![]() Let's take the example of the three mldgs I showed in the prior post (or use any item-and my favorite example might be the Antica line from Larson) But, a simpler method might be to forget the things we were taught and start from scratch If there is one point that I need to stress, it might be that we change our thinking to incorporate some of the traditional techniques used by other retailers In truth, I agree with him on virtually every other issue Instead we take high end items and price them lower than usual margin-based pricing bcause we feel they might be "over-priced"Īnd Jerry, thanks for the kind words but this isn't about Jim and I at all. We need to find those opportunities where an "earned" advantage can and should be leveraged to our advantage in selling more The original concept of taking a discount off a fixed margin (generally too low) was injurious has become taking any discounts (earned or otherwise) is evil and unethical. Somewhere along the way we retail framers have been taught poorly. I am one of those retailers that see nothing wrong with offering a little promotion when every other retailer does. In fact, a wiser course of action might be to use a little of this and a little of that I think pricing has so many variables that no one method is the best. And I am not suggesting that it's an evil plot at all, but sometimes it works best for them Hi Eric-I think we have been told to do as vendors would like us to do. Now if you feel that you need a lower "retail" to sell this "high end" product, isn't that "discounting"? But if you use a more "standard" multiplier and feel that retail is too high, then at least get the benefit of a "Sale Price" The fact is that we all get shipped more length than ordered and the lower the multiplier, the greater the damage Now, use the 11ft as what you will charge your retail client, but factor in the fact that you received 19ft (This is exactly what happened on one of ours) and now your " base" CoG on this moulding i 40%, 42% and 48% respectively.īut suppose we use the $2 rate (4.3 times) as a uniform multiplier, we now have a uniform rate of margin that on the $5/ft that is 8 points higherĪnd, if you do the math, you will find that you also have $38.50 additional dollars of gross profit If we use the "published" sliding scale markups in Larson for a $2, a $3 and a $5 wholesale cost/ft and you establish a retail selling price based on those multiplier, you start out with a spread of five points in margin Let's plug some numbers into this bad boy So, we did a quick review and found we had 27 orders in which 23 had overages of 5ft or more Lot's of legitimate reasons, but is easy and importantĪ recurring culprit recently has been receiveing more footage than needed, you know you ordered 11ft but received 19ft? Whenever a workorder doesn't meet our acceptable margin it's flagged for investigation. ![]() I think sliding scale markups are really "de facto discounts" designed to get you to lower your retail prices to make that "high end" product more attractive to your clients so that you might sell more so that you can buy more from the vendorĪll at a lower margin to you, but they will tell you will make more gross profit dollarsĪnd, I cannot argue the basic premise except that it is really putting something "on sale at a discount" but without the benefit of a "savings story" There are not many people that are "better friends" to our industry than Jim, so this really is a "gentleman's disagreement" I really had to think long and hard about this post, because it may appear that I am disagreeing with my friend, Jim Miller
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