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2009 PMA U.S. Custom Framing Report

Warren Tucker

MGF, Master Grumble Framer
And, Cliff, here’s the capacity clincher: it doesn’t cost much in the framing industry to add capacity. A really good double mitre saw costs around $15000 and a light industrial v nailer around $12,000. Those two alone would more than quadruple production capacity for $27,000. William’s figures must have a much higher cost. Before the current troubles we made around 30 to 40 frames a day and no one was overworked. During Christmas rushes, the same staff has done 100 frames a day and still weren’t at full capacity. Where there is more capacity than demand, something is out of whack.
 

Doug Gemmell

SGF, Supreme Grumble Framer
Jeff and Warren, I admire your successes in one of the highest unemployment areas in the country. Your model is well suited there for these times.
 

PaulSF

PFG, Picture Framing God
Maybe selling those frames for a mere $2 above cost is the reason this industry is in the toilet right now. You train your customers to maintain certain expectations. For years now, retailers have been training their customers to wait for the discounts in December, and now they can't make a full-price sale in the 3 weeks leading up to Christmas.

Those of us that have tried coupons and discounts know that many customers will wait for that coupon to arrive in the mail, and won't come in to frame something at any other time. Is that because we are overpriced the rest of the time, or because we trained our customer to think we are overpriced the rest of the time?

When you price your frames at $2 over cost, you train your customers to expect cheap frames. They don't care about the materials, they don't care about the work that goes into them, they don't care about whether you want to send your kids to college or provide health insurance to your staff. All they care about is that $12 frame. Customers might actually have been willing to pay $25 or $30 for that frame, but you trained them to believe it's only worth $12.

Good job.
 

cvm

PFG, Picture Framing God
It looks to me like after this is all over (economy situation) there will be a shift on what custom framing is all about. I think you will see more home based businesses and firms like mine operating in an industrial park focusing on commercial sales and trying to attract the "retail" clients to come to us more as a "manufacturer" than as a big box retailer.
That's very interesting. When you say 'focusing on commercial sales' are you thinking volume stuff (hospitality, restaurant chains, etc) or the one-off stuff that many around here refer to as 'commercial' (law office, doc's waiting rooms, corporate gifts, etc)? Cuz I'm thinking the truly big jobs couldn't be bid successfully by small operators (economics of scale and all that) and the one-off stuff is going to be recognized as low-hanging fruit by the well-capitalized, already-up-and-running internet art & framing doods.

I'm very interested in your thought on this.
 

surferbill

SGF, Supreme Grumble Framer
There is a break point at which increasing volume only comes with additional production costs (more people, more equipment, etc.). At that point, net income may be reduced by these additional costs, and higher volume will cause a decrease in the bottom line. Working harder getting less. William Parker MCPF GCF
Good point. Also, where are framers going to get all of this extra business in a down economy and a shrinking picture framing pie?
I would think the vast majority of indie picture framers are working by themselves or have one employee.
They just aren't going to get any larger for a number of reasons, no matter what kind of marketing they do. IMO

My business has been fairly stable for a few years, but the retail has been flat.
However, I've been lucky and managed to snag a few good on going corporate accounts that have taken up the slack.
After doing this for 28 years, I'm fairly happy with the amount of framing I have, and I'm certainly not going to put in the 60 hour work weeks needed to increase my framing volume.

Flat sales might be okay though, since one of the talking heads on CNBC said that "flat, is the new up."
 

Jerry Ervin

PFG, Picture Framing God
Maybe selling those frames for a mere $2 above cost is the reason this industry is in the toilet right now...

Good job.

Makes you think don't it.

Will we all be selling plastic carp frames one day as we race to the bottom?

I have taken in 3 photo restore jobs in the past week from UV fade and acid burn. Thank God for cheap frames. Keep'em coming.

Remember the old Purolator Filter commercials...

You can pay me now. Or you can pay me later.
 

Kirstie

PFG, Picture Framing God
My contrarian view is that our business model should NOT be based on maximizing volume by discounting price. In my opinion, if you do, and unless you understand the requirements of a volume driven shop, you will be one of those people standing outside a padlocked shop saying “I don’t understand, we were busy until we closed.”

Just my opinion…what’s yours

William Parker MCPF GCF
I agree that across the board price reduction could be a very dangerous strategy for many custom framers. If you don't have efficient buying you can't just randomly lower your prices or you will be standing outside the padlocked door. But, as Warren recounts in his story of his early beginnings, if you can make space and if you have a little capital, you can start by buying certain less expensive materials in larger quantities and offering those materials as value packages as many in our industry are now doing. This is a way to lower prices without coupon discounts. You can start at the 50' level or buy selected boxes of moulding. It is not a drastic price reduction but it is a start.

I buy a certain popular moulding for a very low price, and anyone can can get it at that price by the box. (PM me for details if you need to.) This price allows me to lower the price on the other frame components and thus offer a value package price. Add a few more mouldings and you have the makings of more offerings, often enough to satisfy the consumer who is only looking for the basics. This is not discounting, but using careful buying to offer lower prices.

This is essentially lowering price by design. You can do it by offering paper mats and regular glass as well. Or as William points out, by changing mat margins or other design components. Warren also points out that he sells closed corner frames. Like our business, there is a higher end demand at his as well. I don't sell a lot of closed corner but I do sell Roma and severl other higher end lines, and I buy them at good negotiated discounts because I value the lines and sell quite a bit of them. Thus, I can fund my normally priced offerings at a bit less than some of my competitors can. There is no art to this, it is just fine tuning your selection and offering good value for money. What I don't have room to do is have larger equipment and store pallet loads of mats and glass. Beyond price, I have to find other ways to attract business.

We haven't discussed convenience for who knows how many posts, but I hold firm in my belief that convenience is still huge in retail buying decisions. Free parking, ample service, quick turnaround, delivery, and other similar factors, and relatively competitive pricing can give many framers the edge they need in these difficult times.

Rob, one framer in this area recently closed a local retail shop and has moved those operations to an industrial location. I hope to have a chance to talk with him at some point to see how it is going. I certainly wish him well. The one industrial location serves their corporate business as well as a couple of retai stores, but the Berkeley store is gone. An interesting move, perhaps a trend.
 

JWB9999999

SGF, Supreme Grumble Framer
My contrarian view is that our business model should NOT be based on maximizing volume by discounting price. In my opinion, if you do, and unless you understand the requirements of a volume driven shop, you will be one of those people standing outside a padlocked shop saying “I don’t understand, we were busy until we closed.”

Just my opinion…what’s yours

William Parker MCPF GCF
This is the view that I have taken as well. When I bought my shop 2.5 years ago, we were clearly the low price leader in the area. We still are. In August 2007 our average price per framing order was around $65. I took a few classes at the Decor Expo in Atlanta the following month, and that pretty much convinced me that I needed to move my shop a little more up-scale. I remodelled the interior, I changed our dress code, I added higher priced moulding to our stock, we switched our primary mats from being Crescent Decorative to Crescent Select, and we started actually trying to sell conservation glass. Our order values have nearly doubled since then.

With the economy being what it is, we are seeing fewer customers. We've had a declining number of orders month after month since probably last September. My number of sales for last month (May) were off 41% compared to the previous May.

Yet our dollar volume was the same. In fact, though my number of orders was down last year by 11%, my dollar sales were up 13%. Add on a cost reduction due to more intelligent purchasing, and my profits were up nearly 30% last year.

Likewise even with our number of sales down 21% for this year to date, our dollar sales are up about 10%. And I'm sure that if I look at my costs (which I haven't in a while), my COGS is continuing to decline. I have mouldings that I used to buy inefficiently and mark up 2.5 times that I can now mark up 10 times and still sell it to the customer for the same price as before. Yes, I'm stocking more mouldings and more mats and more glass, so my inventory costs are higher. But so is my ROI.

I loved it today when a customer came in to pay half down on an order for 2 large frames, triple-matted, which is costing her $1700, and my total out-of-pocket expense to make it happen will be about $120 for the 6 mats she needs. We had one last week for $700, and my out of pocket was $0.

I am definitely happier being able to offer a higher priced package (to those that wish it) while having fewer customers, as opposed to a lower priced package to more customers. Expenses are down, profits are up. But I do stress the word "able", as we are still the low price leader in the area for those that want to go inexpensive.
 

PaulSF

PFG, Picture Framing God
JWB, just wait til the economy picks up. You'll have more orders at the higher average ticket level, your sales will rise, and so will your profits.
 

Kirstie

PFG, Picture Framing God
JWB, just wait til the economy picks up. You'll have more orders at the higher average ticket level, your sales will rise, and so will your profits.
I appreciate your optimism Paul. But I also think that even as the economy improves, the public will be more careful. I think that the money saving habits our customers currently have will persist, and we may need to adjust accordingly in order to serve thier needs AND keep ourselves in business.

The PMA custom framing report shows trends that have been ongoing for several years, and worseningat an alarming rate. I know that most of us on this forum already understand these trends but it helps to foster discussion and implement change. If we are still on that topic, and we care about that small percentage that have items custom framed, then we care that as a rule, they prefer the BB craft stores to our shops. They have preferred the BBs for a long time now. I think that as an industry we will have to work very hard to keep our existing customer base, and lower ticket averages will be with us for a long time to come.

I dont think it's just about the economy.
 

cvm

PFG, Picture Framing God
I dont think it's just about the economy.
Nor do I. However, I think the current economic situation has exacerbated the trends we see as negative in that report, and I would use caution when extrapolating those trends out into the longer-term when making huge changes. A grain of salt type thing. Remember all those things that 'were going to change forever' immediately following the dot.com bubble? Or 9-11? One of the institutional investor fears on Wall Street right now is whether the recent favorable numbers for Wal-Mart are the first in a longer term trend, or are more a function of temporary trade-downs by consumers.
 

David N Waldmann

SGF, Supreme Grumble Framer
But I also think that even as the economy improves, the public will be more careful. I think that the money saving habits our customers currently have will persist
Maybe I'm just a pessimist, but I think that unless we go into a full-scale depression "we" are not going to change our fundamental behavior. Which, by the way, is "spend as much as you can". Of course, if this is true it's good news in the short term for people selling stuff. As long as we can hold on when the next major recession hits.
 

surferbill

SGF, Supreme Grumble Framer
This is the view that I have taken as well. When I bought my shop 2.5 years ago, we were clearly the low price leader in the area. We still are.
With the economy being what it is, we are seeing fewer customers. We've had a declining number of orders month after month since probably last September. My number of sales for last month (May) were off 41% compared to the previous May.
Yet our dollar volume was the same. In fact, though my number of orders was down last year by 11%, my dollar sales were up 13%. Add on a cost reduction due to more intelligent purchasing, and my profits were up nearly 30% last year.

Likewise even with our number of sales down 21% for this year to date, our dollar sales are up about 10%. And I'm sure that if I look at my costs (which I haven't in a while), my COGS is continuing to decline.
.
I would think your numbers are similar to what a lot of framers are going through.
I had a really good 2008, but Nov, Dec, and Jan were really off, with the last two months getting somewhat back to normal.

I'm still down some on my retail, and I'm hoping that this slowdown is an anomaly, and not a trend down.
I went through the recession of 1991 and it almost wiped me out.
This recession I don't have near the amount of employees, or overhead, and I'm in much better financial shape than I was then, but I'm still really concerned about this recession.

Losing customers is not a good thing, no matter what your overhead and COGs are.
If your number of customers (or mine for that matter) keep going down 20% a year for the next 5 years or so, it won't matter how good your COGs are, because there probably won't be enough customers to maintain a business. IMO
 

Cliff Wilson

SGF, Supreme Grumble Framer
Interesting. I'm seeing more customers at smaller dollars per unit.
I'm building more frames at a lower average cost per frame.

Having lower cost options that still maintain margin is critical in our current conditions.

If you're loosing customers, you may need to add some lower cost options.
 

shayla

WOW Framer
So, maybe we should be open to exploring the addition of a good value
line, and at the same time, improving our skills on the higher end of
the design scale? If this trend continues, and what's left in ten years are
the low-priced 'volume' stores and the small, higher end designers, it seems
that a small shop would be wise to maintain some of each. If we start looking
too much like a BB store in our offerings, what's to differentiate us? It seems
wise to keep offering what they aren't able to, in the way of creative,
conservation designs, but at the same time, put some of our eggs in the
value line basket.
 

Cliff Wilson

SGF, Supreme Grumble Framer
So, maybe we should be open to exploring the addition of a good value
line, and at the same time, improving our skills on the higher end of
the design scale? If this trend continues, and what's left in ten years are
the low-priced 'volume' stores and the small, higher end designers, it seems
that a small shop would be wise to maintain some of each. If we start looking
too much like a BB store in our offerings, what's to differentiate us? It seems
wise to keep offering what they aren't able to, in the way of creative,
conservation designs, but at the same time, put some of our eggs in the
value line basket.

exactly

I would further add that you need to advertise and promote each in different venues and you have to be very aware of what message you're giving to what potential customers.
 

Paul N

In Corner
When you price your frames at $2 over cost, you train your customers to expect cheap frames. They don't care about the materials, they don't care about the work that goes into them, they don't care about whether you want to send your kids to college or provide health insurance to your staff. All they care about is that $12 frame. Customers might actually have been willing to pay $25 or $30 for that frame, but you trained them to believe it's only worth $12.

Good job.
And yet, in another thread, some framers are complaining that some customers are unwilling to pay for labor......

The above shows exactly why customers think labor is non existent in framing.

If a watch costs you $10, would you expect to pay $12 to fix it??
 

PaulSF

PFG, Picture Framing God
JWB is going through what I went through when I stopped doing discounts. The number of orders decreased, but my revenue actually increased, as did my profit margins. In JWB's case, he was leaving a lot of money on the table. His prices were simply too low, and he's now discovering that there are plenty of customers who are willing to pay more than what he used to charge. Not all of them, but that's true of every industry. Hey, there are people who think Michaels is too expensive. There are people who think Warren is ripping them off. You can't serve everyone, and you shouldn't try.

Regarding the survey, perhaps someone with a copy of it can tell us during what time period it was conducted. I recall that previous surveys released their results at least 6 months or so after the survey was conducted. It may be that the survey actually doesn't reflect economic conditions over the past 6-9 months -- the time period when the economy really tanked.
 

David N Waldmann

SGF, Supreme Grumble Framer
Research Methodology
In January 2009, Synovate of Chicago, distributed the questionnaire, by mail, on a representative sample of 15,000 households. The questions were prepared by PMA Marketing Research. Consumers were questioned on the 12-month period through January 2009. Market estimates were based on an estimated U.S. household population of 116 million for 2008. The response rate was, 51 percent or 7,637 households out of which 4.6 percent had custom frames made. The response base for each question can vary from the overall response.
 

PaulSF

PFG, Picture Framing God
Thank you, David. I would say it's a pretty good snapshot, then, of current economic conditions and consumer mindsets.
 

Kirstie

PFG, Picture Framing God
exactly

I would further add that you need to advertise and promote each in different venues and you have to be very aware of what message you're giving to what potential customers.
Cliff, can you think of examples of such advertising? I find that well-heeled folks who might want higher end designs also want the bargain framing for certain items.
 

surferbill

SGF, Supreme Grumble Framer
J The number of orders decreased, but my revenue actually increased, as did my profit margins. In JWB's case, he was leaving a lot of money on the table. His prices were simply too low, and he's now discovering that there are plenty of customers who are willing to pay more than what he used to charge.
In a perfect framing world, we could choose the type of customer we want, which would be the ones with a lot of money that don't care about price.
Unfortunately, that's not the real framing world, at least in my neck of the woods.

Even my well to do customers are balking at high prices, and going for the frames that I have on the sale board, value framing line or my framing package deals.
I would guess that the majority of framers are experiencing the same thing happening to them.

Paul, not to quibble with you, but I hear this "don't leave money on the table" all the time from other grumble framers, and i would like to know where this table is? because I don't have a money table in my shop.
In this recessionary environment where almost everyone walking in the door is looking for a deal, I'm very happy just to make the sale.
If I have to cut the price a little, add a mat for free, deliver it to their house, or even beg to get the sale, whatever it takes I'll do it. :)
 

PaulSF

PFG, Picture Framing God
Bill, if the average ticket is going to be $65, I would just as soon close the doors and find something else to do. That's just too low an average ticket for custom framing. I can make $65/sale selling manufactured goods that I just pull off a shelf and hand to the customer, with better margins and an easier time of it.

Really, if your average ticket is south of $100, if you aren't in a production environment, you are in trouble no matter what the economy.
 

Cliff Wilson

SGF, Supreme Grumble Framer
Cliff, can you think of examples of such advertising? I find that well-heeled folks who might want higher end designs also want the bargain framing for certain items.
I agree Kristie. And in store merchandising and signage should show all your options clearly WITH prices where appropriate.

What I am referring to is ... I advertise "Frugal Framing" with prices in a weekly rag paper here in the city ... wide circulation free at drop off points.

In the monthly high gloss magazine (subscription primarily to the well heeled), it's "Certified Picture Framing (tm)" and we do work for ... museums ....

If you look like a discounter to the people that want to keep their noses up in the air, you could loose them. Don't misunderstand me, they often can pinch the pennies too, it's just a matter of how you make them think of you.
 

Cliff Wilson

SGF, Supreme Grumble Framer
Bill, if the average ticket is going to be $65, I would just as soon close the doors and find something else to do. That's just too low an average ticket for custom framing. I can make $65/sale selling manufactured goods that I just pull off a shelf and hand to the customer, with better margins and an easier time of it.

Really, if your average ticket is south of $100, if you aren't in a production environment, you are in trouble no matter what the economy.
I don't agree. The key is Gross Margin % and $ relative to fixed and variable cost. The calculation can work, although it might not work for you. We do too much generalization on this forum, which I guess is to be expected.
 

Thedra

CGF II, Certified Grumble Framer Level 2
Paul, aren't you leaving money on the table if after designing a job for a customer, they walk out the door. We all know what part of the sale the customer is most concerned about and what part they really don't care that much about. If we can substitute a "value" substitution, please don't read cheap or free, and you keep the sale then you are putting that money in your pocket. I think if we were to put a stopwatch on our design time and our production time, if we don't count the time we watch glue dry, we will find they are very close. We want to charge for our time and if we design a frame, don't get the sale and worse yet send the customer across the street to our competitor with a design that we did, then we are giving our time away for free and setting a negative feeling that we are not easy to deal with and they are!!

Just a thought.

Tom
 

PaulSF

PFG, Picture Framing God
Yes, every time a customer walks out without placing an order, we have left money on the table. For example, suppose a customer comes in with a 36x48 canvas, and it needs to be stretched onto stretcher bars, and put in a frame. Even with an inappropriately thin value moulding that is your cheapest moulding, let's say that job comes to $300, based on your normal pricing. The job will take a couple hours of your time to complete. The customer tells you he only wants to pay you $200. You look at each other for a few beats. Do you let the customer set your prices for you, and do the job for $200, or do you thank him, put your samples back up on the wall, and tend to the orders for customers that are willing to pay you a fair price for the products and services you sell?
 

CAframer

SGF, Supreme Grumble Framer
Perhaps I'd offer him a museum wrap to be done now at substantially less than his $200 budget, plus a coupon that he can use later when he finally wants to get it framed, plus an explanation that going this route he can hang his gallery wrap and then borrow some samples so that he can really see what a difference each one makes in situ. When he finally picks a moulding he'll probably end up with something nicer than the value priced item you were showing him because of price, and it'll more than offset the coupon! :)

My point being, that for custom products & services a selling solution is much more than just product selection, cost, and price, which seem to be the only elements that are being thrashed around here.
 

Kirstie

PFG, Picture Framing God
Cliff,

With regard to advertisng to different groups we do something similar with the clientele who have more discretionary income. We place color glossy ads in theater programs featuring various popular artwork that sells in this area. These are expensive but when I have the occasional customer come in to ask about a certain print they saw in the theater magazine, it seems worthwhile. But even on many of these ads, I stress "Affordable Custom and Do-it-Yourself Framing."

I also place ads in magazines directed towards art shows, Open Studio programs, and so forth. I stopped putting coupons in these publications because they rarely brought in business. Now I am using the generic Affordable phrase instead.

I have not put ads in the throw away papers for the poster special packages. It seems like everyone has one these days and I'm not sure I want to get into a price war on a possible $10. difference. Still, this is something to think about. All print advertising is so expensive in my area.

it would be fun to see examples of ads placed by Grumble framers. I will try to find a few to post....I found some. They are a bit larger than the size I made them here. This is just one format. There are others in different shapes, different themes, but all geared towards the more affluent client.
 

Attachments

Kirstie

PFG, Picture Framing God
I found another. Most are on the computers at work. We have years worth.

(Quality is not for print here...reduced in size and quality for this forum.)

How are all of you advertising to differentiate yourselves from the BB competition. Are you advertising to the high or lower end? Examples?

The last one is geared towards the artist's budget, a current ad in the Open Studios program.

Advertising is much more expensive than we would like, but we feel it is important to keep our name out there as visibility is key. In an earlier post on this thread someone talked about the first store that customers think of. We can't compete with the BB budgets, but we try to be that store as often as our ad budget allows.
 

Attachments

Kirstie

PFG, Picture Framing God
Bill, if the average ticket is going to be $65, I would just as soon close the doors and find something else to do. That's just too low an average ticket for custom framing. I can make $65/sale selling manufactured goods that I just pull off a shelf and hand to the customer, with better margins and an easier time of it.

Really, if your average ticket is south of $100, if you aren't in a production environment, you are in trouble no matter what the economy.
I had a day like this Paul, one of many lately. About 7 sales all under $100. Less than $500 total. I can only hope that those people tell their friends and come back with more. When we first discussed poster specials on this forum, several people said that you should not institute such a deal unless you were happy to sell that deal all day every day. Well, I could not make money if all my days were like today. My doors would close. Wages alone were more than this. Today I lost money. OTOH, if those 7 people had only been given much higher quotes on more beautiful framing, then we might have had no sales at all. I am the first to say that I don't know where all this is leading. Many of us here have radically changed some of our offerings and I still contend that we wil live with those changes for a long time to come. They are permanently incorporated into our sales structure. It's not just the economy. We talked about future changes in buying patterns a couple of years ago on this forum. Those changes are making themselves apparent right now.
 

Thedra

CGF II, Certified Grumble Framer Level 2
Do you let the customer set your prices for you, and do the job for $200, or do you thank him, put your samples back up on the wall, and tend to the orders for customers that are willing to pay you a fair price for the products and services you sell?
No I would never let the customer state the price, BUT there are a multitude of possibilities. If if was next door to you and they came to see me next (because your store is the more inviting store of course!) after listening to them I would offer them Framerica BW58062 which is 1.5 inches wide and 1 inch deep, that I buy by the box , Liner from Linen Liner , one hour labor for stretching and standard fitting cost all for the low price of $193.00 (okay I would probably go $199.99) get the sale , get my labor costs and get 6.17X on the frame and liner.

Now if you don't buy by the box on your frames and if you buy chops, you are not going to be able to touch these margins but really is that the customers problem.

Just saying you HAVE to make sure no one else has a better mousetrap out there then you do when you let that customer out the door!

Tom
 

Warren Tucker

MGF, Master Grumble Framer
I think we should all take a close look at the Media and Marketing section of today's Wall Street Journal. "Neiman [Marcus] Plans Lower-Priced Strategy" and "Some Gentlemen's Club's Strip Down Upscale Offerings as Business Slumps." Both articles bolster the observation that in hard economic times, discretionary spending on high ticket items takes a big hit.

I think this should give anyone basing his business on the high ticket model pause. If PaulSF can't or won't run his business on small ticket, what can he do when there is demand only for small ticket goods?

I offer for consideration a small tale of two of my businesses: I've discovered that the average ticket of The Frame Works (and I didn't know this before I asked) is $120.00. Sales at the Frame Works are down. The average ticket at the Frame Outlet runs around $56 and its sales are down, too, but not nearly as much as sales at the Frame Works. Neither shop is in danger of eliminating jobs, but in times when the Frame Works is down, the Outlet helps out. Again, if you have a business model based in high ticket sales, what do you do in a down economy?

For what it's worth, the Outlet can, does, and has done well with a staff of 3 1/2 with its low ticket offerings so high ticket sales are hardly needed to sustain a healthy shop.

I know we're viewed here by many as a discount operation but that's simply not so. We have the same margins as anyone; we don't as a rule offer discounts off our rationally arrived at prices; our prices are low because our costs are low. Our costs are low because, as Jeff puts it, we own what we sell. We're also our own landlords, a decision we made when our first landlord raised our rent 20% on the first anniversary of our lease. A decision we've never regretted. One business theme that's guided our business, in addition to stocking what we sell, is investing a sizable portion of our earnings back into the business, in the beginning on land and buildings and then on equipment. Maximum capital accumulation if you will. That strategy has worked well for us. We're currently entering the toughest recession in the business' history with no debt (not even two unmarried daughters, a liability I carried on my balance sheet at $75,000 after paying for their educations figuring weddings at around $30,000 each, low as it turned out) and a very impressive net worth. (If anyone is interested in comparing net worth as a metric of business success, I'll gladly provide ours privately. I think ours is instructive because our business is the only source of income Toni and I've ever had - I broke even on my teaching- and the business is 31 years old.)

Kristie, I wish we had someone in our business who could design advertising as attractive as yours; we'd do some advertising if we had. As things stand now we don't do any outside our web site and its a poor effort compared to yours. I often wonder what we colud have done if we had any flair for promotion.
 

Jay H

PFG, Picture Framing God
I wasn't asked and for years have reserved my opinion but I'll offer it now at the risk of being jabbed. After my tour, I saw very little "class" difference between your two shops. I don't know how that translates into your sales but I say with a bit of confidence that a customer wouldn't likely avoid one shop and go to another because of a perceived price. I've exposed my veins, slash at will.

Second I'm not sure what point you are trying to make. I can't really spot anybody here that doesn't try to the best of their ability to expand their offerings and reach as many client "classes" as possible. Even you suggest that is what you are doing with two different types of businesses. I agree few have any interest in going as extream as you have but the intent is the same. You really have nothing to prove nor is anybody, that I have noticed, in disagreement with you. This talk of net worth and how filthy stinking rich you are just hits me as odd. Maybe I'm alone in that.

Carry on.
 

Jerry Ervin

PFG, Picture Framing God
I know we're viewed here by many as a discount operation but that's simply not so. We have the same margins as anyone; we don't as a rule offer discounts off our rationally arrived at prices; our prices are low because our costs are low...

I really don't think that you will find anyone on here that sells chop frames at a 1.6 times markup.

That is ludicrous.
 

Framing:

In Corner
In fairness Warren did indicate that the 1.6x on that chop was somewhat of an exception for him, he also indicated that on all other elements of that job it was business as usual on his margins.
 

Paul N

In Corner
In fairness Warren did indicate that the 1.6x on that chop was somewhat of an exception for him, he also indicated that on all other elements of that job it was business as usual on his margins.
Well, since Warren has so humbly serenaded us with his net-worth stories, maybe he can tell us about his true margins then??

It's is more related to the subject than net-worth stories.....
 

Jay H

PFG, Picture Framing God
I've ordered less than a dozen or so chops in my life. I did get one rail in today to finish up an order. Ten inches of moulding with a length price of $5.??/ft was $32. That's right 10" of moulding for $32! A markup of 1.6 that would be robbery as far as I'm concerned.

I suspect I'm under 2 times that chop price for my retail. Again I don't hardly ever order a chop and I do not think pricing from chop is a resonable metric.
 

Warren Tucker

MGF, Master Grumble Framer
Jay, there is a differences between the Frame Works and the Frame Outlet. One, the corner selection at the Frame Works is 3 to 4 times as large as at the Outlet, and the price per foot of moulding is much less at the Outlet although both shops can and have raided each others samples to make a sale; it really doesn't matter to us as long as we get the sale and the customer is happy.

As to the net worth bit, I'm only offering to reveal mine privately in a like to like trade of information. There are very few instances of real numbers being discussed here. My only interest in my net worth is as an objective indication of how well the model I discuss works. I see plenty of comments here on business models and I often wonder "how's that working out for him."I try to be as transparent as I can and I think would be a legitimate question for anyone to ask about me. I don't think I've ever mentioned here what our gross sales are, but I did tell you when you were here.

PaulSF, that sale using chopped frames was a big oversized order and Toni priced it (and we were bidding on it) to make the sale, and we needed to make the sale. We're more than pleased on what we earned during a slow period and would do it again, gladly. As to what our margin (if I understand the term correctly) is but our cost of goods sold is way south of 28%; I don't know for sure for 08 but Ill check, the corporate return is on my bench at work and I haven't looked at it; it's around 1 1.2" thick. My guess is it's about 25% keeping in mind that we get a bit of revenue from digital imaging (our pre-press work: scanning, color correcting, proofing) and that's purely service.

Our everyday mark up for chop frames is 2.2% plus shipping. We feel that's a good mark up because we don't have anything invested in the moulding. We get that price for just passing along goods. We get higher, much higher mark ups for stocked moulding because we accept a risk. With chops there is no risk that the goods will not be sold. I hardly find reasoning "ludicrous", and I'm sure our customers don't.

I have felt since I took Econ 101 that there is a direct relationship between risk and return on investment. Where we accept risk, we try to get a commensurate return. When we take little risk, we think the return should reflect the amount of risk. This is a rule that the Madoff investors ignored at their peril; how they convinced themselves that returns of over 12% were risk free is beyond me. This risk/return idea may be relevant to our industry. The typical frame shop requires very little capital risk, say $24,000 to get started. Maybe that's why the return is low.

I think I've mentioned that one big advantage the independent framer has over the corporate framers is our ability to make quick decisions when circumstances change, when circumstances demand it. Marking that chopped moulding 1.6 times rather than 2.2 was just such an occasion to capture a big sale. To survive we need to be nimble, not rigid.
 

Warren Tucker

MGF, Master Grumble Framer
PaulSF, according to our tax return, our COGS for 08 was 19%, a lot lower than I'd have guessed, well 6% lower. That includes freight, too.
 

Framing:

In Corner
Very very nice.

Average 81% GP (Gross Profit) and an average 5.3x mark up.

Any business person can be proud of that.

Thank to all for sharing on this thread, it is super stuff, in fact I would go as far as to say there is the foundation of a book on the “business” of picture framing from this thread, I just wish I had the business acumen and command of writing to put it together.


Again many thanks to all.
 

PaulSF

PFG, Picture Framing God
Everyone needs to be very clear on something, and Warren has yet to mention it in any of his numerous postings here. Small-ticket sales only work in high-volume environments. Let's say the average ticket for Shop A is $65, with a gross margin of $52, using Warren's COGS of 19%. The average ticket for Shop B is $225, with a gross margin of $180, same COGS percentage. Shop A needs 3 1/2 orders for every 1 order that Shop B takes in, just to maintain the same profit dollars. Shop A probably also needs more employees to handle that volume, compared to Shop B, which cuts into its net profit. If you are bringing in 10 customers a day, Shop A is a viable strategy, but you need to advertise the heck out of your community to generate that kind of traffic. If you are only taking in 5-10 orders a week, you darn well better be Shop B.
 

Framing:

In Corner
Other than his website Warren has said that they do virtually no advertising.

He has also said that even at peak times they would have spare production capacity.
 

Framing:

In Corner
Warren posted:

The Frame Works average is $120.00.

Frame Outlet runs around $56
 

PaulSF

PFG, Picture Framing God
Did Warren mention how long he's been in business? Let me pose a couple questions to you -- do you think a shop that's been in business for 30 years is likely to have more customers or less customers than a shop that's been in business for five years? Do you think a shop that's been in business for 30 years is more likely than a shop that's been open 5 years to be able to sustain its sales volume without advertising?
 

Framing:

In Corner
PaulSF

I do agree with what you have to say and it is a very worthy analysis of how you approach your business model, however with current economical winds I think some if not all of Warren’s business model should be considered.

It speaks volumes that Warren is still in business after 30 years, I wonder what is the average life of the typical framing shop.
 

Framing:

In Corner
Perhaps the length in business could be a number captured in the next survey of framing businesses.
 
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