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The discount game


#1

Hi Orchid, I know the subject of pricing has been discussed at length
many times here, but something happened recently that has us a bit
puzzled. We sell natural stones in handmade settings (mostly
cabochons in argentium sterling) and we’ve worked hard for many years
to find sources for the best quality stones at the best prices, and
since we design, fabricate and sell all our own pieces from our own
shop we can offer our goods at a price below that of most of our
competitors. Anyway, the other day my partner was walking past
another shop and noticed in the window a piece of larimar, in a
pre-made glue-in type setting, with a crooked bail no less, and
couldn’t help but ask the price. This was a low quality stone, very
pale with no pattern, about 15x20mm, something we would sell for
around 65 dollars if we even bothered with it. The starting price at
this place was 800 dollars, but immediately came down to 300,
“special price for you”. We were pretty shocked to say the least.
What we are now wondering is are we shorting ourselves or are they
totally ripping off their customers? maybe a little of both? Should
we triple our prices and offer 50 percent discounts on everything
just to make the sale? We really don’t want to play that game but it
seems like everybody’s doing it. Is this normal? We came to this from
an artistic perspective and don’t really have any experience in “the
business” other than our ten+ years of building our skills and going
from humble street vendors to well respected artisans with our own
shop. Are we missing something here or are we the only honest
jewellers in town? Also I should say that we are on the notorious
Alaska cruise ship circuit, not known for it’s honest jewellers.

Thanks,
Doug and Sarah


#2

I think that you are in a good position, because you have been
working on producing a quality product. Now you need to work on
alittle bit of educating your customers and potential customers about
the differences and the quality reasonsfor owning/chosing your work.
I’m sure you can come up with several benefits without even trashing
the competition, don’t take that road, take the higher one. I think
it was Leonid who said recently that Tiffany sales have been up for
the last ( Ican’t remember how many concecutive quarters I think it
was 8?). Why is that? Partially I’m sure it’s because they are
"Tiffany" but it’s mainly becuse they ownthe mental real estate in
everybody’s mind that it is a luxury-Quality brand. And they make
silver jewelry made from the same raw materials that you use( that
might be a great “ad line” right there…you’re, welcome for that
one, LOL).

Getting back to your situation;

#1 I think that you could put your work in nicer boxes,

#2 I think you definealtely need to have a little story card with a
picture of you two on the front and alittle story about how you
create your work,inspiration etc. etc. look at some artist
statements, they have a special language I call it “artspeak”. Adopt
some of thier structure/style, and for pity sake do not mention
anything like “ever since I was a child” or basically any reference
about child hood inspiration, that is way too cheesy and lazy,
remember you make high quality hand crafted one of a kind work, your
packaging and presentation needs to represent that, It’s all about
"romancing" the sale. I will bet a high percentage of your sales are
gifts. Make those people giving the gifts proud of what they are
giving with a box that reflects your passion for the jewelry
inside.

#3, now for the fun part, if what you are saying is true about your
competions pricing, you can mark your work up and still be way under
thiers, remember you need to be able to educate once you have them in
front of you, and it sounds like that won’t be hard for you because
you were able to convince me ona forum, to respond to you in a
lengthy email!

#4…Oh never mind that’s enough for now.

Go forth and prosper my friend,…Gregg.


#3

Doug and Sarah,

I have an opinion about this and I think there are pros and cons
behind tripling your prices and offering big discounts or sticking
with your old price and offer minimal discounts. What I do is, if I
don’t plan on getting any advertisements that says 30%-50% off on all
products I keep my prices at low, but if i have plans to advertise, I
have to reprice all my stocks and offer 30%-50% discounts.

Stores would overprice so they could possibly rip off a customer if
they don’t ask for a discount but remember some really need to triple
or more their prices in order to cover for the entire operation
process plus profit.

Marvel


#4

Doug and Sarah,

My response is not the answer you may be looking for, but comes from
my heart and soul as well as my awareness of life around the world,
over a long period of time.

Bottom line, IMHO is Ethics and Integrity. I have come to realize
cultural norms enter into this as well. The situation you describe
is outrageous. This store is interested in its financial position,
not in the customer. This is not because of the economy we now are
going through, it is as old as history. There is always someone
looking to get more money for less product. Not sure how much repeat
business they get.

What you have going for you are ethics, integrity and quality. Lose
one of these and you stand to lose all. Customer loyalty, and
customer service go hand in hand. You have a ten year track record,
I believe some of your customers have been with you every step of
the way. If you do want to increase your customer level, offer your
regular customers a 5 or 10 % discount for each referral which
results in a purchase… Follow up with a thank you and a discount
certificate on their next purchase.

No need to compromise your integrity because another has none, stay
above the fray. you will prevail in the end.

Culturally, it seems to be a game of one upping another. I do not
like bargaining, in some countries, I am considered a fool for not
playing that game. If the price quoted seemed fair for what I was
buying, I bought it. The merchant was stunned and some even asked me
why. A Thai boyfriend asked me to keep my mouth shut while he
negotiated the price.

In some countries, I simply did not buy from some stores depending
on the nationality of the owners. These are absolute cultural
differences. Change not very likely.

Hugs,
Terrie

Teresa Masters


#5

Doug and Sarah,

I personally find that a very distasteful practice. I won’t do it. A
fair and honest price period, well maybe for a dear friend I’ll
discount even down to almost cost but at my choice and offer.

I once worked as the repair geek in a retail store, the 70% off
signs took up more of the display space than the jewellery. I was not
high enough up the food chain to know their pricing retail structure
but was responsible for repair quotes. If they knew what I was doing
I would have been fired sooner. Honesty and trust count, a little
customer smile can go a long way too. Then they will be back with
their friends.

jeffD
Demand Designs
Analog/Digital Modelling & Goldsmithing
http://www.gmavt.net/~jdemand


#6

There is nothing wrong with making money. Selling something that
cost an hour’s labor and $50 for $800 is not illegal, it is not
immoral, it’s not ripping someone off (unless it’s your time and you
think it is), heck it’s not even a bad idea. Lying about it to make
the sale on the other hand is all of the above. Marking up to mark
down is illegal. Marking up because you are proud of your work,
especially if people are willing to pay for it is not. Discounting to
move something out that you’ve had too long isn’t either. Value is
not equated to cost, it is based on perception, a combination (or
negotiation) of both yours and your customer’s. You do yourself a
disservice if you don’t do everything you can in an honest,
straightforward and legal way to enhance the perceived value of your
work, including pricing it at what you really think it’s worth or
what you would really like to sell it for.

Don’t worry about what the other guys do concerning marking up to
mark down. You can’t control it, you can’t enforce the laws, if you
bellyache about it publicly for consumer awareness, it makes you look
bad. You are your own best advisors about how your business should be
conducted, ethically speaking, so listen to your hearts. Then just do
what you do best and do it to the best of your ability. Think about
asking more for it too.

A little Devil’s advocate for you. A lot of people that immediately
give discounts like you describe do it more out of a sense of
insecurity than an attempt to mislead. They’ve been beaten up on
price by so many for so long that they just flinch out of habit,
their immediate first reaction to resistance during a sales
presentation is to drop the price rather than find out what the real
resistance is about. That’s a mistake, a pretty big one in sales, but
it’s not necessarily part of an attempt to mislead. They lack the
courage of their convictions and the pride in their work that they
should have. Holding your ground in the face of polished wheeling
and dealing can be really tough, especially if you’ve convinced
yourself that you’re right on the ragged edge of pricing. Doing it
day after day, piece after piece can wear someone down. A lot of
those cruise ship passengers got to where they are by being those
wheeler dealers and know exactly how to intimidate an artist,
especially one that’s a little insecure about their work in the first
place. Just a little food for thought about how it might have come to
be that way at those other stores.

Dave Phelps


#7

Doug & Sarah,

Don’t play the “sale” game that you saw being used by a seller of
poorly fabricated jewelry mentioned. Sounds like it may have been
some cheaply made imported pieces poorly made, mass produced. Keep
your pricing and explain your workmanship and let your products
speak for themselves. Explain about the stone, how you design and
make your beauties. Give each item a name which also helps it to be
more memorable and enticing. When someone buys your piece they are
also buying the story behind it.

It might be effective to offer a small discount, 10 or 15 percent
for example, for purchasing multiple pieces. I would be suspicious if
someone started at $800 and in a few minutes dropped the price to
$300. Have fun on your circuit and good luck with your sales.

Pat Gebes


#8

Hello Doug and Sarah;

If you’ve been observant as I have in my 40 some years in retail, you
will recognize this as just another element of the “race to the
bottom” mentality. First, I’ll refer to this phenomenon as RTTB.
RTTB says that customers are stupid and will only respond to a SALE!
because they believe there is only a real bargain afoot when this
happens. They aren’t smart enough to understand it’s a rigged game,
that prices have been artificially inflated, then artificially
discounted. Phase 2 of this mentality says, OK, they’re on to it,
but it’s like Big Time Wrestling. Customers know it’s scripted, but
somehow conjure enthusiasm as if they are part of the charade. To
apply this to RTTB mentality, customers know about the
inflated/discounted racket but think that it’s the only time prices
are realistic in respect to value. Fact is, ALL pricing is more or
less arbitrary, and can be low profit in respect to high volume, or
high profit because part of the “value” is brand snobbery.

I could go on about this, I’ve made quite a study of it, but let me
give it to you straight and concise. DO NOT pull this crap. Customers
may, at times, not be well informed, but they can still have their
senses about them and their instincts will tell them that you are a
bottom feeder like the big box/chain/mall stores and are trolling for
suckers who buy into this baloney about 50% off (after we jack up the
prices). They will also rightly get the impression that you think
they are stupid enough to fall for this. If you want to do a sale,
mark it down from your regular prices as a way to draw in new
customers and clear out old inventory. That is a legitimate sale.

I don’t do sales, but I will bundle multiple items for a discount,
whittle prices for customers who are on the fence, and give good
deals to repeat customers. This has to be done carefully, so they
don’t think you had overpriced the item to begin with. Look at the
tag, pull out a calculator, think about it, and don’t be afraid to
stand firm if you need to. I’ve even said, “I’m tired of putting this
one back in the safe every night, it’s yours for $” or "I’ve got a
little room on this and I think you’ll enjoy owning it, so I’ll go to
$. Joking around with some customers, “you’re killing me on this, but
you’ll be back, I know you are addicted to jewelry, so I’ll make it
up in volume, right?” "I’m going to have to cut my own pay for doing
this, but… " That, they know, is baloney, but it’s harmless and
they know that too.

I’m going to be pessimistic here with a little hyperbole:

INTEGRITY=SURVIVAL!

In a small business, in a small town, if you are scrupulously honest
and fair with your customers, your good reputation will spread like
wildfire and you will accrue generations of loyal customers. I see it
here every day. If you don’t have the traffic that a box store or a
cruise ship has, you won’t get away for very long with confusing your
customers about how a sale is proceeding. Confusing? I mean, it’s not
good enough to just not rip them off, you need them to feel confident
that everything is above board, you sincerely want them to get value
for their money. Value is simply a combination of quality product,
quality service, and a price that is not so low as to be suspicious
but not so high as to seem arbitrary and greedy. Of course, you
should actually price your product in a way that is fair to yourself
and good for your business. And that requires knowing what your real
overhead is. It’s taken me decades and I’m still learning. And by
the way, don’t fall in love with any of your inventory. It’s there to
sell, if it’s sitting too long, it could be overpriced. Sometimes
it’ll sit if it’s priced too low, but not often. Best of luck.

David L. Huffman


#9

Depends on what kind of work you take pride in. For some (like the
shop you visited) the ‘work’ is taking money from the unsuspecting
and the ignorant. Even the most cunning have to keep moving to new
fields because word soon gets out as to what they are, tourists and
cruise ships included.

If your pride is derived from producing a good product and selling
it at an honest price, and you wish the customer to be happy with
the purchase, then the customer will praise you and your product for
years. You will prevail without the need to advertise, nor indulge
in desperate sales tactics, and the longer you stay the stronger you
get.

Leave the card sharks to their own devices…they will either change
their ways or move on to new pickins!

Alastair


#10

Thanks for the reassuring advice everyone. Trying to be ethical in a
place where what I would call unethical standards are basically the
norm can be frustrating at times, but it does pay to be honest and
real with your customers because they come back happy and buy more
and bring friends as well. So we’ll probably make some adjustments in
our price structure but we’ll continue as always to try to give a
fair deal while compensating ourselves adequately for our time and
skill. Just one thing though Dave, "A lot of people that immediately
give discounts like you describe do it more out of a sense of
insecurity than an attempt to mislead. "I can promise you with near
100 percent certainty that everyone at that shop who balks at the
price gets the same discount, and it’s not insecurity, it’s just
store policy. We hear about it all day from customers that have been
to this and other stores of their ilk. They even instituted a no
returns policy after too many people would buy an item there, then
come into our shop, go back and return the item and then come and
buy something from us. funny eh? Anyway I just wanted to hear what
you all had to say, actually expected to hear more people say to
triple the prices and have a half off sale, since that’s what
everyone but usdoes around here. Thanks for being real everybody.

Keep up the good fight, D&S


#11

Once upon a time, I upon a time I had a shop in a mall. There were
the chains stores that the 70% off “sales”. We would have a ring that
was similar one of their “sale” rings, ours was less than the
discount price, and the customer wanted to know if I could discount
the ring I had. They did not want to buy unless it was on sale, even
if it was already less by $50 or more. Happened repeatedly.

Richard Hart G.G.
Denver, Co.


#12
The starting price at this place was 800 dollars, but immediately
came down to 300, "special price for you". We were pretty shocked
to say the least. What we are now wondering is are we shorting
ourselves or are they totally ripping off their customers? 

WOW a 75 % discount !!! DUH ! 75 % off WHAT ???

About 99% of us in the jewelry biz face this problem every day, when
it comes to sales. In my opinion it is impossible to talk about
discount price point tactics without saying something negative about
people and or the situation. In my opinion the huge discount thing
can only work if the buyer makes an impulse buy or is uninformed
(blind purchase) about what is good or bad about the product & the
price and it cannot work with out the buyer being greedy thinking
they are going to steal it from the seller.

If you are going to hold the line in the sand drawn by your
integrity you will lose sales to those sellers who maintain a more
predatory approach toward tourists coming into town off cruise ships.
Quite often the cruise ship’s crew will warn passengers in advance to
shop around before buying Just this week i was able to keep the
attention of a young couple who had enough clarity of mind to listen
and believe me when i told them everyone can sell a junk diamond for
nothing. No one sells the quality diamonds cheap, then i proceeded
to dissect the discount game for them and afterthey shopped around
they realized i told them the truth they came back andbought what
they wanted. - goo


#13

Hi Doug & Sarah, As many have stated-including John- you have spent
time,energy, and much skill to be where you are today…I agree that
you must let the public know.Perhaps a story board with pictures and
you philosophy for your display window… It doesn’t have to be big,
just eye catching.

Some store here are using digital frames with an explanation &
pictures of stock In Venice, Italy last fall we saw the same issue
being addressed by some savey stores that had the similar products as
the competitors who did the deep discounts. But these stores had
their product & sales statement posted stating that their prices were
genuine, the products were genuine and they welcomed all to come in,
browse and see why the “discounters” were really not giving the 70%
off like they claimed…We even educated our female cousins in price
gouging/and false % off and these ladies can shop!!! And mind you,
this is tourist central and they even have to compete with the idea
of cheap “Murano glass”/ aka made in China… Here’s a post that might
sound familiar and I think it’s worthy of going in the front
window::" We’ve worked hard for many yearsto find sources for the
best quality stones at the best prices, andsince we design,
fabricate and sell all our own pieces from our ownshop we can offer
our goods at a price below that of most of ourcompetitors."

Hope this helps,
Jo-Ann Maggiora Donivan, finally summer in SF


#14

Don’t worry about what the other guys do concerning marking up tomark
down. You can’t control it, you can’t enforce the laws, if
youbellyache about it publicly for consumer awareness, it makes you
lookbad. You are your own best advisors about how your business
should beconducted, ethically speaking, so listen to your hearts.
David’s quote is the only thing that means anything, especially the
first sentence. Let me tell a little story of my last week that’s not
exactly about discounts, but it shows something nonetheless. Store
owner calls me, “Can you help me out?” This whole story is about a
favor, it was never going to be really profitable, understand.
“Customer wants platinum wedding band, I have one used. Size from 11
to 7 1/2, remove extensive and deep engraving and set a peridot and a
ruby ~inside~ the ring, as they are birthstones.” So, the ring
arrives and it’s a cobalt-platinum Stuller ring of 1.2mm thickness.
He’d like to spend +/- $100, remember. For size and set, that’s
do-able. I say, “Well, it’s just not going to fly - once the
engraving is removed it’s going to be a millimeter thick, and aside
from that being a really flimsy ring there’s no way we’re going to
set stones inside without drilling holes, which is unacceptable. What
we CAN do is recast the metal into a new ring of the smaller size,
and the metal weight is nearly even.” This is Monday afternoon. So,
the caster agrees with the plan and the metal weight estimate, but he
doesn’t have cobalt (everybody hates it…). He calls to borrow
a button, and this and that and it turns into Thursday morning - day
before yesterday and it needs to be delivered yesterday morning so
they can get married today. Caster pushes it, casts too hot and the
casting is 30% larger than the wax was.

5 grams of platinum or around $300 just in metal. For real reasons
he can’t take the filings back. Bottom line, we all three of us
negotiate a position where we all lose something and we all make
something. We’re all friends, we’re all pros and we’re all adults. We
will live to fight another day. Or, as I told my store owner, “There
were some problems, mostly because of the rush, but this is a ring
that I can be proud to deliver to you, that you can be proud to
deliver to your customer, that he can be proud to own and wear.
That’s what’s important, that it’s not some flimsy, repaired,
patched, POS.” Everybody’s happy, especially the customer. Everybody
will be back, there will be more business, etc. and etc. It’s not how
much you make an hour, it’s how much you make a year… JD


#15

Doug and Sarah

That shop will not last. Unlike PT Barnum, I believe the number of
suckers is finite. Keep a record of all your clients, their likes and
dislikes, their birthdays, anniversaries and children’s notes if
possible. Send them an email of congrat or best wishes. Make it a
fancy email on gorgeous stationery. Send notes through the regular
mail too. Do name your pieces – it develops a life and hence a story
and print out a story with each piece. There is so much to say about
a piece of jewelry, the stone, the metal, the design. And when you
feel you have’ a piece that would wow them again, don’t be afraid to
be proactive and let them know about it. Each client IS special -
make them feel like the special people they are. You won’t go wrong.

Barbara


#16
I do not like bargaining, in some countries, I am considered a fool
for not playing that game. If the price quoted seemed fair for what
I was buying, I bought it.

We all bargain, if not individually then collectively. When we
decide something is “too expensive” or “a good deal” and then either
buy or not and thereby make our offer to the seller, we are
bargaining, however indirectly.

I have been going to Thailand most years since '84. Depending on
where one shops, the original quoted price may be five times what the
seller considers acceptable. I have been offered stones in the
Chantaburi gem market at as much as ten times the current market
price.

Jerry in Kodiak


#17

Doug and Sarah- Never, ever apologize for your prices. Never compete
with bottom feeders.

The kind of person who shops for jewelry based on price alone is not
the kind of customer you want. You don’t want them in your store.

What we do is magic. " Wow! You’re an artist. I can’t draw a
straight line, etc." Play that up. If it was easy, everybody would be
doing it. Have fun and make lots of jewelry.

Jo Haemer
timothywgreen.com


#18

Funny you should mention diamond sales, the afforementioned shop has
had a “diamond clearance” sale for the past year…


#19

A related question…

Most of the posts are about 70% discounts for cheap work. But what
about serious artisans who mark up an additional e.g., 10% in order
to be able to give the customer a 10% ‘discount’? On expensive
pieces, it can come out to quite a bit. Does everyone do this? I’m
always afraid my prices are high enough (work-intensive pieces) that
I need to keep the price as low as possible. Do you folks think that
most people want SOME discount, even if it is small?

Janet in Jerusalem


#20
But what about serious artisans who mark up an additional e.g.,
10% in order to be able to give the customer a 10% 'discount'? 

I am quite sure there will be “ethical/moral” opinions about this.
Some from people who do not depend on their work for total financial
support. Practical is that if you mark up your work an extra 10%, you
deserve the extra 10% if you can get it from a customer who loves
your work. I always consider that the customer wants to support me as
an artist.

I have done retail for 40 years and you have a choice to make a line
in the sand and hold tight regardless of how much it hurts you, or
be flexible and use to 10% discount as a velvet hammer.

It is hard to judge when to discount, I try to wait until it seems
as if the customer has decided not to make the purchase, and then I
ask if 10% would make a difference. I make a lot of sales that way.

By the way, the last 2 years have been exceptionally rough
economically, and I am still here, sometimes I think it is not
because I am smart, but because I am persistent.

By the way, a reality test that would make sense, try doing it and
see what happens, that is the only way you will really know whether
it will work, and how you feel about it.

Richard Hart G.G.
Denver, Co.