Repairs: Another Profit Center. Making money from Repairs & Custom Design How to handle customers concerns on price

Transcription

1 Repairs: Another Profit Center Making money from Repairs & Custom Design How to handle customers concerns on price

2 The Shop 1. How to figure your prices 2. How to get the staff to charge & buy into the prices 3. Customers concerns on price, how to address them 4. How to tell if the shop is profitable

3 How to figure your prices Repairs: Repairs are not price sensitive they are TRUST sensitive. Closing ratio tells the story: Product: 10 people walk in, how many out of 10 actually buy? Repairs: 10 people walk in, how many out of 10 say OK, go ahead and fix it?

4 Quick fretting! Repairs have a 3-4 time greater closing ratio than product and you never fret over a be-back on product. Typical store in USA has a 90%+ closing ratio on repairs. No matter what you charge.

5 What you charge? 14kt yellow gold 2mm wide engagement ring with wg head, 1 carat diamond. How much to make it smaller?

6 What you charge? How much to replace the 6 prong solitaire white gold head in her shank and reset her 1 carat diamond?

7 Charge? For the most part whatever number falls out of your mouth when the customer says how much to fix this? 90% of them will say OK.

8 Your job? Your job Is NOT to have this on your tombstone:

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10 Your job? To do quality workmanship Deliver as promised Guarantee your work Pay your people well and fairly Double your total shop costs as shop income. Best way to see shop profits is in QuickBooks, not your POS program.

11 OK, so where should I fret? Let s look at inventory sales: Average Sale = $400 Inventory Level = $250,000 to several millions. Closing Ratio = 33-40%

12 Fretting Let s look at Repair sales: Average Sale = $65-$100 Inventory Level = $3000-$ one weeks jewelers wages Closing Ratio = 90-95%

13 Fretting Let s look at Custom Design sales: Inventory Level = $3000-$ one weeks jewelers wages Most items ordered for a custom job are order JIT. Closing Ratio = 70-85% But what is the average dollar sale?

14 Average Custom Design Sale WHAT IS YOUR AVERAGE CUSTOM DESIGN SALE? $100 - $ % $751 - $ % $ $ % $ $ % $ $ % Over $ % Look! 82% of the time the Average sale is easily $751 to $3000! With a 70-85% Closing ratio

15 Now that I have given you confidence How to price the shop Same way I have done in my price book 3 time markup on findings/parts/gold/small stones. 4 time markup on jewelers wages. Ends up giving you a 3 time markup. Mine=$40 to mid $50 s a year

16 Pricing parts are easy, Labor. Labor is tougher for one reason:

17 Pricing parts are easy, Labor. Jewelers are BIG FAT LIARS!!!

18 Pricing parts are easy, Labor. Why? In an 8 hour day they only work 5.5 hours. *Answering questions *Assisting customers *Bathroom breaks *Breaks *Talking/texting/internet/looking out the window.

19 1985 was not a good year All jewelers were paid an hourly wage We called around to see what others were charging Didn t train the sales staff well and paid hourly plus a WHOPPING 1% commission.

20 Accountant/Watchmaker Paid jewelers percentage of labor (you don t have too). Time study with time clocks from Office Depot. What I found out was Jewelers are big, fat, liars on time. Must add 25% to their time Must add 25% or more to their gross pay for taxes & benefits.

21 Example: Labor Work Paying $15 an hour. Takes 1 hour so with a 3 time markup: $15 x 3 = $45 retail charge But reality is.. Must add Fica/Medicare/Unemployment/health insurance we pay/vacation pay/sick pay to gross pay. Another 25%=$18.75 an hour

22 Example: Labor Work So now our labor cost is really $18.75 an hour. But a 1 hour job takes 1.25 hours: $18.75 x 1.25 hours = TRUE COST of $23.43 (not $15). 3 time markup on $23.43 = retail of $70.00

23 Example: Labor Work We were charging $45. Should have charged $70. That s a 35% difference in price & profits. We fixed it with our price book. Kick in the pants: after raising prices substantially and coming out of debt SAME CLOSING RATIO!!!!

24 Net result of charging 4 time markup on jewelers pay. Add 25% more to the time guestimate. Parts=3 time markup. Or round up to 5 times jewelers pay times what they tell you in time.

25 Net result of charging Never ask a jeweler how much to charge. Ask them how long it will take. Markup a jeweler just like they were merchandise.

26 How many jobs should a jeweler do Wrong question. in a day? At mid $40 to mid $50 s a year a jewelers BENCH should produce $180,000 to $250,000 a year!

27 Getting the staff to embrace repairs Training Role playing Pay m! Pay m as though it was product they sold Pay m as if the store depends on it! (Hey, it does!)

28 How to get the staff to charge & buy into the prices TRAINING Ongoing, consistent training. Divide an hour long meeting into 4 quadrants: 15 minutes on the shop, follow my book as a syllabus. 15 minutes on product knowledge 15 minutes on selling 15 minutes on store news 0 minutes on complaining

29 Selling Repairs Explain how the work is done (Schlitz Beer) Never say Well that s our price lady! Show them their repairs needed with either a loupe or better yet on a monitor

30 Selling Repairs

31 Camera

32 Selling Repairs Role play just like our soldiers do Reward great achievement Pay Commissions Play games Pass The Buck Repairs are just as important as product sales. We don t CLERK REPAIRS. At a 3 time markup it deserves better!

33 Selling Repairs Ask your jeweler these 3 questions 1. How long have you been a jeweler? 2. How long have you worked here? 3. What s the most expensive piece of jewelry you ve ever worked on before? Use this new ammunition in your sales presentation.

34 Selling Repairs The power of 3 Geller Blue Book Training: Password: geller Each chapter on video

35 Making a ton of money from Custom Not all gold has been melted. As baby boomers age their children will inherit a ton of stuff. There will be a boom in remaking mom s old stuff. It takes training on the sales floor and in the shop. Is it worth it?

36 Making a ton of money from Custom WHAT IS YOUR AVERAGE CUSTOM DESIGN SALE? $100 - $ % $751 - $ % $ $ % $ $ % $ $ % Over $ % Look! 82% of the time the Average sale is easily $751 to $3000! With a 70-85% Closing ratio

37 Making a ton of money from Custom Design Inventory Level Custom = $3000-$ one weeks jewelers wages Closing Ratio = 70-85%

38 Custom Design makes Serious Money Takes more expertise from the staff. Some stores delegate 1 person to designing. Sell the uniqueness of the piece and it will be made one ring at a time just for you. Never allow the conversation to wander why is it more than the ring in the showcase. Custom costs more and is worth it.

39 Gemstone & Custom private Parties Lois Wacholtz of Christopher s Fine Jewelry has gemstone parties (JCK magazine February 2013)

40 Custom Take In Non refundable design fee but goes toward purchase within 6 months. Picture is on file. Don t have an attitude. Custom is whatever the customer wants. From Cad/cam; a wax; order a semi-mount or order a shank and 8 heads. It s what the customer wants.

41 How to sell price Custom can have sticker shock but it usually comes from the staff (gulp) not always the customer. Sell as if you do this everyday for every customer. Design as the customer wants and is happy but always make a suggestion of something to enhance it.

42 Upselling Custom Going from 14kt yellow to 18kt (prettier yellow). You can upgrade their gold. 14kt white gold to 18kt white gold or platinum. Platinum areas for setting. Adding additional stones or a major stone. Fancy engraving on the shank or sides. Make a signature of it (diamond or sq shank)

43 Price Resistance Use a legal pad, draw and 2 columns. Write out the major charges in two columns: Labor & Material Don t over complicate labor. No customer has ever bought a wax. NO!! Design/carve/cast/finish/assemble YES! Make ring/set stones/5 dwts gold

44 Showing the price to the customer LABOR MATERIAL Make ring from design $750 6 dwts 18kt@$197=$1182 Bead set 24 $25=$600 3 extra dias needed, $225 Bezel set center sapphire $200 TOTAL LABOR: $1550 TOTAL MATERIAL: $1407 $2957 (3 ways to say the price)

45 As You Know TOTAL LABOR: $1550 TOTAL MATERIAL: $1407 $ % of $2957 = $591 But 20% of the material = $281 You get $309 more Like actually a 9% discount. Material for making custom has a turn of 12 to 24!

46 Is the shop making money? Unless you pay 100% commission to jewelers, they are big/fat/liars QuickBooks or your accounting program is only way to see shop profits. Profits are look at end of month, not per job. Shop sales should be double shop costs (keystone). Can t resell returns.

47 QuickBooks setup 3 Income & COG s groupings INCOME/SALES Product Sales Scrap Gold Checks from Refiner Shop Sales COST OF GOODS Product Cost of goods (what sold!) Checks to customers to buy their scrap Shop Costs

48 Shop Profits/QuickBooks SALES FOR SHOP Jewelry Repair Sales Watch Repair & Battery Sales Custom Design Sales

49 Shop Profits/QuickBooks COST OF GOODS FOR THE SHO: Jewelers Pay Jewelers taxes & benefits Findings/Mtgs/Stones/Gold Outside Trade Shops Watchmaker Costs Laser Lease

50 Shop Profits/QuickBooks This method allows for mistakes and wasted time to be taken into consideration. Shop profits should compete with showroom profits as a percentage PLUS 5 more points (redo s/mistakes)

51 Thank you IJO! Repairs are not price sensitive, they are trust sensitive

52 All slides can be downloaded at

53 Thank You IJO! Thank you! Geller s Blue Book to Jewelry Repair & Design. IJO 25% Savings on the Geller Blue Book kit. Go to the IJO tab on our website for more information. Expires March 3 rd If I can help you with your shop profits or QuickBooks contact me: David Geller (404) David@JewelerProfit.com