“Profitable Pricing”

1. “Profitable Pricing”

2. Pricing Methods Pricing chart

3. Pricing Methods Pricing chart Pricing software

4. Pricing Methods Pricing chart Pricing software Visualization/pricing software

5. “Guesstimates” or something similar

6. 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!

7. 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

8. 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

9. 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!

10. Pricing structures

11. 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.

12. 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!

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

14. Fixed and variable costs Non productive time (or ”downtime”) Non productive days Labour/hourly rate

15. 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)

16. 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.

17. 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

18. The percentage of non productive time in a week will be in the region of 25% or put another way …..

19. 10 hours per week or 1.25 days per week

20. 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.)

21. 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%)

22. Labour charge or Hourly rate

23. Most framers tend to undervalue their time

24. Most framers tend to undervalue their time You should be charging a minimum of £30 per hour

25. Most framers tend to undervalue their time You should be charging a minimum of £30 per hour (I charge £38.25 per hour)

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

27. 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”

28. So, just how much CAN you charge?

29. So, just how much CAN you charge? This will depend on…….

30. Your market position and

31. Your market position and What your market will stomach (or the “going rate”)

32. So, what is the “going rate”?

33. So, what is the “going rate”? This will depend on ….

34. LOCATION

35. 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.

36. 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!

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

38. 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)

39. Two most popular types ofpricing structures Cost of materials X a multiplier and (Cost of materials + mark up) + (time taken X hourly charge)

40. 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

41. (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

42. 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

43. 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)

44. Any Questions?