What is Cash?

Another thought comes to mind in this ‘discount’ thread. I often
don’t agree with David Geller’s mind set on pricing, but one point I
have to heartily agree with. If that credit card percentage is that
important to your profitibility, maybe you are too low to begin with.
At least in the retail arena, I wouldn’t think that a reasonable
’loss’ to the credit card company should really hurt us in the name
of making a sale. And, is it really worth fighting over 3% or so,
and then losing the sale? One point he has been making recently is
that it is far better for the bottom line to move an item at a
discount than to hold it indefinitely waiting for the ‘right’ buyer.
Outside of the discounts I give for volume in my wholesale dealings,
I base my willingness to discount on some often non-objective things.
My willingness to hold onto a piece forever if I don’t discount. The
overhead on the sale. My desire to court a future sale, especially
if I am courting a new wholesale customer. And totally without
objectivity, my mood that day and the attitude of the buyer. Jim

Hi All; I’ve stayed out of this cash vs. credit card discussion
because I am a wholesaler, exclusively, and I haven’t had a need to
accept credit cards. But I’ve been concerned, and forgive me if I
seem insensitive, but it seems that this issue of the cost of doing
business with credit cards has only become a serious concern as of
lately in the retail world. Perhaps I’m wrong. I think it reflect
the present economy for the most part. I wonder if, ten years ago,
it would have been such an issue. But I’m horning in here with my 2
cents because I think I’ve just heard the voice of reason in Gerry
Galarneau’s post.

He says;

    I know the point on each of my items where it is no longer
worth me making the item to sell at that price.  I call it the end
point.  My end point takes into consideration all overhead
including the total amount of fee charged by credit companies over
the year. Using this system the cost of credit cards becomes just
another overhead that is rolled into the total price. Gerry

Thank you, Gerry, I think this is very insightful on your part, and I
hope some of you see the value of his observations and conclusions. I
don’t think it’s worth risking your relationship with your customers
by trying to “educate” them in one way or another that what they pay
their credit card company for a purchase isn’t worth that same amount
to a merchant. And I think Gerry’s solution to this problem avoids
that problem while at the same time providing a solution to the

David L. Huffman

   Another thought comes to mind in this 'discount' thread.  I
often don't agree with David Geller's mind set on pricing, 

And I wonder how objective any of you can be if you have not tried
to revise your prices according to what Geller teaches. My reality
is that I can charge those prices based on how professional I am and
the quality of my work.

Car repair shops have repair guides that tell them how to charge for

labor for each job. If the mechanic does it in less time, because he
had more experience or he is faster, (assuming the job is done to
the highest standards), do they charge you less. Not! How many of
you have occasional or frequent losses due to underestimating the
time of difficulty of the job. We are not dealing with a guide that
tells us what to expect. How often do you work on something that
another hack worked on, and once into the job, you discover you need
to do extra work to replace or redo what someone else did poorly. I
can charge more on the front end, charge less if no problems occur.
Less stressful for me than calling with a higher quote, or eating it.
Let’s be real, David Geller has tried his formula’s with many
jewelers , had a lot of feedback and has had a degree of success
from which to base what he is teaching.

Seems to me, this thread seems to be about fear of loss.  For me it

has been about going past the limitations I think will cause me
problems and taking a risk to find out the reward of what I have
worked so many years for. It is about getting paid for my knowledge
and skill as a Gemmologist, Goldsmith, and Retailer with the most
honesty, ethics, and integrity. People will pay you for those
qualities, they get security, and higher quality service and

I have doubled some of my repair prices, and they still like me. In

the case of repair, the people who were not realistic about what a
repair would cost still don’t get the work done, the rest say okay
with a smile. That’s my experience. Have fun, make money. It’s legal.
I get paid to play and learn new processes and techniques. What else
could I do that would provide me with more challenge. About the tread
about “What is cash?”, no mention has been made so far, and it leads
me to wonder. The real reason to do it for cash is to not charge the
customer sales tax, and to avoid paying the IRS their share of your
income. I realize that there is no one on this message board that is
unethical enough to do this. But,if you did do it, and I would not
advise anyone to do this, you can give the customer 20% off, and you
will come out ahead. And while at a craft fair, for a couple hundred
bucks it might not matter, but when you sell something substantial,
some people know they will find someone who will cooperate. That is
what they are shopping for.And we all know that we get good value
from everything the government spends our money on.

Richard in Denver

Cash, to me, is something I can take anywhere I want and get
something I want without leaving some sort of personally
identifiable paper trail. And, I don’t have to pay an additional
fee for the “privilege”. To my way of thinking, I should be able to
negotiate at least a 5% discount for “cash” from anyone who takes
charge cards.

You guys wanna talk real cash? Now, I’m only referring to the ones
doing business in the United States. Look into getting paid in real
money - gold and/or silver coins currently minted in the US, at face
value printed on the coins. I know some who are doing it, and it
does work - and is legal. I’ve managed to do it a few times,
myself. Only if you use American coins. You can figure your
charges on the value of the metal, but only charge/get paid using
the face value of the coin. Get “paid” $50 for a $350 job seems
wrong till you think about it. Lower your reportable taxable income
by using the amount paid based on the face value of the coin.
You’ll pick up the remainder of the money once you convert the coin
to Federal Reserve Notes, but that can be avoided by using the coin
to buy something yourself using the coin’s face value. It’s not an
easy system to work all the time since everyone’s used to using
either FRN’s or electronic “money”, but it can be worked with like
minded individuals. What you will be doing is using the buying
power of the coins instead of the actual face value. Almost a
bartering system, but not quite since you will be using an
established price printed on the coin.

I’m sure some of you will want to shoot holes in this, and I’m not
interested in getting into some long discussion. But it will and
can work, but only on a limited basis with a network of like minded
people. And is perfectly legal. Think about it and do some
research on your own. The is out there if you look hard
enough and can read through the govt. legalese doublespeak.

it seems that this issue of the cost of doing business with credit
cards has only become a serious concern as of lately in the retail

Hi David,

I think you might be misinterpreting the motivation behind the “cash
price” issue. I agree with a recent comment that if your credit card
percentage is an issue, your prices are WAY too low!

In my experience, it goes back to the question we’ve discussed about
price negotiation, usually at the request of a prospective customer.
I loathe negotiation on a piece whose price is clearly marked. As an
artist, I feel the prospect is devaluing my work, which is

Nevertheless, there are some who will not buy if you don’t
negotiate. I think it has something to do with a power trip, and the
joy they get from “getting over” on some poor artist.

The other assumption this customer makes is that a true cash sale is
“off the books” and you (and they) will not be paying sales tax on
the transaction. Big blinking WARNING sign. Try this at your own
risk… you are in for a heap of trouble if the tax man catches you.

I know these issues don’t impact your wholesale business, but
thought I’d share the retail perspective from the little guy’s point
of view.

All the best,


Dave Sebaste
Sebaste Studio and
Carolina Artisans’ Gallery
Charlotte, NC (USA)

Glad it works for you. But, my post wasn’t about bashing his
pricing, it was about agreeing with his thoughts on moving
merchandise. If you are pricing yourself profitably, I think it is
often better to use incentives like a cash discount to move
merchandise. David’s point in one post is that it costs us a lot of
money in the long run to hold onto merchandise just so that we can
sell it at full price. I agree. My post also wasn’t about repair
pricing. I don’t give a discount for cash there, because prices in
our shop are plenty low enough. Unfortunately, I have little power
to raise them, or I would revamp the whole price list. For
establishing those prices, though, I prefer to have a formula in hand
to determine mine rather than a book of prices that don’t take into
consideration all of the overhead factors. I have only seen David’s
book once, briefly, but I recall, I think, that his is a list of what
should be charged, not how to arrive at that.

Material costs are relatively constant across the world, but many
others aren’t. While I am not really happy with my current list, it
is profitable enough to live with. The circumstances will change
when the time is right. I simply advocate establishing pricing based
not only on material costs, but labor and overhead costs. Surely it
can’t be wrong to assume that I can charge less than a guy in
Manhattan, even at the same labor costs, because my overhead is much
lower. Or even comparing with a guy who operates in a local mall,
and pays much higher rent. Jim

Hi Everyone and Dave,

The Orchid thread of “What is Cash” is very interesting. After
speaking with many people I know, the reason they pull out credit
cards is because many of them receive bonuses: free golf fees, air
miles to use, using the Credit Card Company’s “rewards” to get more
out of spending by using a credit card.

Clyde’s response was great. Giving the customer a 5% discount and
gently reminding the customer that the price was for “Cash”. For
those of you who travel to trade shows, craft shows, art and jewelry
shows, have you considered planning on discounting the items (or at
least some items) you have for sale prior to selling it?

If sales made during trade shows average about 80 to 90% in credit
card purchases, why not make up a flyer that will entice the buyer
to use cash and purchase more.

The flyer must be very specific in language, defines what is the
acceptable form of payment for the sale “green bills” and
stipulates: We reward our customers who pay by cash. 5% off from
items from $0.01 to $99.99 excluding tax, this also means that the
$100.00 level has not been met since the original price was for
"Cash Excluding TAX". The customer is motivated to purchase another
smaller item to get the discount.

Yes, some people might think this is going too far, but who will
protect your end profits if it isn’t protected at the very
beginning? Many stores hold firm to these types of price breaks and
$100.00 means $100.00.

This type of selling can be done in a variety of ways: 5% OFF for
cash only (ATM machines are located ______) If you like, I will
accept a hold deposit good for 1 hour. When you return with the cash
I will return your “deposit” if it was by check, or credit card (this
can be done because you might swipe it, but unless you contact your
merchant account, that person’s credit card will not be affected) but
a deposit shows Good Faith. Just return the customer’s charge receipt
showing that it was not processed nor given an approval code. 7% OFF
for cash only (the above written statement applies) for items that
cost between $100.00 to $300.00, and so forth.

This coupon is good for Aug. 10, 11, 12, and 13, 2003, thereafter
this coupon is deemed expired and void. Good only for selected items
that are labeled, if you want to go this far. Any coupons used,
have the customers sign it as proof of Good Will Advertising.

Many people we sell to like things for “FREE” so we select specific
items, have our sales brochures ready, give them a gift for every
purchase(s), even if a person buys 5 items it is still one purchase
per customer. The higher the dollar, or credit card amount, the
nicer the gift.

If a customer came our sales event, spent $600.00 on a gemstone and
pearl necklace, we would offer the customer a “Free Gemstone”. This
is the teaser is this type of sales, because you can always state:
The labor is free for mounting but they must purchase the mounting
from your company. Now your sales have increased. Always stipulate
what the customer will receive, what you are giving them, and when
it expires. A company can even use this to build a nice guest book
listing all people who have signed your guest book, select the
categories he or she is interested in, such as necklace, rings,
bracelets, chains, almost anything. If you want to have traffic to
your store, use a trade show, guest book, business card, and e-mails
to increase your customers’ data base. Make sure you include every
category that needs to be filled out in detail before any gift is

Even a nice Agate Bead wired with SS or Gold can be a very nice
gift. The customer gets the “Free Gemstone” and you might want to
have sample to show what can be done creatively for one nice bead.
Of course you have them pay for the “Wire or Other Mounting” and
give them a coupon or two to give to friends or return to your booth
for more goods to purchase.

There is a section from the IRS that if a gift enhances your
business sales, then it is called a “Good Will Gift and falls under
advertising”. Many peoples’ eyes light up if you offer them
something for “FREE” – the magical word.

A SS 18" Box Link chain would be a nice gift for some one who
purchases several hundred dollars. It is actually more cost
effective to give a Good Will Gift as Advertising and the chain
since the chain may cost less than $4.00 but the discount would be
around $50.00 or more.

Let them use their credit card in your store, but guide them to use
it in the manner that will bring you repeat business and higher
sales. Do you think that would be worth the 3% swipe of a card?

Sell them this month’s special is:_______________ and with a minimum
purchase of $_____________ you will receive a Free__________. If the
Free Gift is a Faceted Gemstone or a Cab, give the one of the two
items for free in this manner: labor or materials, which ever is
going to pull in the most profit for you.

This is just a stepping stone to increasing sales. My friends all
use credit cards for every little thing, even a $1.00 purchase
because they want the rewards the credit card is giving to them.
Why can’t the customer’s credit card work for any person in a
similar manner, but you set the parameters of how the sale will be

This is my penny’s worth.

To me, cash is cash, a credit card is a credit card, but each one
can be used to pull in higher revenues, profits, and possibly gain
many loyal followers. Every brochure we send out states where all
the ATM machines are in our location. Customers have placed a good
faith deposit, go get the cash, and return to complete the sale.
All sales final, inspect well, sign and date. Waynette

Before anyone takes Waynettes’ advice about offering a discont for
paying cash rather than a credit card you better read your merchant
agreement. You could lose you ability to accept credit cards for a
long time if you do this against your agreement.

Ken Kotoski
MPG Repair