Advice needed from a picture framer

JenT

I started a very small picture framing business from home six months ago and I am worried that I am underpricing my product.
All my customers are telling me that I am, which has got me worried!
I am not trying to undercut anyone (although there are no frmaers in my local town anyway) but I obviously have no overheads to take into account.
I am working out my costs (from wholesalers) for the glass, boards, moulding and sundries (including the VAT I've paid) and doubling it (so adding 100%). The only place I think I might be making a mistake is how much I am allowing for wastage bearing in mind that you never get an equal number of mounts from one sheet of board etc. I am also not adding anything for equipment as I reasoned that it was part of my start-up costs that would come from my profits (that's already sounding daft isn't it!).
Would any framers out there be willing to let me know roughly how they price so that I know I'm not doing myself out of justified profits!
Thanks in advance
Jenny

bridiej

Why not do it the easy way and phone round a few posing as a customer?

JenT

"Why not do it the easy way and phone round a few posing as a customer?"


You could do that for other businesses that just buy in and sell the same items but you are using at least 4 different raw materials to make a frame. It also depends on size and which frame style / moulding you use! So not quite that easy.

But thanks for the thought.

Pennywise

Don't undercharge yourself. You will end up being a busy fool! If the demand is there, it is far better to charge double and work half as hard than to charge half and work twice as hard. Remember, the majority of new start businesses don't survive and the majority of those that fail do so not because of low demand, but because of bad management (including pricing mistakes!)

Don't try to "factor in" everything into one too-simple formula. You have your materials to pay, your time to charge and your equipment to charge. A big frame may take the same time to make as a tiny one - using your method, a tiny frame may cost far too little and a huge one may cost far too much! I've had a few things framed in the past and the charges have been between £20 and £40 for fairly average sized items in fairly standard frames.

Firstly, you need to mark up your material costs to take account of all the "overheads" associated with stock-holding. You will have off-cuts that may or may not be useable. You will make mistakes which need replacement. You also need to factor in your time and costs of procurement of your stock. Ordering takes time, travelling to your suppliers takes time and costs money. You may have to pay more for insuring your stock as the values increase, you have money tied up in stock which costs you interest. Your 100% mark up may only cover the overheads associated with your stock and procurement and doesn't actually contribute to your profit at all.

Secondly, you are spending your valuable time on the creation of a finished product. You must charge for your time as well as materials. I would suggest a minimum of £10 per hour (after all you could earn £5-£6 per hour in a superstore!). When you are quoting, use your best estimate at how long it will take you to make the item. Add your time cost to the marked-up materials cost.

Thirdly, if your equipment is relatively cheap, you can probably ignore it in your costings, but if you have expensive equipment, in comparison to the product, then you need to absorb its costs into your prices. If the equipment costs £1,000 and you expect to use it to make 200 frames before it needs replacement, then add £5 per frame to cover it.

So using your current method, a frame with £10 of materials would be priced at £20. However, if the materials are £10, your time is one hour, perhaps it should be charged at £30 (i.e. materials mark up of, say, 50% top £15, one hour time at £10 and £5 for equipment use).

An alternative method would be to work backwards. Decide how much you need to earn (say £15,000 p.a.). Then estimate how many frames you could comfortably make if the demand was there (say 5 per day - i.e. 25 per week, for 48 weeks gives 1,200 frames). Then estimate the likely materials you would use to make 1,200 frames (say £15,000). Finally estimate the depreciation of your equipment for that year, say £1,200). Your total costs would be £16,200 and you need to earn £15,000, so your total sales price needs to be over £31,200 - you are going to make 1,200 frames, so the average cost per frame will be £26. You can then have this as a base price, charge less for smaller frames and charge more for bigger.

Finally, a few words of wisdom.
If your customers say you are cheap, you are grossly undercharging.
If your customers don't mention your price, you are undercharging.
If they say you are expensive, your prices are right.
If they don't buy your items, you are over-charging.