[Jewelry making - Article 00274] - Re: [Orchid] The cost of holding out

[Bruce Holmgrain]

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    Ron, I normally read your posts with a lot of attention and respect.
    I think that you are missing the boat on this though. 

>        You always suggest that prices should be as high as possible so
>     that profit can be maximised.It seems to me that you do not include
>     the concept of competition in your vocabulary ! 

    I think that you are making a number of mistakes. He is talking of
    competition. The fact is that most of our competition outside of the
    large corporate stores don't understand how to do business. We have
    been competing ourselves into holes. A huge number of us go out of
    business because we are so worried about losing a little business
    that we will do a losing business in the hope that we can somehow put
    the other guy aout of business before we go. Not a good strategy. A
    better idea would be to go to business school before we set up shop. 

>         Apparently you perceive that the best method of business is
>     that of squeezing the last drop of money from the customer. 

    I don't see David squeezing the last drop of money out of the
    customer so much as I see him maximizing the profitability of each
    transaction. Often, this results in a quarter here or a quarter there,
    but each of those quarters carries to the bottom line. This is not
    just a small percentage that comes out of the gross. It turns out to
    be a large percentage of the bottom line. 

>         I have never, in your many posts, seen any reference to the
>     merit of being competitive. 

    Competitive means "still in business" in my book. If one wishes to
    stay in business, one had better make a reasonable profit. 

>         And yet, most modern consumers are increasingly sensitive to
>     getting a "fair deal". 

    You aren't just talking about modern consumers. Consumers have
    always been sensitive to getting a "fair deal". 

>         Nonetheless, I do not do everything possible to milk the
>     customer. 

    Dave's also got a lot of suggestions for promotions that may involve
    free services. This may or may not involve an exchange at a later
    date. If you wish to provide free services to remain competitive, be
    my guest. To be sure, I have provided plenty of free services over
    the years. My personal opinion is that if you don't charge for it the
    client will think that you did nothing for them and likewise will be
    generally unappreciative. Great! Now we can be underpaid and
    unappreciated! 

>         I can readily appreciate the fact that you are preaching the
>     gospel of the fact that many jewelers don't realistically value
>     their services, but I also perceive that your generalizations more
>     often than not apply basically to jewelers who operate mall type
>     stores or jewellers who have high rent , employee laden stores. 

    The high rent and high employee costs should be offset by the values
    that each provide. Mall stores generally get a lot more traffic that
    strip malls or my garage. Thus, to get that traffic, you pay a
    premium. That premium should pay off with an increase in business.
    Maybe one needs to raise prices to pay the rent, maybe not. 

>         Regardless of your SENTIMENTS , you are ignoring the fact that
>     in the real world, competition prevails. 

    Dave hasn't forgotten competition. He just knows that most jewelers
    are generally undereducated in the vagaries of a competitive business
    world. He is pointing out that we don't have to try to undercut
    ourselves buy trying to "charge a little less" than the other guy.
    Business costs. Money is required to do business and if we don't first
    and foremost insure that we are profitable, we will surely go out of
    business. 

    I have had cistomers say to me "Well they told me that they could do
    it for half of that." I will cheerfully send them down the hall to get
    that item. Why would I want to waste my time on unprofitable work? An
    accountant suggested to a buddy of mine that was selling equipment
    below cost Hey! Save yourself some time! Just put $50 bills in the
    packages and send your money out that way! 

>         Basically, your continuing thesis, suggesting that
>     contemporary jewellers are not charging enough, flies in the face
>     of the fact that we  are now in another world in which labor has
>     diminished value. Now it is time to realize that we must accept the
>     fact that we cannot charge nearly as much for labor intensive
>     endeavours because a global economy has devalued labor. 

    And, so now I should take my goldsmithing skills and settle for $8
    an hour? I think not. We need to change to remain competitive.
    Currently, I am moving into the CAD/CAM arena with all of the gusto
    that I can muster. I can make twice as much custome jewelry and I
    haven't lowered my prices. You go ahead. Lower your prices. Be
    "competitive" that way. I'll be competitive by changing the ways that
    I produce product. 

    I am not well on my way to getting rich, but I am doing a lot better
    since listening to Dave. Thanks, Dave! 

Bruce Holmgrain
JACMBJ


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