the cheepest.

Back to pricing. (After- all that is what this discussion is about.) I start my pricing at or above Decor Mag's pricing survey, and offer a huge discount everyday. My prices for my regular "Program" items are the lowest in the market. Not by much mind you, but it is the lowest. Nowhere near the 50% I advertise, but whose ever going to check it? Even if they tried, how could they? We sell very blind items and services.

"Your lying to your customer.", you say.

No I'm not. They are paying the lowest price, and I am discounting from the prices published by a nationaly recognized and accepted industry leading magazine. (Who actually charges those prices with a straight face?)

I do sell framing of all kinds, including my own version of conservation framing and specialty design. However, any item that falls beyond my standard menu of products, i.e. Cons glass, archival mounting techniques, needlepoint stretching, specialty framing services, are not that in-expensive. They are still cheeper than the "Mom and Pop" framer in town but boy, I make unbeleivable margine on those items.

At the end of the day my proffit margine may not be any better than yours, but I have alot of dollars to play with. Assuming my customers don't catch on to my game and you independant framers don't educate them on what good design and a quality finished product is, and stop giving that personal service. I will be a around and controlling the market for a long time.

Why not have the lowest prices?
 
Warren, what would you say is your weakness? You seem to have it all, and I'm not being facieses. It would seem you have the scales of economy working for you.

I guess our choice at this point in our business is to be on the higher end. Sure we'll do some lower end jobs but most are profitable for us in the $500 and up range. We try to show the most expensive designs. We frankly cannot handle too much volume because we have diversified so much and we are having problems keeping up, we often refer things like matting only, glass only and stretching only to the guy down the street. We have a small production area and we stock by the box certain signature frames but charge full price for them.

I believe that when the economy flattens, we lose the lower end crowd, and still retain the rich folks.
There is a high end gallery and frame shop in town that brags about being the most expensive framer in town. His artists sell at 10,000 + so I guess that his clients don't mind paying through the nose. He also pays his top framer $25/ hour (go figure) and has been in business for 20+ years.
 
Is it possible to say to have the least expensive shop requires more work than the most expensive shop?

From what I am reading - it takes alot more effort to produce the same product and offer if for less. It certainly takes alot more individual pieces to make the same amount.

Most Expensive gets my vote - and since this is all for the thought provoking reaction - we can honestly say in reality we may be perceived as one or the other but actually offer all levels.
 
Thanks Harry. That was an honest, educational, and entertaining view. I love the "mediocre service" admission. I would love to have a sign posted out front saying "Guaranteed highest prices, best design, and mediocre services" I think that would actually bring people in.
 
Least expensive this has been proven in many markets time and time again…..think of my favourite company for example Dell Computers…….how many in the computer business laughed at Michael Dell when he started out only 20 years ago and where are they today..........remember Michael Dell started his company with a borrowed $1000…….I have a feel Michael Dell had a chat ;) with Warren
thumbsup.gif
before he started making computers.

I’m just giving an example of Dell here rather than a framing business…….sometimes it helps to take a look at another industry to find out what is going on in the market place………and to repeat myself the methodology and requirements of "custom" building a computer are very similar to building Picture Frames :eek: ………in fact you would be astounded :D at the similarties…..
 
Lise, I have two weaknesses: location, and lack of interest in advertising and marketing. Wilmington is a largish town (60K) on the Atlantic ocean (only 180 degrees of draw). I think I'd do a heck of a lot better in a larger metropolitan area. I know nothing about advertising and marketing and consequently do very little or none of each. We've relied only on word of mouth and Yellow Pages advertising, no marketing as such.

We have two stores, a high end store, The Frame Works, and a lower end one, The Frame Outlet; (see our web page) our experience through two recessions is that when business falls off during bad times at The Frame Works, it picks up at the Frame Outlet. Go figure.

You'd have a hard time spending $500 (what, $400CD?) on a single framing job in either of our stores.
 
Lise,

I calls'em as I sees'em. However, I would like to clarify. I am not advocating the approach I outlined in my ficticious business nor do I currently operate that way. As a matter of fact it was my complete lack of agreement with that approach that inspired me to go out on my own. I was simply putting forward the argument from the otherside that was not being expressed when I began typing.

By the time I finished and posted; Warren and Jay H had expressed their side. And they did it well. I have worked in both extremes. They both have merit and can yeild great results.

I think the resiliancy and longevity of a business comes from it's being willing and able to adjust to the market and consumer trends of the time.

If you truly want to service your customers you have to be the most expensive, the least epensive and the guy in the middle at all times. For me, its all about providing outstanding service, a quality product, creative design, and fair prices. Oh, and did I mention outstanding service?
 
That it is harder work in a low price shop because of the increased volume is another myth. Actually, in my experience, it's easier because there are more people and in my case more well trained people. Each person is a specialist although here everyone is cross trained. Twenty frames would make a slow day: long lunch hours and leisurely work. Fifty frames is about capacity for an 8 hour day. There are no frantic make up days and evenings. Everyone goes home on time.

I think Harry's hypothetical low price shop is a little more cynical than the shop I run and envision. Our aim from the get go was to make sales good deals for us and good deals for our customers in reverse order of importance. No business will last long, certainly not a very small business, bassed on Harry's cynical premise. Belive me, if you're not delivering a good product at a good price, your customers will know it.

When I started my business, I had two daughters under 6 years old and a wife to support and the business *had* to be successful. The only way I knew how to be successful was to strive constantly to be better than the competition in price, quality, and service; and there is no reason in the world why a customer can't have all three, no reason at all. I think that the idea that a customer has to pick any two of those three displays a certain amount of fatal arrogance that has a high probability of failure. A successful retail business exists for its customers and customers want all three.

Low cost doesn't mean poor service or poor quality, and anyone who takes comfort from that myth could be in for a big supprise. Service is a broad concept and having the ability to produce what you sell with every step under your control is a form of service. There should be no weeks of waiting for out of stock molding to come in, weeks added to a job because of a damaged chop or an out of stock mat board.
 
Perhaps my veiw of this subject is a little cynical. However, it is accurate based on my experiences. It is of course not intended as a slight against Warren's operation. In-fact. the vision he has set for his business can be a very effective one and it sounds as if it is working for him.

I would also agree with Warren's assertion that you CAN give your customers the best service, the best product, and the best price all at the same time. I, like most of you, have taken a huge risk based on that very assumption.

I would add, however, that the "Best Price" is not always the lowest price.
 
This is an eye opener, where is Bob on this one. He likes these posts. I have found Harry's post on the earlier page to be quite amusing...but it is dam smart. Now you see how they do it. Warren I like these questions, when this one dies down put another up.

One day I shall hopefully have the opportunity to put all of this knowledge to the test...then we shall see
Patrick Leeland
 
I truly just want to be more successful and profitable each and every year.

I want to provide a good living for myself and my family.

I want to provide jobs for a quality-minded, caring and professional staff in my store(s)

I want to be "the place" for whatever a customer is looking for.

There are many models for an operation like that - and most are probably not as successful as we'd like. I do know that Warren's got such a place (yes, folks, it's EXACTLY as he describes - there's no blowing smoke with Warren) and I'd be happy to have as successful an operation as the one he's built.

That being said, it's kinda hard to reinvent the wheel that we've already made.... BUt if I'm both, doesn't that make me the ONLY framer in town :D

Tony
 
Warren, take this.

Say that I am a former doesntmatterwhat and I decide to go in framing business in your town, Wilmington, NC. I am also aware that I am a beginner and can't offer same quality service nor ask for same price as you do. Consequently I price my output much lower than yours. I am also capitalized to resist for at least one year until I get a sense of what I am doing and a chance to learn more.
Do you want to say that you will be cutting my stupid price too, just to be going on with offering your clients the magic trinity? Would you cut your own bottom price in competition with one's stupidity, sufficiency or arrogance?
Is your high end shop selling also at the lowest price compared to other similar shops? All your shops put together, how much of your local market do you think is yours?
 
I saw a Q&A with Warren Buffet one time. He said that one thing he always looks for in a business is one that has created a model that is not easily copied. Warren Tucker has done just that don’t you agree Tony?

It would be very difficult if not impossible for a new guy in town to just decide to open an operation and compete with Warren on any level (including price).

Anybody who has the money to copy Warren’s shop, is wealthy enough to look for a much better investment than a frame shop. What he had done has taken years to build and as a result is sitting on a mountain which he will not easily be removed.

Now if he owned the most expensive shop his mountain would look much more like an anthill.
 
Here's another take on this.

If we look at WalMart, Target and Nordstroms as representing low, middle and high end retail.

Who would you rather be? All are successful, all are admired for one thing or another (and all are probably reviled as well).

We could all probably find in each market a WalMart frameshop, a Target frameshop and a Nordstroms frame shop.

The WalMart shop - busy, crowded, working 50+ eighty dollar jobs each day. Constantly berating suppliers for better deals, free shipping, etc. Service is mediocre but it's cheap.
Low margins, but high volume = success.

The Target shop - some box mouldings, a good selection of multiple vendors, some nice stuff, a few closed corners, maybe some special services the WalMart shop is too busy to do (hand-wrapped mats maybe)
Decent volume, good margins = success and growing

The Nordstroms shop - closed corners and hand-leafed mouldings - museum glass only. Super low volume but really big tickets. There's a cachet to getting work done here that the other 2 don't have.
Small volume, great margins (but small volume is the potential killer here) = small, well-regarded, succes.

Please, dear Lord, don't let this give the powers-that-be at any of the above-mentioned companies any ideas......

Tony
 
Here's my fancy answer:
It often seems to be all about perception. With that in mind, I would like to be perceived as the least expensive shop but in reality be the most expensive shop.
I'm only somewhat joking...
I like the good stuff, I like to sell it and I'd like my customers to know and feel that they are getting their money's worth.

edie the itsallaboutvalue goddess
 
Cornel, our low prices reflect our effort to make our shop and purchasing as cost effective as possible. In this respect we think we're as good as anybody and welcome competition. We try to sell at the lowest price that will sustain us. We don't try to squeeze the last penny of profit from each job we do. Our aim is to make a good living, and we do, while giving our customers outstanding value. The reason we can offer low prices is that there are big inefficiencies built into the chop shop/distributor model. Selling a job, ordering the materials, assembling the frame is not an efficient process and probably adds 60% to the most efficient cost of a job. And , btw, the big box frame shops are just about as inefficient, which is why I argue we can compete with them on price as well as service and quality.

Remember Mercedes Benz raised their prices artificially high and almost lost the North American market. They lowered the prices but Lexus and Infinity used the interval to become firmly established. The high price model turned out to be a bad idea.


I really don't have any idea what share of the local market we have; there are 14 other shops in town. If these are one man shops, that'd be 14 framers compared to our 11 on any given day.

Yes, we follow the same pricing policy in the upper end store, we just sell more expensive molding. Just because we're commited to low cost for our customers doesn't mean we're not selling them high quality materials. We sell Roma. laMarch, AMP at The Frameworks as well as precious leafed closed corner frames as I've mentioned before.


To be clear: we don't set our prices to be the lowest; they just happen to be, and if someone sells for less we'd take a close look at how he was able to be more competitive than us and do something about it or look for another business.
We, too, are well capitalized and could survive a prolonged price war.
 
I too belive in the low price model.

Buying better creates a buying advantage. A buying advantage creates a selling advantage.
A selling advantage creates more sales. More sales allows for better buying.

There are many, many was to buy better. Warren has touched on most of these. The trouble for most framers is that they won't jump in to the above cycle.
 
Warren,

Thanks for answering my questions. As long as the absolute lowest price is not an obsesive goal of yours, and you happen to be the least expensive in town by way of inteligently managing your business, that's perfect for everybody. I had missunderstood your stand.
 
Did you bump onto something, Jay?

Warren is able to fish efficiently in two different ponds. Good for him. But framing is not a must have type of service and in recession times low price framers are the first to be concerned, to suffer or succumb because of how vulnerable their necessarily large clientele is.
From safety and vanity perspective I understand why many would prefer be the most expensive framer in town.

Besides, Warren is preaching here of such special stamina and competitiveness that very few other framers are able or willing to duplicate them for most are in love with the art of framing, not the math of framing.
 
I think the topic is very interesting. There have been many new threads in this section yesterday and this got shifted all the way the second page.

If its over fine, but the bump was to give another chance for those that might not have been on here the last couple of days.

Sorry if the word "bump" offends you. But like my wife says, "get over it!"

Carry on!
 
Actually, Cornell, I'm neither "in love with the art of framing" nor the "math of framing" but, rather, with my wife and two daughters who need housing and feeding and the lattter college educations and weddings.

I think, heck, I know, that it's a myth and a dangerous conceit that high end shops do better than low end ones in a recession. We've been in business for 27 years through at least two recessions and have not overly suffered. I know that when sales fall off at The Frame Works (our upper end store) due to hard times, they pick up at The Frame Outlet (our lower end store).

All framing customers are affuent but they are not immune to economic cycles or highly resistant to high prices. Whether you sell high end or low end, price matters. Remember when the US enacted high luxury taxes on cars and boats? The market for both crashed and didn't recover untill those taxes were repealed. The economic iron law of supply and demand and its corollary that demand decreases as price increases has not been overturned.

And while I'm responding, I'd like to say that our shops take a backseat to none in quality framing. we can, and do, take rough sawn lumber and turn it into closed corner, leafed frames. Take a look at out cabinet shop on our soon to be updated web site. There's a 16" jointer in there as well as a 5hp 16" planer and a sliding table saw; we even have a molder so we can duplicate just about any profile from screen molding to 5" picture frame molding.

Our large customer base and the business it brings us is actually an advantage in enduring the slings and arrows of fortune. Lots of customers means lots of business and the capitalization that business makes necessary and at the same time makes possible. Highly capitalized businesses survive sever recessions pretty well.

I hardly think my family would find much solace in my "love of framing" if they were poorly fed and housed. Love of framing would be slight comfort to my daughters having to go into the work force right out of high school, forgoing college educations and the admitedly self indulgent pleasures of sororites and big weddings.
 
I think Warren does an admirable job busting a lot of myths about "low-end operators". In fact, I would bet that his "humble" little shop probably does a good blend of high, middle and low end work. I'll climb a little further out on this limb and suggest that the amount of high end work he does, might exceed the volume of many shops that just won't dirty their hands with work below their "dignity". And then dump on the middle and low end volume and Viola! you get Warren's plan

Too often, we tend to rationalize that because people accept "low end" work that it somehow prevents them from getting those other jobs.

I know it isn't true for our "little" operation and I'll bet a couple of Moon Pies that it isn't true for Warren, either.

While Warren and I have different models in terms of location and pricing, we sure tend to agree on all the other mechanics-the same mechanics that way too many of our brethren just flat out disagree with.

Warren speaks often of "capitalzation". In most cases, it simply means bucks in the bank. But, what he doesn't mention enough is the powerful advantage of buying well and that comes only through volume.

The seismic shift of dynamics that occurs when you buy well trumps almost every single hurdle to success
 
I think Bob, that the brethren/sistern disagreement comes more from the "independence" factor..... "I AM my OWN man/woman! I will NOT be my parents!"

I, for so many years looked at "Fat Cats", landlords, rich people and such with scorn. (except of course my customers. They were/are always the "Nice" people).

It blinds us to seeing that there are ways to make a living that are NOT "ripping people off, to get rich". Although there are those of us who can justify our Shop Time, but then go in on Sunday for a few hours to work on something that we didn't charge enough for.... so we put in our "free time". Then we wonder why there is so much month at the end of the paycheck.

I think that Warren, yourself and a few others have learned the secret to success is not "High End" or "Low End", it's simply providing a service at a price that people are willing to pay, and that pays your bills and profit margin needed to stay in business.

It's a fine wire. Charge to much and soon you're out of customers. Charge not enough, and soon you're out of business.

But charge the right amount, whether it is on a $20 ColorPlak, or a $100 diploma job, $250 LE acid free job, or a $20,000 Museum piece. It is all a precentage thing. If you do 1,000, $20 ColorPlaks a year, you're out of business. If you do <u>only</u> 2 of those Museum pieces a year, and your over head is $30K, you're out of business. But do 1,000 all sizes ColorPlak, 600 mid-line jobs, 100 acid-free jobs and one Museum piece a year, you're gonna have a nice year for a one man shop.

The interesting thing here is that it really costs very little ($500-$1,000) to have about 4 feet or more of Closed Corner samples. (1 Starbucks latte on the way to work each day = $1,000+ annually) You sell the frame job, do the same mats and mounting as anyother job, and the frame comes in MADE and you fit it. Your profit on a $350 closed corner that you marked correctly to also capture the shipping is about the same as a cheaper looking frame that you had to chop and join. But isn't as impressive in a customers perception.

If I'm clearing 30% on "Cheap stuff" and 30% on the mid-line and 25% on the high end . . it keeps me in business.

Keep talking Warren and Bob, I'm taking notes.
 
Hey Baer-I agree with you-right up to the point when you scorned "Fat Cats". Heck, to me it's all about the free market system. Some folks want a smuch as they are able, some folks couldn't care less.

As long as those that don't want as much don't expect me to pick up the difference, good for them

But, you do bring up another of those things that needs a little "myth busting".

Why should you have a lower margin on your high end poducts? Because some vendor said so? Yeah, Yeah I hear that same old tired story sure, you make less margin, but the larger ticket generates more Gross Profit Dollars.

My response to those purveyors that use that line of thinking is simple: You want me to lower my prices so that I can sell more of your product? Well, I will if you will

No one has taken me up on it, yet
 
Gotta agree with Bob on that one, if I have to purchase, unpack, cut & join a moulding, my mark up remains the same, no matter what the price of the moulding is.

Why should I make less just because it is a four inch wide moulding? In most cases, wide mouldings are harder to cut and join than narrow mouldings. They are usually a lot more time consuming from start to finish, yet the distributors think I should have a smaller mark up on them, because they cost more. Sure, you betcha!

Let's face it, even if it is a expensive narrow moulding, just the sweat factor makes it harder to turn into a frame. Knowing that you can easily blow it in the cutting and joining, and may have to purchase it again, makes it well worth your normal mark up. Generally, you will spend much more time on these type of mouldings.

I do work a smaller mark up on closed corner frames, just because they are a piece of cake, as Baer points out. All you gotta do is fit em.

John
 
Bob,

A (very) rare disagreement - You have to analyze your market when determining mark-up. There are two separate ways to look at sales volume. The first is where growth in the number of units sold AND gross dollars earned are the objective - clearly the most business-like approach. The second is where the objective is the most dollars from a fixed number of sales - for me the number of frames I can deliver with no employees and minimal overtime.

Many small shops are like mine, with a relatively fixed number of customers walking through the door. Selling up is clearly the way to make more profit. I've been selling framing to antique shoppers because of my location for 9 years now. I'm sure that I am selling more Munn chops and earning more profit precisely because I do not mark them up by the same percentage as my cheaper frames. The same is true of Museum Glass.

An example is Munn's Louie XVI 1" antique metal vs. a knock-off that I carry from a local distributor. The knock-off sells for $14 a foot. If I marked up the Munn the same percentage it would sell for $36 a foot - sell it for $28 a foot. I sell a lot of Munn's frames using that pricing - so much so that they are about half my volume. I don't believe that I would be there if I sold them at the higher price. I pay attention to the number of customers that go for the knock-off (not a bad looking frame when not compared directly) and I believe that my pricing is on target for the "market".

My reason for pricing more expensive frames at a lower percentage mark-up are related to my market evaluation and not the advice of my suppliers. I believe that small shops that deal with a relatively fixed number of customers, for whatever reason, are leaving a lot of money on the table by over-pricing more expensive products.

I mentioned Museum Glass because I noted in the glass pricing survey that my price was distinctly on the low side. I sell enough of it to make a tidy profit - certainly a lot more profit than CC on the same jobs.

Pat :D
 
Hi Pat-I don't disagree, because I am certain that you have thought it through and know it works for you. And the number one rule is that if it works for you,it doesn't make a bit of difference what I or anyone else thinks.

My only consideration is not on the scenario you develop, but what happens when you accidentally drop that lite of Museum glass. Your reduced margin might work against you here.

But, Pat, your point of view is well shared and you can make an argument, with the numbers, to justify it. Smaller shops such as yours are a better case than mine, however. I do stand by my original premise that if it is so good for your shop, it ought to be great for the vendor. And, I doubt that you will see that happen

Recently, the cost of Museum Glass was reduced significantly. Open question the forum: How did you react to this new found buying advantage?
 
Three things Bob,

1) I didn't quite make it clear that my scorn for "Fat Cats" has changed (much as my body shape has too). I realized as I became a more successful person, that they also were just working slobs, just doing it better some how. So I have been learning how. Oh great master. And thank you.

2) Museum glass. First we adjusted our POS to reflect the new pricing. Then I spent 15 minutes talking to Kristen Ling at A Framers Touch, in Forest Grove, OR.
We'll be moving our price point even further down.

Kristen sells more Museum and ConClear then anyone else. (Not bad for your second year in business in a "small backwater cheap skinflint college town"). Actually, I think that is ALL she sells.

Why she doesn't mark the heck out of Museum, is because when they take it home and the ART looks better than any other picture in the house BECAUSE THEY CAN SEE IT. That simple fact brings them back to her.

How does she know that is why? Because she keeps replacing old frame job glass with Museum.

Is she making a living? Yes. A lot better than the previous owners who were convinced that NO ONE in that town would pay for anything more than cheap moulding around paper mats and regular glass.

Yes, I hear your "what about when you drop a piece?"; and the simple answer is 'don't drop it'.
In the last 3 years, I have "broken" less than 6 pieces of glass (all 32x40). I don't think it would bankrupt me. But I might sell more Museum.

Sorry Bob. Your still my hero, but on glass, I gotta put Kirsten on the pedestal. She's kickin' "A" and building a data base.

3) Mark up on more expensive moulding. Heck no. It all gets the same. Closed Corner gets the lesser mark-up)

BUT, what we are changing with our new POS is HOW the mark is applied.

If you buy moulding "x" at 1.00/ft and you mark it up 5x and sell it $5.00 or it cost $1.75 chop and you mark it 3x or $5.25ft. This is the given.

[If you're Warren, you bought 1,000 @ .21/ft.]

Small shop with no storage space so they order chop: customer orders 5x7..... which is 2 feet of moulding and so you charge $10.50.

Moulding MFG will charge you for the 4' minimum + handling + shipping.

4'@ $1.75 = $7+S&H @ $9.84 = $16.84.

To remedy this, start by re-setting your "0" points. First, ALL minumums are 4', and capture $.75 per foot with a set-base of $5.00 for shipping & handling.

Where this starts to fail is in a straight line markup the larger and more expensive mouldings become bloated. So the mark-up is an ajusted curve that gets a up-tick after 30x40 because of handling difficulties.

But back to the 5x7... So the adjusted (instead of a "loss leader") price is $21 for the 4', plus $5+.75+.75+.75+.75= $29.00 which you get charged $16.84 for, but the customer can afford or by a $12.00 ready made (which cost you $4.50).

So it's not as simple as when JRB started back when all there was, was length bundles and 100'cases of glass in dirty wood crates.
So everything was 5x for moulding and 10x for glass. Now you have to account for the placement of every penny and where it goes. And trust me, that "free delivery to your door" and "free samples" aren't. Those big boys have teams of accountants watching those pennies.

[ 02-27-2005, 01:32 PM: Message edited by: Baer Charlton ]
 
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