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Discounts

Discussion in 'Picture Framing Business Issues' started by Rebecca, Oct 25, 2002.

  1. Rebecca

    Rebecca SGF, Supreme Grumble Framer

    I noticed on some of the other threads that there are very different ideas on the subject of discounts out there.

    In antiques everyone and their dog expects some sort of discount. They get it because the discount is built into the price - no dealer expects the full asking price. This is also true of cars, stoves, fridges, furniture - one always asks for the best, or sale price, and usually one gets something off. Again, I'm sure that whatever discount is given, has been factored into the ticket price.

    I would imagine that frame stores that regularly offer discount sales do the same. Some threads suggest that discounts attract business. Since things seem to be so slow for so many, would the discount thing work for (or help) those who don't presently do it? Or is this a totally unbusiness like way of looking at the situation?

    Rebecca
     
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  2. gemsmom

    gemsmom SGF, Supreme Grumble Framer

    What kind of business do you want to attract? People who want quality work, and are willing to pay for it, or discount shoppers? At one time I ran two sales per year, a "customer appreciation" sale, and a sale on stitchery framing. Until people started waiting for the sales. Then we were slow the month before the sale started, went gangbusters, then went dead the month after the sales. I have run zero sales for years. I never discount. People ask for discounts from time to time. They still leave their work when they don't get one. Don't forget, a discount only affects your profit margin, nothing else. Your cost of doing business remains the same, and the cog's don't change.
    My business became most successful when I focused on what kind of customer I wanted to attract and shaped the business accordingly. People who want quality work and goods and are willing to pay for it, will carry a business through the tough times better than a discount shopper. One or two high-ticket sales a day are all that is needed.
     
  3. Rebecca

    Rebecca SGF, Supreme Grumble Framer

    "Don't forget, a discount only affects your profit margin, nothing else. Your cost of doing business remains the same, and the cog's don't change." - Pamela

    I think that was part of my question. I know some people don't want to discount but I was thinking about those that do. If one includes the cost of the discount into one's prices - ie. marks the prices up before the discount - can discounts then be used as an effective marketing tool.

    Bob Carter was talking about the difference between cost pricing and market pricing. As I understand it, some framers aren't making enough money with their current pricing structure, but worry about alienating customers if they raise prices. Would it solve some of that problem if they raised prices but offered selected discounts? Then the consumer would perceive that they are getting a bargain (which they may well be), but the framer would be making more money on their regularly priced items, and not losing money on the sale items. And they could offer a discount to selected customers without giving away the farm.

    Maybe this isn't possible - I was just wondering if it was.

    Rebecca
     
  4. Less

    Less SGF, Supreme Grumble Framer

    For me, I object to discounting, not only from an image perspective, but also an ethical one. Someone needs to start breaking this cycle.

    I sell fine art, and at least here on the east coast, it seems 8 out of 10 clients ask for a discount, or out-right make an insulting offer. Here is a recent example. I had a client in the other day, who was interested in an $800 painting. He first asked if I could do better? I reluctantly gave him 10% off, or $720. “Oooooh, can’t you do better than that?” Maintaining my cool, I told him the best I could do was $700. He mumbled a little more, then he had the audacity to ask me why this 12” x 16” oil painting so expensive, and could he have it for $600. Well let’s just say I said no thank you, and he left before I had a chance to throw him out my door. The problem seems to be this accepted practice of raising your prices to get what you really want. Let’s stop this behavior, and just say no! I don’t falsely raise my prices to get what I want. If you like to play that game, go to the next gallery. :mad:

    Discounts, today, mean about as much as a Limited Edition Print run of 40,000 copies. For the most part it is a big marketing joke. I think Betty recently touched on this issue.

    Raise your prices 12% so you can discount 10%? If you want to join this endless downward spiral, feel free. I have made a decision to try to give a fair price, with no games. I have no problems with offering legitimate discounts to encourage sales in your slow season, or to get rid of excess inventory, or if you bought very well, and you wish to pass the savings on to that to your customers. But, to use the loosely used term “discount” to draw customers into your business is a moral issue I don’t want.

    If the masses are dumb enough to be herded, then I don’t want them as customers anyway. People are starting to get tired of the Big Boxes and mega-malls, and eventually, they will smarten up to those offering empty discounts.
     
  5. B. Newman

    B. Newman SGF, Supreme Grumble Framer

    Oh man, I can't believe it. I actually agree with Less!!!! :eek:

    Rebecca is right, in the antique business (which I am a part of also) it is a common, even enouraged practice. I actually saw a sign once that said, "The listed price is only a suggestion, make me an offer." I HATE THIS TYPE OF MENTALITY! and I will not participate!

    I had a customer purchase some caning supplies recently that later complained about the total. I wrote out my exact costs for the materials including shipping and said, "This is what it cost me, how much do you think I should make on it?" Uh, I think it embarrassed them. Tough!

    I have also said to "friends", "Would you like to know what this costs me?"

    Now, understand, this is not something I recommend for just any customer. These were people I knew well. Another example for my caning business. Hand caning retails for $1.50 per hole. I often get the remark, "My Dad used to do it for 10 cents per hole." To which I answer, "yes and milk wasn't $4.00 per gallon then either." They usually laugh and agree. The point is, most people are living in the "used to be" ecomony, and they think a discount makes them feel better.

    When "discount" comes up, I just usually say, "No, we don't discount, it's too much trouble to mark it up, just to mark it down." They usually smile and agree.

    Betty
     
  6. Bob Carter

    Bob Carter SPFG, Supreme Picture Framing God

    Hi Rebecca-This is a part of the business that really separates the crowd. I have no quarrel with anyone that nevers discounts. And I agree with Pam when she asks Who are you trying to attract?

    But the evils in promoting can not be summed up as inherently wrong on face.

    Go to the next trade show. Every vendor will have some type of show special. Prices will vary from A to Z. Just look at the Larson catalog at all the different prices listed for the same piece of moulding.

    It has little to do with morality, it has to do with good business. Do you think when I buy a pallet of glass, I will pay the same as someone that buys a box here, a box there? You don't think there is a world of difference? You bet there is.

    Here's a real world example:

    So, let's assume that you and I buy the same readymade from from ABC Co. It's a nice 8x10 and costs $20. You buy three and would probably put it into your store for $40, typical Readymade markup. Then I waltz in and want to promote their entire line and figure I'll sell 50 between now and Christmas. They offer me a 20% discount. For the same $1000 invoice, I now get 62 frames for the a $16 per unit price. I can either use that advantage and sell for the same markup as you, but at a more attractive price $32. Or I can make more margin at the same retail, $40. But have no selling advantage. Why would the consumer pick me over you?

    But if I give them a more attractive price ($32),they will probably buy from me. I will probably sell more, also.

    Is it a hollow discount a Less suggests. Hardly

    Will that consumer think you might a little high? Probably.

    Will I sell more than you allowing me to buy even more effectively in the future? Probably

    If I buy a lot more from ABC Co. will I continue to get more favorable pricing and probably better service in the future? Most assuredly

    Welcome to Business 101

    Evil? Hardly

    Unethical? Not in this environment
     
  7. The King

    The King SPFG, Supreme Picture Framing God

    Rebecca, of course it's possible and it doesn't need to destroy your image if you use it carefully. I do pretty much what you're suggesting with my frequent framer program. Details are on another thread but what it means is that infrequent customers end up subsidizing the frequent ones.

    There are no coupons and there is absolutely no haggling. People used to ask about discounts for senior citizens, students and Daughters of the American Republic. Nobody asks anymore. If they keep coming in for framing, they eventually get a big, fat credit that they can use to buy something fun. I chalk it up as a marketing expense and build it into my pricing.

    What really erodes margains are the freebies - things like not charging to remove labels and tape from the back of prints before mounting. :D
     
  8. B. Newman

    B. Newman SGF, Supreme Grumble Framer

    Oh gosh, somebody stop me here, I'm defending Less!!! :eek:

    Could it be that we're comparing apples to oranges here?

    There's nothing wrong with promotion. Less (at least) offered a discount here with this customer. He has discounted before with new cross stitch customers. I offer "special prices" to "grannys" ( ;) to Bob private joke).

    And purchasing correctly will allow you to take advantage of volume "discounts" in order to promote efficently.

    But what we all hate is the "discount mentality". And I think we all agree on that. Something's gonna have to drastically change, to change that mindset.

    "Buying smart" is different from "gimmie a deal".

    Betty
     
  9. Less

    Less SGF, Supreme Grumble Framer

    From Less
    Bob, I think you misread my post!
     
  10. gemsmom

    gemsmom SGF, Supreme Grumble Framer

    What it boils down to is, if you can get a discounted price at the wholesale end, of course you can discount the moulding at the retail end and still protect your margin. This works great for large operations. Use it as a marketing tool? I don't know. I can't get beyond the notion that what you will attract are discount shoppers. These are not loyal customers-they go from one "deal" to the next. I have always felt that the independent framer cannot compete with the discounters of the world, and shouldn't even try.
     
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