The one thing I was never flexible with during my corporate marketing career was the bending of my morals and ethics. It is one thing that kept my clients coming back time and again to use my consulting services. They knew they could turn their back on me without getting shafted and could always trust me and my judgment. I despise unethical business owners with a passion and because of that it cost me a lot of money over the years by refusing to work with certain clients who fleeced their customers.
Here I am, 11 years down the road in retirement and I am faced with something that I feel is in the realm of unethical practices, which is the reason for my post. I would really like everyone's opinion on this so please leave your comments.
There are huge numbers of retailers out there, from furniture stores to clothing shops to other retail outlets who purposely mark up their product by 10, 20 or even 40 % and then hold a sale or give a discount for the same amount. Everyone of us at one time or another has unknowingly bought a product on sale that had this scheme dialed into the discount price. It is a very common practice in some industries.
What I want to know is, do you feel it is unethical to give a quote on an upholstery job of lets say $ 500
and then discount it by 10 % ? So the final bill is $ 450. Your target and estimate all along was
$ 450 but you wanted the customer to have a feel good moment by getting a big discount.
I have wide margins built into my solar screen jobs so I always offer true 10 % discounts to senior citizens and military vets. Always. But a buddy of mine who is still bogged down in the corporate marketing world recently suggested I give discounts to everyone as a promotion and also run some sales by utilizing the bump and cut discount method.
I am having a hard time with this. I feel it is unethical and I need to be able to look myself in the mirror every morning and know I did right by people. I know it is a standard practice ( and legal ) among many different types of businesses ( especially the auto sales industry ).
Opinions please.
Chris
Personally I don't see a problem with a markup on either supplies or even a labor rate. After all we need to make a living too. Now please don't think I'm suggesting ripping people off, you need to give a high quality and fair priced product and I'm sure that you do. As far as offering an X% amount of discount to seniors and vets I think that's great and I believe good marketing to offer promotions from time to time to everyone.
Ethically none of these things are wrong, but I also believe it must be a personal matter too between you and your conscience. In other words if doing it bothers you then don't. What matters is at the end of the day, Are you comfortable with what you have done? Just My Opinion.
Kyle
Yeah, we see it all the time with those "Giant Liquidation" sales (usually, but not limited to furniture stores). "EVERYTHING 50% 60% 70% OFF!!!"
Well, it doesn't take a college genius to walk in, take a look at the prices, and realize that they're not discounted even one penney.
So I say "Fool me once,shame on you. Foll me twice, shame on ME".
Having said that, I don't ever employ the "false markdown" tactic myself. I think it's tougher for a "one man" shop to look customers in the eye, and claim that they're getting a discount when they're not. It's easier for a big retail chain to do it, since there's not a "face" to associate with the deception.
There are all kinds of tricks that companies use to get people to buy. Is it unethical? Maybe sometimes. Usually they are tricks to get people to buy.
I think the best advise is "let the buyer beware". If people do not want to research the product that they are going to buy, that is their right to do so.
When someone says the cost is $500 but they will give me a 10% discount, what that says to me is that the product was never worth $500 to begin with.
I do not discount because I cannot do a $500 dollar job in less time.
gene
My personal conviction is that I have to have a clear conscience in business practices. This means that if I feel something is questionable then I don't do it. I only do what I know is right that keeps me happy and the customer. When I give discounts to people it is on what I would have normally charged so it is a true discount.
Clay
I think you have to becarful when you market. As for the bump and cut sale, it's a tactic that makes a customer feel good, right up until they talk to someone with a simillar job for the same price.
I think I am better off showing a value to the customer. I like to state what kind of job they should expect and then do my very best to meet those expectations, with a price that the customer and I can agree on.
This is not my primary career so it's easy for me to stick to my price and ethics. Someone trying to put food on the table may try anything to draw a sale, so how do you judge that person??? Is he or she doing something illeagal?? I think Sofadoc is right, buyer be ware, do your research.
Well 90% of my customers like to get a discount for the best quality work/materials etc. Who wouldn't.
I believe I price each job competitivly & so not keen to give them one. :P
One particular guy beat me down on a job lot of covers, then ask for something to be included FOC & still wanted the IVA (Tax) knocked off ???
Most of them want the tax knocked off, but I still have to pay it >:(. So simple solution is I add the tax twice :o Then I can be so generous to knock it off the bill, the customer is happy & so is I. ;D
I don't have a problem with it, they sure don't mind if I loose out so why should I by keeping things level. :P
I think the bump and discount is used all the time by retailers. I don't like it, but it's there.
I don't do this on my projects and I don't offer discounts during the normal season unless they want multiple projects done on their boat, or it's a large project.
I do however offer winter discounts depending on the project size. The quote is normal, not bumped. It's a necessity here up north if you want to have work during the winter months.
Let's face it. When pricing out a job, we need to include a mark up on materials to cover shipping and handling. And your hourly rate should cover all costs (payroll and operating costs), and a profit. After all, every business needs to make a profit for the lean times.
So, when I offer winter discounts, I essentially lower my material mark ups and my hourly rate.
That's my opinion, but you know what they say about opinions. :D
I'm with the others. I don't do false markdowns myself. But I don't think less of those who do.
Kinda' like tattoos. I don't have any, and if my wife or daughters ever come home with one, I'm scrapin' that sucker off with a cheese grater (even if I have to go clean down to the bone, it's comin' off!), BUT there are people that I hold in the highest regard that have them. And I certainly don't think any less of anyone that has one. I'm actually fascinated with some of them.
Hey, maybe that's an idea! How about one that says: MENTION THIS TATTOO AND GET 50% OFF!!! I could include the phone # and web address. :D
Quote from: sofadoc on December 09, 2010, 09:05:50 am
I'm with the others. I don't do false markdowns myself. But I don't think less of those who do.
Kinda' like tattoos. I don't have any, and if my wife or daughters ever come home with one, I'm scrapin' that sucker off with a cheese grater (even if I have to go clean down to the bone, it's comin' off!), BUT there are people that I hold in the highest regard that have them. And I certainly don't think any less of anyone that has one. I'm actually fascinated with some of them.
Hey, maybe that's an idea! How about one that says: MENTION THIS TATTOO AND GET 50% OFF!!! I could include the phone # and web address. :D
How I went through the Marine Corps, a few drunken nights in Tijuana and the rest of my years without a tattoo is beyond me. A buddy a few months ago suggested I get one. I said " what the hell for. Do I look like a side of beef that needs branding " ?
I had to laugh because I told my daughter and my wife the same thing. If either ended up with a tattoo I would take my Rapala fish knife and fillet it off them. :)
Chris
I like the no nonsense approach. And that's how I explain it to customers.
1.) I am in business to make money. I offer a service you can't perform for yourself. Mark up. I know what you don't and I intend to be paid for that knowledge.
2.) I have access to materials and suppliers you don't. Mark up. I have the tax #s and have put in the time/expense to get them. I intend to be paid for the effort.
3.) If you supply the materials there will be no guarantee or warrantee on them. If the goods are substandard/defective, "you're on your own". If you are disappointed by premature "failure" of the fabric, go to the retailer. It's not my problem.
4.) Because I haven't "sold" the materials state tax regulations require that you pay full sales tax on my labor rate. Bottom line, you either pay sales tax or "service tax". Your choice. Pick! I am legally liable for required taxes on the work I perform. One way or the other you will have to pay. That's how it is.
Jackassing around with stupid financial games is not my style. "Homey don't play that".
I have to agree with most of you guys and gals(?) I give a price and stick to it. No obscene markup so I can discount it. I do discount fabrics when necessary.
That said this is why we are Upholsters and not highly paid businessmen and women. ;D
You certainly have to "check your ethics at the door" when you become a car salesman.
I was doing some furniture repair work at a local dealership. You know how the salesman always has to leave you in that little room, while he goes to a bigger room to talk to his boss. Well, I was in that bigger room one evening. The salesman came in, turned on a speaker, and listened in on the private conversation of a young couple that he was negotiating with. He heard them say what their "Top dollar" was. Armed with that info, I'm sure he squeezed a few extra bucks out of them.
I once had a car dealer tell me that he was only making $20 profit on a new Tahoe that he was trying to sell me. He said that he "just wanted to help people like me".
What a humanitarian!! ;)
inwouldnt do that marking up a job 20% over what I Really want then offering a 20% discount.
Sure you could do it but not something I would do.
My opinion is that under no circumstance can you greatly exceed the price you commonly charge other customers provided it's same same type of work and materials, but when it's custom work all bets are off. Having said that I as well as most people will recognize what your trying to do and it might just hurt you. In a past life as a commercial appliance salesman I was bidding close to a $100,000.00 worth of appliances to a new customer with several large apartment complex's and the way I approached it was to ask "how do you want to play the game" best price first or I inflate the price so I can give you a discount? My customer laughed and of course took the best price, and I might add I sold him many more 100's of thousands of dollars worth of appliances!
Big John
Quote from: Grebo on December 09, 2010, 07:40:02 am
Well 90% of my customers like to get a discount for the best quality work/materials etc. Who wouldn't.
I believe I price each job competitivly & so not keen to give them one. :P
One particular guy beat me down on a job lot of covers, then ask for something to be included FOC & still wanted the IVA (Tax) knocked off ???
Most of them want the tax knocked off, but I still have to pay it >:(. So simple solution is I add the tax twice :o Then I can be so generous to knock it off the bill, the customer is happy & so is I. ;D
I don't have a problem with it, they sure don't mind if I loose out so why should I by keeping things level. :P
gre o do tou write up two contracts. One for the customer a d one for be books that shows the real cost showing the tax?
Quote from: regalman190 on December 09, 2010, 07:57:04 am
I think the bump and discount is used all the time by retailers. I don't like it, but it's there.
I don't do this on my projects and I don't offer discounts during the normal season unless they want multiple projects done on their boat, or it's a large project.
I do however offer winter discounts depending on the project size. The quote is normal, not bumped. It's a necessity here up north if you want to have work during the winter months.
Let's face it. When pricing out a job, we need to include a mark up on materials to cover shipping and handling. And your hourly rate should cover all costs (payroll and operating costs), and a profit. After all, every business needs to make a profit for the lean times.
So, when I offer winter discounts, I essentially lower my material mark ups and my hourly rate.
That's my opinion, but you know what they say about opinions. :D
I used fo h s a sale in march to encorafe owners to dif there boat out of be back tard and get work started a month or so early when I was up
north. Regal.
QuoteI am having a hard time with this. I feel it is unethical and I need to be able to look myself in the mirror every morning and know I did right by people.
I'm the same way,and I couldn't comfortably do the bump and cut B.S thing.
If I picked up material on sale ( clear outs,full roll pricing, etc..) I would pass that along to the customer as a discount over suggested retail. I would offer added value promotions like " let me do your boat top over the winter and I'll give you free storeaqe to save you $350 renting from someone else" , but that's it. My margins where way to tight to do any more. ( did I mention I'm no longer self employed.)
My brother handles advertising for the largest locally owned furniture store in Central Illinois, as well as three different stores for one of the largest national chains of furniture stores. In the last 17 years of doing the local store's advertising, there hasn't been a single week that I know if that they have NOT offered 10-20-30 whatever % off. That's just how it's done in that industry. Furniture also routinely sees a 300% markup for retail, with the intention of "slashing" "chopping" "hacking" the price. The also will buy a container from a Chinese cargo ship, sight unseen, full of chairs and sell them at barely above cost. These pieces of junk get people in the door. Those that can only afford these pieces usually get financing, so money is made off them. The other customers are steered to the more expensive pieces.
The difference. They only buy and sell, buy and sell. They move a commodity through their store. It could be furniture, cars, widgets or wankles. It doesn't matter. No one has to know how to make the pieces they sell, and no one puts the hours of building into it that we all do.
I do the standard industry markup on material, and charge for true hours worked. I don't have time to figure out how much more to mark up to offer a discount, and if that's not all figured out, then there's a risk of losing money. The only discounts I offer are through our local Farm Bueau for materials to farmers. It's not much, and it's a true discount not inflated, but it is a source of advertising for me.
I don't begrudge car dealers, furniture sellers or anyone marking up and discounting. There's always going ot be someone willing to pay the inflated price, or really think they're getting a deal with the discount. It comes down to getting all the money that's on teh table. Let the buyer decide.
That's like every spring down here when the snowbirds Leave a local regaled had a 50% sale on shirts and shorts. That when I go.