Hello from Lichfield, Staffs

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TinaB
Posts: 12
Joined: Sat 15 Mar, 2014 11:17 am
Location: Lichfield
Organisation: Tina Bailey Framing
Interests: Photography, theatre, dancing, reading.

Hello from Lichfield, Staffs

Post by TinaB » Mon 21 Jul, 2014 6:38 am

Hello everyone. I hope you had a good weekend and weren't flooded! :D

I am just setting up a business and wondered if I could seek some help from your collective brains?

What pricing software would you recommend?

What markup would you recommend as average, or what criteria do you use for setting your prices? The pricing is the one thing I am struggling with and I want to try to get it as right as possible from the off :?

If anyone could give me some guidance I would be eternally grateful!

Many thanks and take care,

Tina

Roboframer

Re: Hello from Lichfield, Staffs

Post by Roboframer » Mon 21 Jul, 2014 8:39 am

Welcome to The Forum, Tina.

Here's some great pricing info from an old thread - well worth bookmarking.
Gesso&Bole wrote:PRICING FOR PICTURE FRAMERS

This is one of those never-ending questions . . . . .

I hope that my explanation of how I work out prices might help you price your frame hamishfour, but it may also provoke some responses from colleagues who have different opinions, and perhaps know better . . . . .

Sorry it’s a bit long, but its an important subject.

Under-pricing is rife in the UK picture framing market, so I suggest that you DO NOT look at what other people charge, and undercut. You will just end up earning even less than they do, and believe me, your customers won’t thank you for it – if you are too cheap, they will just assume you are no good!

The real answer is to look at the true costs associated with you undertaking the job, and earning a living. Spend a couple of hours working out the true financial make-up of your particular business, and then you will know that you are charging the right price to get you where you want to be.

There are 3 broad components to my pricing model.

Cost of materials
Overheads
Resources employed (time)

Cost of Materials
This should include the actual cost of the moulding, glass, boards, etc, and an allowance for the pins, glue, wedges, tape etc.

It should also include wastage. This includes the materials that you have had to purchase in order to do the job, that you didn’t actually use – say you ordered in a special colour of mountboard, and only used half the sheet – charge for the whole sheet. If it’s a standard stock colour, then charge for what you used, or rendered unuseable. So if you are left with a couple of millimetres less than half a sheet, count it as using 3 quarters of the sheet. A 2ft length of moulding left over is useless (next batch might not match exactly) so charge it in the framing cost.

Be ruthless with this – you will end up with 100s of feet worth of off-cuts that are great for the wood-burning stove at home, but nothing else because you will never get time to turn them into ready made frames. MAKE SURE YOUR CUSTOMERS HAVE PAID FOR THESE within the price you charge.

Finally include the cost of carriage (or the time and petrol if you pick up your materials).

Overheads
This will be very different if you are using your dining room table, as opposed to working from a High Street Shop, but the principles are the same.

1st make a list of all your outgoings which will be, inter alia, as below;

Rent
Rates
Utilities
Insurance
Telephone/Broadband
Website
Marketing/Advertising budget
Accountancy/Book-keeping/Govt red-tape
Bank Charges (inc credit card processing)
Cost of Finance (if you are in the lucky position where you have paid for all of your equipment, shopfitting etc etc, then I would still include a figure representing the notional cost of financing the amount of money you have invested in your business) – say equivalent to a bank loan for that amount repayable over 10 years – if that’s how long the equipment will last.
Staffing costs (inc NI etc) – don’t include yourself at this stage
Memberships and subscriptions
Equipment maintenance/blade sharpening etc

Then add it all up, so you have got a figure that represents what it costs you to run your business, and supply your service to your customers for (say) a year. Just for an example, let us assume that a retail outlet including the cost of 1 member of staff, all of those overheads came to £100,000 per annum. (This does not include an income for the business owner yet).

Once you have this total figure, you will need to work out how many productive hours you will be able to achieve in that year.

So, you might look at how many working weeks, and how many days per week.

This might be 52 weeks – 6 weeks holiday = 46 working weeks x 5.5 working days = 253 working days a year.

Here you also have to add in the productivity of (any) staff employed, as well as yourself.

So if you had a member of staff working 8 hours a day, he or she would probably be productive (actually framing work for customers) for about 6 hours a day, whereas I would be surprised if you, as the owner of the business could be productive for more than 5 hours, unless you are working much more than you should.

‘Un-productive’ work is absolutely necessary – and includes, serving customers, cleaning up, ordering stock, keeping records, mending or maintaining equipment, advertising campaigns etc etc etc etc. There is nothing wrong with it, and it needs doing. But for the purposes of working out an hourly rate it is important to be honest with yourself – I personally recon I can do 5 hours absolutely focussed framing work in a 9 hour working day.

So, let’s say you had yourself, and 1 full-time employee;

253 x 6 hours for employee = 1518
253 x 5 hours for owner = 1265
Total productive hours per annum = 2783

Now, let us assume that you have enough work to keep you busy for all of your productive hours (if not – you MUST be realistic and reduce staff hours – DO NOT let them become less productive).

For each hour of framing, (based on the figures above £100,000 costs / 2783 productive hours) you need to be charging £35.93 per hour (let’s call it £36) just to cover your overheads.

Resources
You haven’t paid yourself yet!
Here you need to decide what you are worth . . . . . again, a big pitfall for many business owners.

In this example above, I am going to suggest that someone running a retail outlet 6 days a week, and employing a member of staff, has got to be worth a minimum of £40,000 per annum – but insert what you feel you are worth.

To earn £40,000, the business must charge (40k/2783= 14.40) another £14.40 per hour.

So our hourly rate is £36 + £14.40 = £50.40


PRICING
So here we have it. The price charged should be.

Materials + Wastage (inc carriage) + HOURLY RATE multiplied by HOURS TAKEN + VAT if applicable = PRICE

So using the above example, a framing job that takes 1.5 hours to complete would be charged out at

Materials and wastage (say) £25-50
Hourly rate (14.40 + 36) £50.40 x 1.5 £75.60
TOTAL COST £101.10 + VAT

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prospero
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Location: Lincolnshire

Re: Hello from Lichfield, Staffs

Post by prospero » Mon 21 Jul, 2014 8:45 am

Hi and welcome Tina. :D

Are you talking custom framing? You mention mark-ups, but what you have to remember is that you are not simply buying stuff and selling it on in the same state. Lot of labour time involved.
One thing that is essential from the outset is to calculate your fixed overheads. What it costs you per hour to stand still. :P Work out the cost of power/phone/rent/rates/tea/coffee/biscuits. Omit nothing. Then how many hours you are likely to work per year. Remember that there is a lot of dead time that can't be billed directly - paperwork and general admin - sweeping the floor....etc.
You should then arrive at you expenses per hour. Then you have to decide what you want to earn per hour. That's a personal thing, but whatever the figure, add that to your fixed hourly expenses to arrive at an hourly labour charge.
Material costs are tricky, but work on what you consume in a job, not what ends up in it. As far as mark-up goes, add enough to cover wastage. Be generous - +30% across the board is a reasonable figure. Remember that offcuts, even big ones don't have the same value as a full length or sheet. Essentially they have no value. Having 40ft of a moulding in short bits is not the same as 4 10ft lengths. get my drift?

Some folks use POS software and find it invaluable. Don't use it myself. It depends a lot on the nature of the work you do.
Watch Out. There's A Humphrey About

Jonathan
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Location: Kings Langley, west Hertfordshire
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Lettering - Typography, Letter forms, Calligraphy
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Re: Hello from Lichfield, Staffs

Post by Jonathan » Mon 21 Jul, 2014 9:52 am

Hi Tina

I've also just joined this Forum and am in the process of setting up in picture framing and trying to fathom everything out. So although I can't offer guidance in picture framing as such, I have run businesses in other, sort of, related industries - creative services, design and marketing.

The advice posted so far is excellent and very useful for me too. Further points you should take into account are: maintenance and replacement/upgrade of equipment and marketing. If you damage a blade and it costs £50 to re-sharpen, where is that money to come from? Also how are you getting customers? It takes a lot of time and/or costs money - without ongoing sales and new customers you don't have a business. Marketing/advertising is very costly.

Also don't confuse income with profit! You need to charge enough to cover ALL costs, as prospero says, including paying yourself - AND you must also make a profit on top of that!

Hope this is of help, your post has helped me.
Jonathan
Picture Framers and Calligraphers
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http://lettersandframes.uk/

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Tudor Rose
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Re: Hello from Lichfield, Staffs

Post by Tudor Rose » Mon 21 Jul, 2014 10:27 am

Hi Tina and welcome to the Forum

We swapped over to using the Framiac pricing software earlier this year and have been very happy with it and would highly recommend it. It takes into account all the points raised by others ^^^^ about including ALL your overhead costs when working out your prices as well as the cost of materials. There are other pricing software systems around and you may find it useful to download trial versions of them and see which one suits you and your business model the best.
Jo Palmer GCF(APF) Adv (Textile & Conservation)

Proud to be serving as current Chair & Master of
The Fine Art Trade Guild http://www.fineart.co.uk
Member of the Guild and the PPFA

TinaB
Posts: 12
Joined: Sat 15 Mar, 2014 11:17 am
Location: Lichfield
Organisation: Tina Bailey Framing
Interests: Photography, theatre, dancing, reading.

Re: Hello from Lichfield, Staffs

Post by TinaB » Mon 28 Jul, 2014 6:08 am

Hello all,

Many thanks for the fabulous advice! It certainly helps as there are some things I had not thought of to incorporate into the pricing.

I am so glad that this has helped you too Jonathan!

Take care and happy framing all :D

Tina

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