Pricing help

[nolonstacey]

I wondered if I could pick your brains regarding pricing. 2 years into bespoke framing and I thought I’d got a handle on pricing, but recently I’ve been told by two separate people that I’m about half the price of their current/previous framer (which I find hard to believe).

I use a spreadsheet to calculate my prices. I know you’ll all say I need some pricing software but my spreadsheet has all the up to date prices from all the suppliers I use, calculates everything to the nearest mm, adds wastage, adds labour, overheads, etc, so as far as I can see, the same variables and decisions I have to make for the spreadsheet calculations, I’d still have to make for a software package.

Anyway, a rough idea for the two simple framing jobs below would be very interesting (all products are Centrado):

Job 1:

Print single mount and framed
Glass size: 406x508mm
Moulding: 6000OA (assume no staining/waxing/finishing needed)
Mountboard: SW03
Undermount SW03
Glass: 21001 float glass
Backing board: 12001
Standard d-rings/cord/etc

Job 2:

Print single mount and framed
Glass size: 700x800mm
Moulding: 0097OA (assume no staining/waxing/finishing needed)
Mountboard: SW203
Undermount SW03
Glass: 21001 float glass
Backing board: 12001
Standard d-rings/cord/etc

I work out at £77 for the first and £120 for the second (both prices include VAT)

I’d be very interested if I’m way off the mark with my pricing assumptions!!

[Fruitini]

Hi. I'd be £96.50 for Job 1 and £250 for Job 2. We are based in the South with very little local competion.

From where I'm looking you seem to be under pricing. Clearly I have no knowledge of your location/overheads etc or the prices your market can tolerate. Do you get many pushbacks on price? If you don't get many/any you aren't charging enough! It'll be interesting to see what others are charging but I'd be surprised if many come out cheaper - especially on Job 2.

[nolonstacey]

Hi. I'd be £96.50 for Job 1 and £250 for Job 2. We are based in the South with very little local competion.

From where I'm looking you seem to be under pricing. Clearly I have no knowledge of your location/overheads etc or the prices your market can tolerate. Do you get many pushbacks on price? If you don't get many/any you aren't charging enough! It'll be interesting to see what others are charging but I'd be surprised if many come out cheaper - especially on Job 2.

Thanks for your reply - it's really appreciated. I'm lucky that my overheads are very low. I'm predominantly an artist with a gallery and the framing side is a relatively new addition to that (I've mounted and framed my own work for a long time) - the framing is done in a studio that came with the gallery so the gallery really covers all the overheads.

I don't get pushbacks on pricing, but I am only getting maybe 5 jobs a week at the moment. The framing side is getting gradually busier though so I feel the need to get this right now.

Interesting that I'm not that far out on the first job, but waaaaaay out on the second! Others may be able to confirm this, but I do think there's probably quite a divide between north and south prices (as with most things).

I would look at pricing software, but as I said earlier, you still have to make the same assumptions on mark-up/wastage/wages/profit as you do with a spreadsheet. This is the spreadsheet I made, so it is fairly comprehensive...

[StevenG]

Hi

Job 1 - £90
Job 2 - £200

[nolonstacey]

Hi

Job 1 - £90
Job 2 - £200

Thanks Steven. Even with just two, there's a pattern forming here!

[NTG999]

Looking at this quickly, most/all of your margin is labour. I have low(ish) labour and make margin on the markup on materials. It is a balance; your method I would suggest makes you expensive on small jobs and cheap on bigger jobs which is what your pricing is showing.
Waste is also make or break for a lot of framers, mine is 25% but not always enough. Today I finished 2 frames, total metereage 5.5m and I used 9m 63% wastage
Frutini is exactly right pushback is the barometer of your area and local competition, have you done any local market research on other framers pricing?

[Fruitini]

I would look at pricing software, but as I said earlier, you still have to make the same assumptions on mark-up/wastage/wages/profit as you do with a spreadsheet. This is the spreadsheet I made, so it is fairly comprehensive...

Absolutely. We use a spreadsheet too. Loosely based on a markup model but heavily adjusted on frame cost, width, appeal to arrive at individual multipliers that work for us.If you are confident in your sums then there is nothing wrong with a spreadsheet but you need to be sure you are on top of price increases and keeping good customer records (it'll really help in the long term you plan to get busier). We have developed our spreadsheet with the help of a programmer friend who used Visual Basic to incorporate customer records and order history. A truly bespoke system and I love it!

[nolonstacey]

Waste is also make or break for a lot of framers, mine is 25% but not always enough. Today I finished 2 frames, total metereage 5.5m and I used 9m 63% wastage

That does seem to be one of the hardest things to get right. I suspect even more so if you're not a big framer. I still have almost full lengths left over from jobs when I first started 2 years ago - just waiting for someone to pick that moulding again (and then hoping it's not for a frame that will require me to need another length!!). I suppose that's where chop comes in, but chop often works out more expensive than ordering full lengths. I suppose I could quote based on chop and then order in whatever is the cheapest way for me!

...have you done any local market research on other framers pricing?

I haven't. It's always felt rude to me to ask other framers what they are charging, and framers don't tend to have prices on their websites (for obvious reasons)

I see what you mean about most of my mark up coming from labour - even though on my spreadsheet the labour charge increases as the frame size increases, it will always make me cheaper on larger frames

[JFeig]

One factor that I noted is you only have material costs and an added markup in your calculations.
Being from the US, one factor is missing. That is the labor charges for assembly of the parts into a frame. We call that a "fitting" charge.

Not seeing the actual formulas behind each item (moulding, mount board, glass. etc.), it is near impossible to see your markup structure. The time to finish a frame will depend on the type of finish being applied( ex: simple wax, or several layers of paint, plain antiqued or to match something).

You have to think of "what is the added value" of the frame and not just the material costs. Just because you have minimal overhead costs now, is not a reason to charge less than others in your geographic area.

Your cost of goods sold is almost 34%. That is very high in comparison to a 20-25% range of COGS(excluding labor) in North America.

[JKX]

For the first job - Working on an hourly rate of £40 and a 30% markup (right or wrong), if that hourly rate is correct - i.e. what it costs you to open the door each day, and bearing in mind you can make extra charges at the same rate for more complex/specialist tasks, regardless of how long they take ...... and assuming youre wastage is covered - then your markup is your gross profit and 30% is very good.

Those assumptions would mean your cost of goods and labour (I've called it 45 mins to make it easier) are 22.01+30 = 52.01
plus 30% - (and many do not mark up their hourly rate but you must) = 67.61 plus VAT = 81.14.

If that is correct for you then after that it's up to you to go as far as your market can stand if it's higher, if it's lower there's a problem, but it sounds like it's higher. Just adjust your markups to match or compete, or, if you think people are charging more for lesser quality and service, go beyond it!

If I were you I'd trial a free software, you can apply different markups to different materials, which makes sense, you probably toss more glass than moulding etc etc, markups can and maybe should also decrease the higher the cost of goods are, these options are built in to some software, plus there's all the record keeping and reports.

[Justintime]

I'm £105 & £230 no vat. I have a few framers on speed dial and we often price check and compare notes. They're not local to me, but we work to the same standards, so it has helped me ensure I'm not undercharging.
When you say you have low overheads, are you sure that you are considering all of the running costs? These won't all be relevant to you but here are some of mine:
Accountant fees
Books
Booking App
Delivery charges
Equipment depreciation
Subscriptions
Electricity
Insurance
Marketing
Merchant Fees
Office Supplies
Software subscriptions
Personal Drawings
Telephone/Broadband
Trade Waste
Website Hosting.
The software adds them all up and tells me what hourly rate to charge. It feels fool proof, as long as I make sure that enough work is coming in!

[nolonstacey]

One factor that I noted is you only have material costs and an added markup in your calculations.
Being from the US, one factor is missing. That is the labor charges for assembly of the parts into a frame. We call that a "fitting" charge.

I do have labour added within the calculations. For this frame it worked out to £35. There's very little mark up on the materials themselves, instead the labour is added as a single item. I think the problem with my calculations are oversimplifying things. Although it accurately calculates material costs and accounts for wastage, it essentially does that and adds labour and that's it. it can factor in additional costs for more complex jobs (float mounting, v-grooves, etc), but that's it.

[nolonstacey]

I'm £105 & £230 no vat. I have a few framers on speed dial and we often price check and compare notes. They're not local to me, but we work to the same standards, so it has helped me ensure I'm not undercharging.
When you say you have low overheads, are you sure that you are considering all of the running costs?

My overheads are low but I tend to see the overheads as covered by the gallery rather than framing. I've had the gallery here for 11 years but only added the framing 2 years ago. I make far more from the gallery than from framing so I guess that's why I see overheads for the premises and most things that don't relate directly to framing as covered by the gallery. Nothing other than the initial machinery outlay and the amount I order from the suppliers has increased as a result of starting the framing.

[Justintime]

You're buying materials wholesale and adding value by cutting, joining etc. If you're not charging a proper markup on materials then in effect you are supplying them at a wholesale price?!

[nolonstacey]

Those assumptions would mean your cost of goods and labour (I've called it 45 mins to make it easier) are 22.01+30 = 52.01
plus 30% - (and many do not mark up their hourly rate but you must) = 67.61 plus VAT = 81.14.

It's definitely the mark up that I'm missing. In simplified terms, what I'm doing is:
What does the job cost me (inc an estimate of wastage)? + (How long does it take x hourly wage)

[nolonstacey]

You're buying materials wholesale and adding value by cutting, joining etc. If you're not charging a proper markup on materials then in effect you are supplying them at a wholesale price?!

That's what I'm seeing now! I've been classing my hourly rate as my 'adding value' but you're right, that means the customer is getting the materials at wholesale price!

[nolonstacey]

I do think I need to trial some software again. Being completely Mac based, there are very few options that don't require Parallels to run them - and I've used my my parallels trials. So to trial any would require me to buy parallels up front. As far I can see, I-Framer is the only one out there that will work on a Mac. I looked at that a while ago and really didn't get on with it. I can get to grips with the software no problem, I just didn't like it.

[JFeig]

The fact is that £64(without VAT taxes - as that is a constant pass though amount) is just not enough. You have to make a profit on just about every function of a gallery, frame shop or whatever, to put food on your table.

Have you done any real "cost accounting" as to what you want as a profit at the end of the year. This is necessary. No matter what you call the expense category, it is subtracted from the amount placed into the till at the end of the day.

There are 2 profits for any business, one is the wages you earn as an employee/owner-operator and the other is the profit of the business (return on investment). If you want to be paid for you skills as being self employed you have to charge accordingly to survive. Adding a framing department is additional income for you that requires additional time, investment, and a "value added" feature to your business.

[nolonstacey]

There are 2 profits for any business, one is the wages you earn as an employee/owner-operator and the other is the profit of the business (return on investment). If you want to be paid for you skills as being self employed you have to charge accordingly to survive. Adding a framing department is additional income for you that requires additional time, investment, and a "value added" feature to your business.

I am seeing the error if my ways!! I certainly don’t want be cheaper than anyone else. I genuinely thought I was pricing my framing at a rate similar to other framers. I’ve been a full time artist for 17 years but, if anything, that gives you a skewed view of framing costs. Before I framed my own (I’ve always mounted my own work), I bought frames in bulk from a local framer but I would do all the putting together, as well as getting a trade discount, so the cost was very low.

On another pricing note, I’ve noticed more and more London based framers seem to simply give each moulding a ‘finished frame price’ per metre. So if, for example, a customer picks 6000OA, and it’s priced at £55 per metre, they pay £100.65 for a 406x508mm frame! I’m sure they come to the price per metre in the same way the rest of you do, they then just simplify it. And I’m sure they then add to that anything beyond a standard framing job.

[JFeig]

Just remember that my ambition is to assist. This is one of many things that is not always taught in art schools. I have also taught would be inventors the need to know how to price things correctly.