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There is a wide variation in customers percetion of a fair price.
Some think we are in the business of providing the type of frames they see in the likes of IKEA, Next etc and think we should price the same plus a little bit to maybe do a mount and put it all together.
Some have no idea at all.
Others realise they are ordering a bespoke product and are willing to pay a premium for that service.
Had a loved up couple in today with some photos of him proposing marriage to her. Two 8x6 photos and they wanted them in one frame so we agreed a design which made the frame size 408 x 285mm, 2 apertures, double mount in this moulding:
TE%203215%20SI[1].jpg (39.48 KiB) Viewed 8310 times
When I priced it up it came to £63 which I thought a bit high but gave them the price. He says "I told you it would be £60-70" and handed over his debit card.
This makes good reading from Jim Anderson (forum member Gesso & Bole)
Yesterday a couple came in with one of those name paintings, most here must have had them, the letters are formed with palm trees, birds, fish, whatever - I hate them and I'm glad I have a mirror just to one side of the counter to check my expression - 'EEEEEEWWW' is regularly changed to 'Ooooooh"!
I laid it out facing the customers and tried, like I always do, to read it upside-down - reckoned it said RATA - that couldn't be right, turned it around - still looked like 'RATA' and indeed it was - the initials of mum & dad and the 2 kids - CHEAPSKATE ALERT! A four-in-one.
Thought I'd be pushed to sell a mount, even a skinny one, but I sold a 3" double one and ...... wait for it .............. AR UV glass!
It would have been about £59 with standard glass (which they were given the option of) but the 'museum' glass almost doubled it - £116!
Reason? Well, it's not like they could just nip back over to Florida to replace it!
Good example of how we should not pre-judge customers and have a fair pricing structure reflecting quality workmanship. I think one point I picked up from my two frames was to make customers aware of the cost of mouldings - they can vary so much (my customer was very pleased by the way). I think the Excel programme for pricing is an excellent idea to factor in all margins.
My price chart has a variable mark-up which is based upon the size of the frame, the anticipated wastage and the cost of the materials.
Smaller frames, or those with lower cost materials need to carry a higher mark-up.
Whereas larger frames, or those with higher value materials have a lower mark-up to avoid pricing myself out of the market.
Any left over moulding needs to be paid for within the price for the job and should carry a small mark-up to allow for the effect that higher wastage on some jobs can have upon you overall margin as it appears in your end of year accounts.
Your wastage does affect your effective mark-up because you still have to pay for the left over amount of moulding and therefore your actual mark-up is less than the mark-up calculated on the actual materials used.
You can never charge the same mark-up on your wastage as you charge for the materials used for the customers job, but it's surprising how much difference even a small mark-up can make to you end of year figures. Management accountacy techniques are used by big name companies as part of their business models. Many of the same principles can also be advanageous to smaller businesses.
I was fortunate to pick up two management accountacy books from a local charity shop and have learnt some very important lessons by reading them.
Mark Lacey
“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
Hi Ray,
Plenty of correct advice above but for what it's worth I'll share what I've done about pricing. I'm in a similar situation ie I frame my own paintings for sale speculatively, as well as on demand by customers. Initially I found a framer's pricing table helpful because I could give a 'real' framer's price as a benchmark to negotiate from. It didn't have to be right, and could have been a formula/software or whatever but it was an impartial third party which I could lean on.
While starting to reverse engineer the pricing table it occurred that it was way too fiddly for my needs so thinking about Jim Anderson's garage parts/labour analogy I've settled on the following. It's on a notice in the studio so it's official enough and should at least remind me not to make some of the giveaway howlers I made this year's open studios (those supplier invoices sure do add up). It would be interesting to compare the output with the more sophisticated software/spreadsheets set up for a commercial operation – it might even agree at one point!
Mitre & join £12.50
Assemble (no glass) £12.50
Assemble (with glass) £15
Disassemble £12.50
Stain/paint £10
Wax/polish £10
Glass 2mm float from £5
Glass non reflect from £20
MDF back £5
Mounts from £10
Other materials bought in £cost x2
So a 40x50 1" foil moulding, standard glaze/back for one of my mounted oil on paper would come to £57.50, not the £25 I was giving stuff away at under the influence of the private view vino.
Using some books from a local charity I have taught myself the principles of Financial accounting, Management accounting and Financial management. Thse are three separate subjects, or activities and it is helpful for ALL businessmen, or women to understand the principles, requirements and the scientific methods which apply to each of these.
We are experiencing a serious recession which is killing many apparently solid businesses, without many business owners knowing what to do about it. Well, we ALL need to know and understand the basics of all three of the above disciplines to understand and control our businesses. We must be in control and not just merely responding to things as they happen, to ensure that our businesses prosper and survive.
Pricing and costing is at the heart of every business and we need to be managing both as a continuous activity. These things are not static and niether is your volume of sales. You will need to monitor your business preformance and actively control your cashflow and profit / loss as part of your day to day business decisions. We ALL need to understand the following things:
FINANCIAL ACCOUNTANCY. This involves your cash flow statement / cash flow forecast, your profit and loss account and your balance sheet. This tells you what is going on and how well, or badly you business is performing.
MANAGEMENT ACCOUNTANCY. This involves costing, pricing and budgeting. These are some of the principle areas where you make decisions and control the performance of your business. To do this you need to understand how to analyse how your business works including break-even analysis and other important factors.
FINANCIAL MANAGEMENT. This is all about how you apply costings, pricing and budgeting to manage the very life blood of your business. Cashflow is the life blood of your business and profit is how you make your living.
YOUR PRICING METHODS AND BUSINESS MODEL RELATE DIRECTLY TO ALL THE ABOVE MENTIONED ASPECTS OF YOUR BUSINESS. IN MANY WAYS PRICING AND IT'S RELATIONSHIP TO THE DETAILED ASPECTS OF THE PERFORMANCE OF YOUR BUSINESS IS THE MOST IMPORTANT THING WHICH WE ALL NEED TO UNDERSTAND FROM DAY ONE IN THIS VERY DEMANDING ECONOMIC ENVIRONMENT!
Anyone new to running their own business may find it helpful to start by doing a Google search on each of the above terms which are highlighted in blue and if neccesary, perhaps a visit to your local library with a pencil and paper so you can make some notes. This is not about jargon, but understanding how things work.
Mark Lacey
“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
Your business is very different to many of us and you have a lot of the right sort of experience and knowledge.
Some of us need a little more help to make our business a success in such difficult times. O.K., it took a recession to make me want to learn much more about these things, but last year after reading this book, I was able to make a lot more profit on less turnover by making some simple readjustments to pricing methods and cost control.
This year my turnover is up quite a lot, (due to other factors) and I expect to make more profit on this increased turnover as well.
Mark Lacey
“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
Do a Google map postcode comparison - mine's BN164EA.
You (no-one in particular) can have all the accountancy/management know-how in the world but if all you have around you is a few sheep it's not a lot of use!
Roboframer wrote:You (no-one in particular) can have all the accountancy/management know-how in the world but if all you have around you is a few sheep it's not a lot of use!
That made me laugh. I must say I have a few indicators I use and I have a general feel for my accounts, I know when the major bills are coming in and when my VAT return is. I also set aside money each month for rent (I pay quarterly) and TAX and my wife gives me a great big long list of accounts which need chasing. I am always concious of what profit margin I am making on a job and try to by in at the best price including buying palette quantities of glass backing and mount board.
So I try as best as I can to control the financial side of the business. However if I spent more time I may have a better understanding of the financial in's and out's of my company but I wouldn't be making many frames and probably be in a worse off situation because of it.
A good accountant and a decent accounts package are invaluable though.
I must admit I like excel and both my pricing programme and accounts are on Excel. I can't be doing with Management Accounting and all the other stuff - and as Alistair and Jon have said - while doing that we aren't making frames.
My accounts programme is based loosely on the old Simplex D format and information then tracks through to an anlaysis page (or two) which gives me all the ratios I need from GP to nett profit and everything in between including value per order, a split between Internet and Studio work and completion of the VAT return. I then have a very good accountatnt who continually bullies me into getting all this stuff to her in September (perhaps I should be doing it now???) However I like Excel and love playing with it so that's my excuse.
I looked at Sage some time back and it was so time consuming setting it up for lots of low value orders that I just couldn't be bothered with the input hassle.
As for pricing, I built my own pricer which does everything I need and is totally bespoke for my business. You need to know exactly how you are going to price though before you start to build the pricing programme. It doesnt work the other way round.
Having a sound business head is pretty important to running a successful business as most above have said and the best advice other than location, location, location is to get round all the framers within a 10 mile radius and check out their prices, service and presentation and set your benchmarks from that. If you find two or three of them are really competitive, offer a professional service and look the part then think hard about how you move forward. Everyone needs that USP in this day and age.
It made me laugh too, but there is a serious point to what I have been saying and that is about not standing still, but progressively fine tuning how you do everything and finding new ways of improviding your business performance.
I'm sure that I'm the only one who knows that he is better at framing than being a businessman. This may not have been so important before the recession, but as least some of us want to sharpen up our business act, to improve our chances during what remains of this recession. I don't think any of us know what is around the corner, or what effect it will have upon us.
Last year I decided that the analysis columns of accounts would include column totals expressed as percentages vs (turnover minus cost of sales), this gives me a very useful tool for finding better ways of cutting my costs and understanding where there are savings to be made. These percentages are called "key performance indicators" and they enable you to identify what is happening in a very detailed way. If you turnover goes up, or down, these percentages will change and can help you make inteligent changes in very precise ways at an early stage.
Accountancy was never an easy area for me. There was just so much which went straight over my head, but now, I've learnt a lot I never knew before and moved onto a much faster learning curve with regard to business ability. I wish I did this years ago, I could have avoided so many mistakes and therefore not wasted money doing things which did not matter as much as I thought.
BTW, I'm not and never was an accountancy expert. I was an engineer and these things have never come naturally to me, so I have to try harder than many others. I don't think I'm alone in this.
Mark Lacey
“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
Roboframer wrote:I'm too busy to worry about all that stuff
Not your average framer wrote:I'm sure that I'm not the only one who knows that he is better at framing than being a businessman
Well, I'm lucky - my wife is the brain. She started out in a merchant bank in the city in days when women within these sort of establishments were very few and far between.
Without her I'd need to employ a buyer and an accountant, not to mention at least two more shop assistants/framers. I sort my own orders out, but that's normally once a week from just 3 suppliers and that's enough of a pain; paying them would be another that I don't need and then there's all the other stuff we do, I've no idea how many suppliers we have - 30 or 40 at a stab. But she has two very (very) good assistants who allow her to get on with 'running the business' - serving customers is a treat for Mrs R - you'd have more chance of an audience with the Pope though.
Then there's all the other stuff, rent, rates, phone, electric ........... blah blah blah - I don't even know who provides our elec-feckin'-tricity - I seriously AM too busy framing and had I started out with a wife/partner that had as much business knowledge as me (feck all) but had good knowledge of what we do .... we'd be stuffed - victims of our own success.
You have to have all this business stuff sorted when you start out - being capable of making stuff to high standards isn't good enough because a time may come when you have to stop or pause production - which will lose money - just to make orders and pay bills, let alone all the rest.
Not your average framer wrote:I'm sure that I'm the only one who knows that he is better at framing than being a businessman
Turning that slightly I always say I am a business man who happens to be in the framing industry. You may be the best framer in the world but if you don't have the necessary business skills then you are up the proverbial with out a paddle. I know I am not the best framer in the world but I do run a profitable business and able to support my family which is the reason I am in business.
Sorry NYAF that wasn't aimed at you as I know from your posts having the correct business skills is very important to you, just quoting you to get my point across.
I don't mind being quoted at all if it helps to get your point across. Please feel free to do so. I certainly won't take offence!
I consider myself to be both a framer and a businessman, but having said that I am treating this recession as a wake up call. A lot of business people I know and respect are struggling to keep things going and for what it's worth, I think that the dead wood and lame ducks already went to wall earlier in this recession. Unfortunately other businesses are still falling prey to the current problems, so I reckon that a good many of these later business failure should have been sound businesses.
I started my business in 2004 and it's been quite a learning curve. I've had no formal business training, but have had to learn along the way. Reading between the lines, I would say that this is probably the way that a very large part of this forums membership has had to come. So I hope that so of what I am attempting to share will be relevent to someone.
When I started I knew nothing about pricing and had to learn fast. Now I would say that pricing is only part of the picture. Some people have much more instinct about getting things right than others. I'm one of those who has chosen to include a few management tools as part of the way my business works. I believe that it makes sense and it will help me to run a much better and more stable business. I'm just encouraging those who want to, just to look into some of thing and see if some of it would help them too!
Mark Lacey
“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
Mine is a large format paperback version, but it's a quite a thick volume too! (686 pages) The price label on the back of £29.99p appears to be the price it was in 1999, but I got it from a charity shop for only £2. It's probably even more expensive now, so it's gonna be a lot of money. In all honesty, if you must read it, I would suggest that you ask your local library to see if they can borrow a copy for you to lend from them.
Can I save you the money by giving you a copy of my Excel based monthly accounts spread sheet, which includes all the percentage analysis boxes, formulas and check sums already built in. I created it myself and use it for submitting my accounts to the accountant.
As you put in you accounts details each month, you will be able to start comparing your results month by month and soon get insights into how you can control your business finances and spot areas of expenses which you will need to take action upon. The main thing about it is that it shows you where you money is working for you and where it is not. Like I said, these things don't come naturally to me and this is my way of understanding what is going on and what I can do to run a better business.
There's a lot on it, so I have to print it out on my laser printer as an A4 size sheet and get it enlarged at the local photocopying shop to A£ and make it easier for the accountant to read it. If you want a copy, then PM me with your email address and I'll send you a blank copy.
Mark Lacey
“Life is short. Art long. Opportunity is fleeting. Experience treacherous. Judgement difficult.”
― Geoffrey Chaucer
