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pricing: How Low Can You Really Go ?????

hadleyoldwestgallery

Grumbler in Training
Thank you for the solution to one of my concerns of offering specials. We are working on our value line right now (yes, I know we are slower than most to get things done!) and I like this philosophy. A limited selection of nice value line frames and poster specials. And the rest at our every day prices.



I am embarrassed to say that for the first time in 25 years I actually discounted twice in the past few months. I was working with customers and just wanted to finish up. However, our policy is not to discount and we absolutely do not. I ended up saying "You know what? I will personally dry mount this piece for you on my own time, after hours. We won't even put it on the receipt". I could not believe that came out of my mouth but it worked. And I felt so cheap doing that but it was several hundred dollars in our cash register. And we have to pay our bills! I am worried though about the ramifications of my actions. And I don't feel comfortable allowing my employees to do this either.
Ultimately I think all of this recession is going to bring everyone back to the fact that we are in the people business. In saying that I mean that profit is the by product of establishing good working relationships with our customers and the more that is brought to the fore front of our thinking as they walk thru the door, the more success we will experience in a diminished economy. I would do what it takes , also , to make the sale, not just because I need the money, which is true, but also because that human has a realm of influence that will impact my business in ways I can't possibly imagine. Profit is good, but friends in our communities is even better. Friends come back each time they have a need and we should be there for them.
 

Jay H

PFG, Picture Framing God
We actually have four sliding scales. Now I have to take stock once again...One is for those scales is for rare companies with whom we only deal on a chop basis. One for the higher end companies like Roma and Larson, one for a group of companies whose prices are typically lower. The latter group has very slightly higher mark ups across the board.
This isn't a criticism but an observation. What a complicated mess.
 

Bob Carter

SPFG, Supreme Picture Framing God
Actually, Jay, that is a pretty logical answer for those that do use a sliding scale. The reality, and my objection, of sliding scale is too many use a "one size fits all" approach.

I think Kirstie's solution does bring a flexibility to the table

We carried a vendor that no matter if we ordered 12ft we got 16; if we ordered 15ft we got 20. Always about 20-25% more. Never closer. In my dark, conspiracy loaded pea brain, I am convinced that it was a "conscious" decision to "ensure" we had plenty upon arrival

That overage left us with two options: To order 12 when we needed 16ft, realizing that "their" overge would actually be what we needed or get a larger discount. The second didn't happen so we simply dropped the line

Kirstie's option my have been a third solution
 

PaulSF

PFG, Picture Framing God
Bob, don't you know after all these years that the first time you order 12 needing 16, they'll ship you 12?
 

Jay H

PFG, Picture Framing God
As simple and effective as my pea brain can imagine pricing is using a markup, waste, and add-on. If that doesn't offer enough flexibilty to price a frame then I can't imagine how 4 or 5 different markups will help. I'd sooner pick your solution and that is dump them.
 

Dave

SPFG, Supreme Picture Framing God
...
Whatever you do to survive in this recession, do not train your customers to expect discounts. Offer them more affordable options, a variety of price ranges, but do not train them to wait for the percent-off sale, unless you are prepared to jack your prices up beforehand to maintain your margins.
Excellent advice, Paul.
 

Bob Carter

SPFG, Supreme Picture Framing God
Hey Jay-That's exactly what we did, but every so often, you just have to dance with the devil. Kirstie's solution, while a little work, is much better than most alternatives

With LS, anyway, that entire implementation might take 10-15 minutes

Heck, I fritter much more time than that everyday on www.18yroldhotties.com

Okay that's a joke, but, you get my point
 

Kirstie

PFG, Picture Framing God
This isn't a criticism but an observation. What a complicated mess.
Actually, this discussion helped me make a decision with regard to our price codes today. We just merged all wood prices into one sliding scale with special attention given to changes on the scale for the lowest price mouldings. Then my manager made one small scale for metal. Then we reviewed the value line prices and now are looking at the poster special. This kind of discussion is great because it prompts us to think about what we are doing and why. I am systematically revewing all our mark-ups and price codes this week.
 

Kirstie

PFG, Picture Framing God
Kirstie's option my have been a third solution
The other option to receiving more moulding than you ordered is to have a systematic plan for building ready mades. We do this but fall short all the time because labor is needed elsewhere. So the moulding stacks up, but is eventually chopped. I'm talking about special order length for onesies. We try to sell from stock as much as possible. You'd think 200-300 in-stock choices would be enough!
 

Lianne

Grumbler in Training
Just wanted to post a huge thank you to everyone who has contributed to this thread with their own experiences and ideas. We're a brand new framing company (less than a year old) after buying out the business from the gallery we used to work in, and since the gallery closed down in January and the whole 'credit crunch' mess the economy is in, we're suddenly really struggling to make enough money to ensure all the bills are paid on time.

After reading some of the suggestions on this thread, I've reorganised our price structures, introduced a new value range, and printed a 'starting from' price sheet to display. We were concentrating on high end framing, as that's what we did as part of the gallery, and what's become obvious now is that we've been alienating a lot of potential customers by not offering more competitive prices for the lower end. We have carried on the same business model as we had at the gallery, naively thinking it would work for us too!

We’ve got a lot to learn, and hopefully the changes we’re starting to make will help us grow and it’s not too little to late! Just wanted to say thank you for the ideas and help :)

Li
 

Jeff Rodier

SPFG, Supreme Picture Framing God
Welcome to the Grumble Li. You will definately hear the full argument for everything each of us does here. Nobody is forced to change their business to fit another's strategy but you will get to hear and understand all arguments pro and con.
 

Bob Carter

SPFG, Supreme Picture Framing God
Hey Jay-I went back and re-read this thread and somehow missed your "shopping for a compactor at Sears" and your 'confusion'

back in the day when I worked for them i actually did a new product project on the brand new concept called the Compactor. It was my Master's thesis

Guess what my plan called for? Three levels of product (good, better, best) so as not to "confuse" the client. They did it for years. Then they opened the "brand" to non-Kenmore products and became just another appliance seller

Obviously, there is a balance needed. Unfortunately, not all consumers agree on what is a "proper" mix

Hence, the need to understand your market

Big difference between being everything to everyone and being more things to more people and not enough things to enough people

Bottom line: we see most of us in one of those three categories. Which best describes our own operations and how can we change it

We are suffering from the latter and having a devil of a time correcting it
 

Lianne

Grumbler in Training
Hi, thanks for the welcome.

I've been lurking for a little while on this forum now, but it was this thread in particular that I found very helpful, considering our current position. Inspiration hit, hopefully it'll all work out, and as such I felt it only fair to finally post and say thanks!

The fact that people are willing to share how they do things, what's worked for them and what hasn't is a godsend to a novice like me. I know what works for one doesn't always work for the other, but it's good to read all these (often conflicting) view points to help make my own decisions!

And it's always nice to say thank you :)

Li
 

BILL WARD

SGF, Supreme Grumble Framer
here's a followup: When to LOWER Your Price Point

here's a "followup" on the subject gotten from Entrepreneur Magazine -- also much food for thought!

article
 

Jay H

PFG, Picture Framing God
Bob, would I be correct in guessing that they sell 10 to one from the middle category than from both the upper and lower end combined?

They show 10 to 1 compactors in the "better" category.

Here's my theory. If they showed 10 to 1 "Best" they would sell 10 times more of the best. If they showed 10 to 1 "Good" they would sell 10 times more of the good. They do show 10 to 1 of the "Better" and I suspect sell 10 times more from that category.

Why not just sell the best if showing the best will insure you sell the best? We see that question around here often. I guess if you operated in a bubble and customers didn't have a clue what a compactor costs down the street you could.

If it's so much easier to sell "good" why not just sell that? Well I noted that the entry level was junk. It has to few options and doesn't have good value even at cheap. Plus I had my choice of one!

I think the "good" and "best" mostly reinforces the value of the "better". I suspect that is why you suggest a mix.

But you know what they don't sell? They don't sell rubbermaid trashcans. They also don't sell large hydrologic dumpster style compactors. Why not? Those are trashcans after all. I have also noticed that very few places that sell rubbermaid also sell compactors. Even good, better, best doesn't cover the entire gamut of that product. It just covers the range that you can effectively sell. I also don't think many of us will be able to effectively offer the entire range of product in our industry without confusing the customer.

I've had better luck with a narrower mix that tries to pinpoint what my customers want rather than a mix of everything under the sun. Sears does too. As you know, my spy has been in your shop Bob. You don't offer the entire range of products available. I know that isn't your suggestion but I fear that many are reading that from your advice. That was also NOT the suggestion from the pearl dealer in the article. He wanted to offer more but not radically change his entire opperation.
 

Bob Carter

SPFG, Supreme Picture Framing God
Hey Jay-Absolutely in agreement, we, too, carry a tailored mix. Don't carry Closed corner. Did, but just neversold many. Wall space simply could be better utilized

In the old "compactor" days we used to have a "Balance of Sale" method of monitoringmix. Each appliance had several steps, 7 dishwasher for example. Starting with the Opening Price point. Always cheapest in town, by design. Had one cycle, one temp setting ( Oem metal, for this example), usually a lower margin

But for $20 more, you could get TWO cycles and Two water temps (Studio 26101). Who wouldn't want that? And for another $20, you could get a Pots n' Pans cycle and two drying temps. Who wouldn't want that? And, so on up until the Top ofthe Line that loaded and unloaded itself practically (Closed Coner, Museum Glass with agreater margin and higher Goss Profit dollars-after all, those folks that wanted all the whistles and Bells generally would pay for it). The difference between Opp and TOL was about $150

Now each unit would be classified as Opp (the two lowest priced), middle of the road (4 units) and Top of the line (2 units). If we sold more Opp than TOL margins would suffer and volume would be depressed. If we sold more TOL than it would indicated that we were probaly chasing off a more price sensitive client. That OPP client was more likely to be "moved up" to that "Middle" product where the fat part of the sales were. In truth, you simply could not live off TOL clients because there simply were not enough of them. You needed that middle of the road to represent about 60% of sales

Well, i do not think our biz is much different, except we generally under serve one segment and fail to monitor activity between segments. now, appreciate we take a sale anyway we can, but each segment is stengthened by the merchandise we carry to support that segment

Never forget salesmanship is also adjusted to service each category and skillfully move folks up a notch or two

And, that's "Bob on Bidness"

This doesn't bring 'em in when you need it (like most of us right now), but is a successful tool to keep 'em
 
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