Profitable pricing
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“Profitable Pricing”. Pricing Methods . Pricing chart. Pricing Methods . Pricing chart Pricing software. Pricing Methods . Pricing chart Pricing software Visualization/pricing software. “Guesstimates” or something similar. Pricing Chart. Cheap to buy (just a few pounds) Prone to error

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“Profitable Pricing”

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Profitable pricing

“Profitable Pricing”


Pricing methods

Pricing Methods

Pricing chart


Pricing methods1

Pricing Methods

Pricing chart

Pricing software


Pricing methods2

Pricing Methods

Pricing chart

Pricing software

Visualization/pricing software


Guesstimates or something similar

“Guesstimates” or something similar


Pricing chart

Pricing Chart

  • Cheap to buy (just a few pounds)

  • Prone to error

  • Can be difficult to update (unless on a spreadsheet)

  • Can only change the total price charged and not individual elements

  • Rather unprofessional looking!


Pricing software

Pricing Software

  • Modest price (£200 to £300)

  • Far more professional looking

  • Consistent pricing – less errors

  • Easily updated

  • Can sometimes be developed further by yourself

  • Usually a database with easy access to previous records

  • Customers tend not to question the price it generates


Visualization pricing software

Visualization/pricing software

  • More expensive (£1000 +)

  • All the listed benefits of “pricing software”

  • Large pictures can sometimes be a problem to photograph

  • Compatibility problems with some computers/cameras

  • Some customers see it as a “toy to play with”!

  • Colour problems? (brightness/contrast etc) – you may end up having to show chevrons to your customer


Profitable pricing

It’s been estimated that currently approx 60% of all framers in the UK are using some form of computerized pricing programme – which implies that 40% are still using pricing charts or worse still guesstimates!


Pricing structures

Pricing structures


Profitable pricing

There simply isn’t one pricing structure which is suitable for all framers

A survey of 1000 framers in 2008 found that the prices charged for framing the same sized watercolour, using the same materials, bought at the same price

ranged from £30 to over £100 which is why

there are as many different pricing structures

as there are picture framers.


Profitable pricing

There are lots of business books which will go into great detail about what formula you should use to work out what price to charge your customers - and to a certain extent they are quite right!


Profitable pricing

They will talk about such things as …………..


Profitable pricing

Fixed and variable costs

Non productive time (or ”downtime”)

Non productive days

Labour/hourly rate


Profitable pricing

Fixed costs

These are the fixed costs of running your business irrespective of whether you’re busy or not

(Rent, rates, electricity, water, sewage, insurance, telephone rental, car tax and MOT, National Insurance contributions, employees wages etc)


Profitable pricing

Variable costs

These are the costs that are directly related to how busy you are – the busier you are the more you’ll spend on such things as materials.


Profitable pricing

Non productive time or ”downtime”

Framers often under-estimate how much time is non productive - time when you’re “working” but not “framing”.

(Taking orders/talking to customers, wrapping their pictures, taking payment from customers, answering phone calls, making phone calls, talking to reps, writing invoices, placing orders with suppliers, unpacking deliveries, sweeping the workshop, stock taking, returning faulty goods, book-keeping, answering e-mails etc)

These “jobs” although non productive still play an important part in the running of an efficient business


Profitable pricing

The percentage of non productive time in a week will be in the region of

25%

or put another way …..


Profitable pricing

10 hours per week

or

1.25 days per week


Profitable pricing

Non productive days

or

Days when you’re away from work!

(Annual holidays, bank holidays, sickness days, going to the dentists, doctors, opticians, going to trade shows, family funerals, family weddings, going to see the bank manager or your accountant etc.)


Profitable pricing

Any time away from work is going to be non productive (i.e. you’re not getting paid)

It will vary from business to business but it could easily be from 4 to 8 weeks per year unproductive/unpaid time.

(I take 15 days holiday + 8 bank holidays per year = 23 days)

plus sick days/funerals/doctors etc.

Which means that I only work for approx 46 weeks per year

of which 11.5 weeks will be non productive time (talking to customers/phone calls to suppliers/doing invoices etc)

= 34.5 weeks per year at my workbench (66%)


Profitable pricing

Labour charge

or

Hourly rate


Profitable pricing

Most framers tend to undervalue their time


Profitable pricing

Most framers tend to undervalue their time

You should be charging a minimum of £30 per hour


Profitable pricing

Most framers tend to undervalue their time

You should be charging a minimum of £30 per hour

(I charge £38.25 per hour)


Profitable pricing

Electricians, plasterers, plumbers, car mechanics all charge anything from £40 to £80 per hour


Profitable pricing

Electricians, plasterers, plumbers, car mechanics all charge anything from £40 to £80 per hour

Don’t be afraid to charge a

“professional price for a professional job”


Profitable pricing

So, just how much CAN you charge?


Profitable pricing

So, just how much CAN you charge?

This will depend on…….


Profitable pricing

Your market position

and


Profitable pricing

Your market position

and

What your market will stomach

(or the “going rate”)


Profitable pricing

So, what is the “going rate”?


Profitable pricing

So, what is the “going rate”?

This will depend on ….


Profitable pricing

LOCATION


Profitable pricing

Of the most expensive framers half were found to be within 60 miles of London with most coming from the “well to do” towns and villages in places like Surrey.

The other half were situated mainly in prosperous county towns and cities such as Bath, York and Chester.


Profitable pricing

Of the most expensive framers half were found to be within 60 miles of London with most coming from the “well to do” towns and villages in places like Surrey.

The other half were situated mainly in prosperous county towns and cities such as Bath, York and Chester.

Not one came from the midlands!


Profitable pricing

Check out your competitor’s prices to find out the “going rate”


Profitable pricing

Check out your competitor’s prices to find out the “going rate”

(But it must be a direct competitor – i.e. the one that you’re existing customers would go to if you weren’t around)


Two most popular types of pricing structures

Two most popular types ofpricing structures

Cost of materials X a multiplier

and

(Cost of materials + mark up) + (time taken X hourly charge)


Profitable pricing

Cost of materials X a multiplier

An across the board multiplier tends to make large frames too expensive and small frames too cheap so some framers use a sliding multiplier scale

(e.g. very small frames x 10, large frames x 5)

Doesn’t work if there’s a large labour element to the job


Profitable pricing

(Cost of materials + mark up)

+

(time taken X hourly charge)

You’ll be getting a return on your materials used and

also on your labour which assuming you’ve done your calculations correctly will be sufficient to cover your fixed and variable costs as well as making an allowance

for your non productive time


Need to increase your prices

Need to increase your prices?

  • You need to “justify” it in some way to your customers

  • Become a qualified GCF

    (The only qualified framer in the area etc)

  • I only use only conservation materials

  • Improve your business logo/style of adverts

  • I only use wood from sustainable resources

  • I have the “only drymounting press in the area”

  • Move to a “better part of town” ?

  • May have to slowly increase your prices over a few years


A few tips

A few tips

  • Discounts from suppliers – if you don’t ask you wont get!

  • Wastage allowance for your materials (33%)

  • Ask for “long lengths” of moulding from your supplier

  • Try to minimise the length of your “end of stick” pieces

  • Add a surcharge for ready stretched paintings

  • If you’ve got a specialism add a surcharge

  • Only give artists discounts to individuals not a groups

  • Always charge for even the smallest of jobs (time is money)

  • Be more efficient in dealing with customers (time ismoney)


Any questions

Any Questions?


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