Matching Your Passions With Profits:
Is Your Pricing Where It Needs To Be?
As part of the Tru Vue® Retail Makeover, winner Sheri Wright sat down with Ken Baur, makeover consultant and president of KB Consulting, to review the financial side of Sheri’s business at her shop Fourth Corner Frames and Gallery in Bellingham, WA. Ken’s work with Sheri inspired, Matching Your Passions with Profits, a series of articles with advice on how to improve profitability and create a sustainable business that enables custom framers to keep doing what they love.
I have worked with hundreds of custom frame shop owners, and one of the most common things I see is incorrect pricing. Business owners should base pricing primarily on expenses, which vary from shop to shop, but the tendency for many stores is to allow other factors, such as competition, guide the pricing. Unfortunately, this results in profitability levels that are lower than they should be. In the worst cases, the business is unsustainable.
Do you recognize yourself in Shop A, B or C?
Shops A, B, and C are hypothetical for the purpose of example, but they are based on situations I have seen many times in my consulting work. Issues like competition, the need for custom frame shop owners to wear many hats, and customer reactions to project costs are very real.
You may not be exactly like these examples, but my experience is that many stores have something in common with at least one. Unless you analyze your financials, it’s hard to know if you are covering your expenses with enough profit left over. If you know your pricing is where it should be, you will be less prone to making changes during the sales process that impact your margins.