Priced to Sell

SOMEONE ASKED ME to make a customized repair price book for them and to double all repair prices!

You read it right. A store that had a current price book of mine asked me to go through every single page and double the repair prices.

“Why in the world would you want to do that?” I asked.

I’m all for making money from the shop, but gouging is not my thing. He responded: “A consultant told me to do it and it makes sense. He told me there was no reason to wait on a crummy little $50 repair when I could wait on a $5,000 diamond sale!”

OK, in one hand is 50 bucks and in the other hand is 5,000 bucks. Yep, I dig it. But …

• The $50 was his average repair sale.
• The $5,000 was not his average sale.
• In America the average product sale ranges from $200 to $500, but is closer to $400.

So, still not a bad argument, he should be comparing waiting on an average repair of $50 versus an average product sale of $400 (not $5,000).

I had a store consultation where a jeweler bought a store doing half a million in sales and within five years was doing $5 million. I asked him what his average sale was. His reply?

“Two years ago about $1,800. It’s down to $985 and I want to get it down to about $550.”

I asked him why he’d want his average sale to drop.

“I want to see more customers. Lower average sale brings in larger numbers of customers. Sales will increase.”

Now, going back to the store that wanted me to double his repair prices. He told me, “I want to run repairs away and instead of telling them ‘no.’ I think a higher price will do it.” He wanted me to help him run off business.

So I did a quick analysis of his numbers. See if these sound like yours:

• His total transactions for the year (tickets written) were about 8,200 receipts.
• Out of the 8,200 transactions, about 2,600 were actual product sales, thus leaving a whopping 5,600 people who came into his store with a service-related question. He didn’t know how many of the 5,600 people also bought some of the 2,600 product sales.

Would you what to get rid of 68 percent of your store traffic? Get rid of 5,600 people a year and I’m betting total sales will drop.

You want to know the ending? I don’t have one. After quoting him $1,000 to custom-make one book just for him with his prices, he didn’t seem as excited.

I can tell you I know several jewelers who have added 50 percent to my price book and not lost a single customer. Repairs are not price sensitive, they are trust sensitive. And, lest we forget, they’re a great traffic builder.

This story is from the March 2007 edition of INSTORE.