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Dare to Discount?

Discussion in 'Picture Framing Business Issues' started by evergreen, Oct 20, 2002.

  1. evergreen

    evergreen Grumbler

    Here's the situation... I was asked by a local gallery if I would be interested in having them send me business - okay, I obviously answered, "YES!" and agreed to send down business cards and some flyers. The gallery owners are great people and as they have just opened I have no idea what will come of this. I spoke with a couple of people about their offer and both of them said, "You are going to give the people they refer to you a discount aren't you??" With all that I've read in this forum, in Decor and in PFM, I'm concerned that framers from around the country might attack me for even entertaining such a thought! So, what can I write in my little flyer that makes people feel like they're getting a "special offer" if they come see me? By the way, the gallery owners did not ask for discounts. My business has dropped off considerably since the spring and I'm trying not to act desperate, keep a clear head and pay my bills. Any ideas as to 'the little somethings I can offer?" beyond "Give 'em great service!" Help! P.S. Last week I was offered free advertising (exclusive for framing) for an artists Christmas show... guess what they want for customers, 10% off. I said I'd think up something better! HELP! I have till Tuesday to come up with something else. :confused:
     
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  2. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    You will probably get some very heated opinions on offering items "on sale". Oh, let's call a spade a spade-discounting.

    I would suggest that before you even consider that option, the first question you need to ask is do you have the capacity to offer a reduction for additional sales? Then do you have the ability to offset that loss of gross profit with increased margins elsewhere. If the answer is no, then don't consider anything but regular pricing.

    The evil in discounting is the affect that happens to your business when you don't know what you're doing, not the actual discount.

    If you calculate your prices to a fixed mark up, then if you discount, you will miss your goals. But, if you are a shrewd buyer and you know what you're doing (and THATS the big if)and you turn buying advantages into selling advantages, then you will be just fine.

    This is another of those key elements that retailers of all sizes and all types successfully incorporate into their marketing and sales strategies, but somehow eludes this trade.

    So, if you know what you're doing and you buy well and you understand protecting your margins through careful marketing, it can be a powerful advantage.

    If you don't have those abilities, don't attempt it.

    I'm assuming if you have to ask that question, the answer is self-eveident. Stay with what you know and what works.

    But don't confuse the evils in promoting and putting items on "sale". It's not the discount that gets you in trouble, the "evil" is the inability to understand the mechanics
     
  3. Jana

    Jana SGF, Supreme Grumble Framer

    Perhaps you could offer a Frequent Framer card. We do. It encourages repeat customers. We first saw the idea on The Grumble.

    1. First order - no discount (you could say 'welcome' and skip to the first discount)

    2. 5%

    3. 10%

    4. 15%

    5. 20%

    Then they start over with another card.

    I'm sure there are variations on this theme. I would like to hear other ways to implement this program.
     
  4. The King

    The King SPFG, Supreme Picture Framing God

    Here is my version of the Frequent Framer Program.

    Each sale is recorded in the customer database of my POS (no punch cards.) After seven orders, the customer gets a credit equal to the average of the seven. If the cost of the eighth order exceeds the credit, they pay the difference. If the credit exceed the cost of the eighth, the balance rolls over to the ninth order, and so on.

    The system encourages repeat business, which is the mainstay of my shop. I closely track the cost of the program and build it into my pricing.

    Yesterday, a woman came in to frame her daughter's senior portrait. She was telling me a story, in a good-natured way, about how badly her Saturday was going so far. She was hoping I could turn her day around. When I ran her quote, and discovered she had more than enough credit (which she'd forgotten about) to pay for the order, she was the happiest person I'd seen all week.
     
  5. Less

    Less SGF, Supreme Grumble Framer

    Bob, as usual offers excellent advice.
    Jana's and Ron's are interesting ways of encouraging repeats, but I bet their customers would come back anyway.

    My policy in general is not to discount. I've tried it and it is just not the type of business I wish to run. My image is one of quality, which you have to pay for, and they do. Although, I often find myself discounting on specific jobs, to help encourage a first timer, or if someone asks for a quantity discount. When I do, I hold to ten percent, but I also practice some of Bob's advice. Ok, :eek: sometimes I can be overly generous, but I make up for it.

    I believe you have a different scenario than Jana's and Ron's.

    My advice to you would be that it sounds like the gallery is extending a business courtesy by referring clients to you. They are not asking for a discount, so do not offer any for their clients. However, it is common practice to give a trade discount to legitimate artists and galleries. This courtesy could be your way of thanking them for the referrals. Give them yours cards and design a flier, but do not openly advertise that you are willing to discount.

    Hang in there, discounting will not increase you business, but your slump will turn around. Be patient.

    Oh, and as far as that Christmas offer (who offered that?), forget it. Any artist or gallery that feels that they need to offer their own discounts or someone else's, won't be around to long, and will not bring you custom framing clients. They are inexperienced and will cause you nothing but grief.

    Go to their opening, take a look at their framing, and have a good laugh.
     
  6. fttom

    fttom MGF, Master Grumble Framer

    I will occasionally discount the labor to a new customer who is framing more than 1 piece on their first time in my Shop. I let them know that I am doing that, and usually, I see them again. I have found that they do not expect the discount every time because I make them understand that I am doing it because they are new and are framing multiple pieces. I usually see single pieces from these people later, and have no qualms about charging full price. This works for us in this area. It may not work for you, and the people in your area. I've found, with us moving so much, that a lot of little marketing ploys that work well in one place will sometimes bomb in another. Depends on the audiance.

    Susan :confused:
     
  7. Ted

    Ted CGF, Certified Grumble Framer

    What I find difficult to understnad is that in most other retail industries, manufacturers and suppliers share in the discounting...special offer or sale prices of product or services. In the photographic industry, the manufacturers are very aware of price trends and consumer competition and will often reduce the net price of a product so the retailer can stay competitive without having to lose on their bottom line. Something we don't often see in the framing industry. I know that with hundreds of manufactuers/suppliers and thousands of different types of product, it's not going ot be easy and is exactly why manufacturers don't feel the need to dicount moulding, mats, etc.

    I don't believe that having a "sale" or a "discount program" is in any way a sign of not having an "up scale" shop, but I, for one, am tired of losing money to promote honest competition while the manufactuers don't. If a piticular manufacturer said, for instance that for a certain period of time "X" line of moulding will be ?% off net, then we as reatilers would then have the choice to diso**** that item to the consumer without any loss to our bottom line (percentage wise that is). If our competition choses not to do that then that would give us the edge...wouldn't it?

    Just another thought....

    Ted
     
  8. Jason Maranto

    Jason Maranto CGF, Certified Grumble Framer

    In my mind you could capture a larger percentage of the "gallery" audience by advertising conservation materials like UV glass and rag matboards instead of discounts... I somehow have difficulty believing somebody who spends a ton of money on a peice is going to cheap out on framing that valuable work.

    I would definately spend some time with the gallery owners and get familar with the best framing methods for thier specific inventory types... I think that would serve you far better than discounts.

    Jason.
     
  9. katman

    katman MGF, Master Grumble Framer

    I'd go with regular pricing. Do something special for the gallery (not the gallery's customers) if the referrals do result in additional business. Smack that artist on the side of the head! Is he/she also discounting the price of the art as part of this promo or using your services to create a sale? Maybe I misunderstood. If the artist wants to purchase framing for his/her art so he/she can sell framed art--I'd consider a discount for multiple pieces. And I don't care how much the artist discounts or marks up. But I want my money for the framing when its done. I don't want to wait until the art/frame sells.
     
  10. Framerguy

    Framerguy PFG, Picture Framing God

    Ted,

    If that is what you are looking for then try Larson Juhl or Williamson mouldings. They regularly have a number of mouldings on "special" in length. Each time my LJ rep. visits my shop, he has a whole display case full of moulding samples on "sale". These are not closeouts but are certain mouldings that they want to move at a faster rate or mouldings that they feel haven't been shown enough.

    In addition, both companies have a "box" program where you can get selected mouldings in box lots for a reduced price. I was told that these box mouldings were specifically for promotions, special sales, and bulk framing.

    Framerguy
     
  11. B. Newman

    B. Newman SGF, Supreme Grumble Framer

    This would get my vote as well. Do something for the Gallery folks, like a gift certificate to a local restaurant, or whatever you think they may like. It didn't look like they expected anything and most people would just like to be thanked.

    Betty
     
  12. John Richards

    John Richards MGF, Master Grumble Framer

    Ted: I know many distributors that offer discounts and plans for promotion. We have a program that will give a customer 200 free four color postcards with their message on the back. They choose the promotion period and the discount and for that time period we either offer a length or chop discount for their promotion.

    We also offer promotions when we introduce new lines. Usually 40% off lenght or 25% off chop the first time the customer buys. We also offer a 25% discount on shop model chops.

    Many of the WDA distributors offer similar programs and I think if you were to talk to your reps, something could be worked out.

    Oh, if the shop wants more than 200 cards we only charge an additional $28.00 per 100 cards.
     
  13. Jim Miller

    Jim Miller SPFG, Supreme Picture Framing God

    Lots of good advice on this thread.

    Discounting is considered here to be a promotional expense. That is, every discount costs $$$ from the bottom line. That is a wise investment of promotional dollars only IF the return is greater than the cost.

    So, we always look to receive more and larger orders in return for discounts. If the retail discount costs us more than the increase in PROFIT for the orders it generates, then we lose.

    As Bob said, offsetting discounts with negotiated prices for the materials helps plenty, although it's difficult to totally offset the retail discounts. If you discount a $300 retail order by 10%, that's $30 off your bottom line. If you negotiate a 20% discount for the $100 worth of moulding on that order (about 1/3 of the retail order value), you save only $20. If you can negotiate favorable prices on glass and boards as well, you might be able to come close to offsetting the retail discount -- but it's not easy.

    There's another danger to discounting, related to consumer perception rather than profit. When we discount, we are implicitly admitting that our prices are higher than they need to be -- which often is not so. For that reason, we want consumers to perceive that we are offering them a reasonable incentive to buy -- but we're not giving away the farm.

    Discounts don't mix well with custom built anything. When was the last time you saw a custom home builder offer a hefty discount? If a homebuilder offers upgraded carpeting or cabinets, you can bet he's found a buying opportunity and is giving an incentive. But if a builder offers 50% off the total price of a custom built home, wouldn't you be suspicious of his before-discount price -- or his intentions of staying in business?
     
  14. evergreen

    evergreen Grumbler

    Thank you for all of these really good points! I think that with the gallery I am going to go in there and "dazzel" them with my desire to know everything there is to know about the type of artwork they carry which could use my framing. I know I always appreciate it when someone shows extra interest in what I do. I will then advertise to those needs... UV protection glazing, the best type of mounting, etc. Assuring customers I know what I'm dealing with. As for the art show I like the idea of a "frequent framing" card. People who buy into sales are too fickle and not necessarily loyal customers. Do most people give artist discounts? I have a ton in my area and they pretty much expect a 10%. These are legit artists... I'm just wondering about switching them to a frequent framing program too. Thank you all for such good advice!
     
  15. Bob Shirk MCPF

    Bob Shirk MCPF CGF II, Certified Grumble Framer Level 2

    In general we do not discount in our shop. We are selling a custom product that is usually produced one at a time. We shop our competition to be sure that our prices are competitive. When we first opened our shop five years ago we discounted our mouldings, it was a part of our strategy to attract customers to a new shop. We gradually removed that discount.

    Exceptions. I deep discount framing to my mother, my sister, and my children. If I had an employee I would allow a good discount to them. I have done small production runs of the same piece in the same frame or a limited number of similar choices and quoted the job at a discount below regular retail. We offer a 10% discount to art students at the local university and high school to help support education in the arts. We do other things to support arts education but that is another story.

    We discount samples (framed art) on our walls periodically to move them off and allow us to put up new samples. We usually do this in late November and December.

    Discounts in any industry are usually only on commodity items. If you go to a photo shop you may find that the 4 pack of 35 mm film is on sale but you will not find a discount on custom cropping and enlarging. If you find professional grade film on sale it is either nearly out of date or a new product introduction. Custom framing is not a commodity that can be produced in bulk.

    Jana is basically giving her frequent framers a 10% discount across the board. Ron is giving his frequent framers a 14.25% discount. If Ron’s average framing job is $200 he is actually getting about $171.43 after the discount.

    Do not give away your custom framing, it is how you make your living. Tell people that ask for a discount that you offer fair prices every day. If you need to thank someone for sending you business give them a gift certificate to a restaurant or a bottle of wine or some other token of appreciation.
     
  16. The King

    The King SPFG, Supreme Picture Framing God

    This is an interesting topic, even though we have this same discussion about every 5-6 months.

    There are a couple things I need to clarify, though. I haven't run any kind of coupon for about 12 years. With my program, nobody gets a dime off until their eighth order. Then they save a bunch. After that they start over. I track what the program is costing and build it into my pricing - just like advertising and utilities.

    There are compelling arguments on both sides of this issue. The difference is, I'm not trying to convince anyone to use my program. I'm just telling you it works for me. If I disappear tomorrow, it will not be because of my frequent framer program.

    People who never discount under any circumstances seem downright evangelistic about that viewpoint.
     
  17. Less

    Less SGF, Supreme Grumble Framer

    Ron, you are starting to worry me. Anything I can do?
     
  18. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    That's a great point that Ron makes about the non-discounters taking an Evangelical approach to their point of view.

    I think a little flexibility makes for a more interesting way of doing business. Sometimes, I guess, it just comes down to what makes you comfortable-then what makes you the most amount of money.

    And I sure wouldn't want anyone to be uncomfortable.

    We sure an independent lot,aren't we? Maybe that's why most of us work for ourselves
     
  19. Art On Canvas

    Art On Canvas CGF II, Certified Grumble Framer Level 2

    A repeat customer just left with a 24% discount. They chose a moulding that I had in stock, and matboard, so I discounted it to them (I don't have to buy anything).

    When I worked for someone else, I would never discount, as we sold every job at full retail. The owner called me a few years ago, and told me that they went out of business.

    So I always show customers what mouldings I have "on sale" as we discuss their needs, and I usually keep at least a gold, a walnut, and a black moulding in stock. Everything else is sold at the retail price.

    It's the customer's choice, and most of the time they chose the more expensive, non-discounted mouldings selection anyway.

    Even so, I try to give them something extra, a glass upgrade or free drymounting, or an extra mat I may have in stock from a prior job. I love it when a salesperson gives me something extra for free. I'll remember that, the next time that I need something.

    Quality is job one, but repeat customers and referrals keep me in business.
     
  20. EllenAtHowards

    EllenAtHowards PFG, Picture Framing God

    Rather than giving a discount, we will "throw in" an extra mat or a fancy corner design. This gives them the Something Extra feeling, but doesn't cost us anywhere near like the discount off of everything choice. Also we have some mouldings that we got cheap that we can offer a price on. "I'm sorry, I can't discount this design, but if you like this lesser design, then we can offer you an attractive price on it, because we got a nice price on this moulding from our manufacturer. (give them a reason other than capriciousness for the discount)."
    As to any program where you will be the exclusive framer/art supplies store/gallery/whatever... we always run away. They are usually HandOut types of promotions (restaurant placemats, bowling alley scoresheets, coupon booklets, other mailers) and not the sort of promotion we choose to do... Anyway, who else in our area are they going to use as their Exclusive Art Supplies Store if we don't sign up? hmmm?
     
  21. AndyPan CPF

    AndyPan CPF MGF, Master Grumble Framer

    Greetings from Rhode Island, where the unofficial state motto is "If it's free, it's for me!" Mike and I don't discount heavily, but we do offer coupons in a variety of sources, like ValPak and local papers. If nothing else, these coupons let people know we are in the area. We are a tiny state, and I am amazed at how many frame shops are within a few miles of each other. I once worked in a Ben Franklin's frameshop where there was at least two other shops on the same street! Being new, I think that Mike and I need to use every opportunity to attract business that we can, even discounting. Once we are a little more established, we can taper off the discounting, but for now, it's a necessary evil.

    Truth be told, in RI, it seems like everyone expects some sort of discount, and will not do business with someone who does not offer one. Here, many times the sale has been saved by the offer of the coupon discount. I'm glad NOT discounting works for a lot of you guys, and I look forward to the day when my client base is such that I no longer need to offer any type of "deal". But for at least our first year or two, I think we'll have to stay with our coupons.
     
  22. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    Hi Guys-I hate to keep harping on this, but It's not the discounting that gets you in trouble, It's not doing it effectively that is the real killer.

    It seems that almost everyone has a little wrinkle that erodes margins. It might be Ron's card, it might be the free upgrade on glass, it might be a no fitting charge. But all these are items that do erode your margin.

    So, we ought to spend a lot less time debating the "ifs" and spend more effort on the "how to".

    But, if you wish not to do anything , it's your business. I just think the vast majority of consumers are driven by some type of "deal".

    If we as an industry continue to think that we don't have to cater to the greater masses of consumers, then all this talk is really academic. Consumers expect more and we have to find ways to provide the things that "turn customers on".

    The debate ought not to be over doing it, but how to do it profitably, how to market it and how to monitor it.
     
  23. evergreen

    evergreen Grumbler

    Both Bob and Andy have very good points! Having my shop for less than two years makes it critical for me to bring in customers without going out of business. My first nine months I took a pretty hefty discount - about 20% off. Yes, you are right, I did not make the 30% cost of goods sold margin by a long shot but I had to get my feet wet and my name known. I raised my prices 20% after nine months to run with the 30% or less COGS. By giving a 10% discount to "Complete Custom Framing" requiring the customer to buy the whole ball of wax I don't loose my profit margin by much. One think I take into consideration is the fact that I am a newbie. I don't frame as well as some of you more seasoned framers do even though my eyes can see it all, my hands don't always cooperate. I take twice as long as a veteran but that's life. I'm in it for the long haul!
     
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