With the recent Museum Glass® price decrease, we wanted to offer framers a series of blog posts focused on how to maximize the opportunity with tools you can use to position your shop for sustained success, from pricing, selling, and employee training. In this post, industry expert Ken Baur talks about the importance of customized pricing and previews some profit-building pricing strategies he’ll share in future articles.
In a recent post on the Museum Glass price reduction, I mentioned some ways you can take advantage of this change, including the suggestion of looking at your default pricing. But from a pricing standpoint, you can go much deeper. The greatest opportunity comes from customized pricing, which enables you to adjust your pricing in a way that best supports your business. Premium products are a big part of this strategy.
Previously, I did a series for Tru Vue® that covered complex pricing strategies called “Matching Your Passions with Profits.” We used fictitious Shops; Shops A, B, and C, to illustrate common pricing challenges that affect different custom frame shops. As we move forward in this series, we will take a look at how we can help Shop B and Shop C improve their profitability even further by leveraging more complex pricing strategies taking these shops to the next level of profitability.
Customized Pricing – Help for Shop C
For instance, if you remember Shop C was an example of a shop where the owner had a pretty good understanding of pricing strategy. They had customized pricing in their POS system and their discounting was under control. Yet, they lacked confidence that customers were able to afford premium custom framing. Therefore, they stuck to lower grade materials to ease their perceived notion of consumer sticker shock and stayed away from design driven sales i.e. what consumers are looking for when they visit a custom framer. We helped address some of these issues in the last series, but now it is time to take Shop C to the next level.
Shop C will be able to achieve an even greater success and profits by adding another layer to their pricing strategy that includes analyzing their markups on premium materials and fine-tuning their approach. Through my years of consulting with framers, what I typically come across is that many use a one-size fits all approach to pricing by utilizing the same markup percentage across the board.
There are many varied results by using a one-size fits all approach, but here are four of the most common and detrimental examples. First, this type of blanket pricing strategy creates pricing for premium products and large projects that are far too high, which leads us to the second outcome, unnecessary sticker shock from your customers. And lastly, the effect of high pricing results in a framer who is insecure with their pricing, and this always shows at the design table, which in turn causes the fourth outcome-lost sales.
Pricing for framing projects that are oversized or using premium materials is an important topic that we will cover in depth in future posts that address, The Rule of Three. The Rule of Three is a specific pricing strategy that helps identify appropriate markups for projects that are large or use premium products. It will show you how to price these projects within reach for customers, which will enable confidence in your pricing, resulting in more sales, and increasing profitability.
Design Driven Sales – Help for Shop B
The above strategy is a bit complex, so we will begin the series with another pricing strategy that is easier to digest. This strategy is focused on design driven sales and is the perfect place to begin for any anyone who relates to the example Shop B from the previous series.
If you remember, Shop B from the last series had a pricing strategy that covers expenses, but its owners felt pressure from competition. The result of this store was unsustainable discounting that lowered the shop’s average ticket and profitability that endangered the store’s future. A solution to this problem is to change the focus from making a sale to providing great design. In the next post, I will show examples of how to focus on great design, what I like to call design-driven sales. This can give owners and employees greater confidence and opportunities to satisfy customers with amazing design, which improves average ticket and increases profits.
Check back on this blog for more articles from me on pricing strategy, as well as posts from other industry experts on sales and training that will help you strengthen your profitability with premium glazing.
Share this Article:
This article is intended for educational purposes only and does not replace independent professional judgment. Statements of fact and opinions expressed are those of the author(s) individually and, unless expressly stated to the contrary, are not the opinion or position of Tru Vue or its employees. Tru Vue does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented.