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Commentary: The Business

Jeff Unger: The $362 “Hello”

Figure your expenses to the minute for a full picture, says Jeff Unger.

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ALL THESE TRADE shows have gotten me thinking about dollars and cents. For the equivalent of a month’s rent for your store, we manufacturers get to rent space for a couple of days. You buy trash cans for your store; we rent them for our booth.  

I also have an office, for which I pay a mortgage and electricity, and where I too own a trash can, but I also rent space outside my office.  

I know how much I spend on my booth and all the extras to set up my store for the week: $45 per square foot for a 10-by-10 booth. Then there’s the electricity, tables, chairs, showcases, carpeting and of course the trash can. There’s also the “drayage”. This is the cost per pound of materials brought to my booth. The average is $1.50 per pound. If I have a custom booth that weighs 5,000 pounds, my cost is $7,500 just for hauling it on the floor. But I also pay to have it transported to the event and set up by a local company at $75 per hour. I then have to transport my line to the venue. 

After all these costs, what is it costing me per customer? I decided to seek the information from Exhibitor Magazine. Based on a normal trade show, the cost just to see your face: $126. That’s without saying hello.  

Let’s say we engage in a simple conversation, like saying hi. Add another $236 to the cost. Before you and I sit down and discuss the value of my product, I have invested $362.  

What happens when you ask the sales rep to stop by your store instead of making a purchase during the trade show? Add another $164 for the expense to travel to your store.  

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We manufacturers have now invested $526 in your store before ink has met paper.  

Let’s say the retailer purchases $1,500 from the sales rep in the store. Add the commission to the sale of $150 for a total of $676 in expenses. The vendor has now broken even and hopes to grow his business with your store to make a profit in the future.  

Is that expensive? It would seem so, but it’s the way the industry has been conducting business with you as long as I can remember.  

Do you as a retailer know what it costs you each time someone walks through the door?  

David Mell, of Goldsmith Jewelers in Lawrenceville, GA, estimates it cost him $3.16 for every minute he was open last year. All he has to do is multiply that by the number of customers who walk in to get the cost.  

David has a full picture of his business. Do you?

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Jeff Unger was the president and co-owner of B & N Jewelry (d.b.a. Alisa Unger Designs) and a long-time INSTORE contributor. He passed away in February 2019 after a valiant 10-year battle with cancer.

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