The slippery slope

In trying to compete and stay in business, prices can end up getting cut to the bone, resulting in a minimal profit.

Many years ago a well-established designer looked at my portfolio. She told me that, if I was not careful, I would end up with a book of beautiful pieces, all done for people who could have easily afforded to pay more than I was charging, and I would end up with little profit. This is the great dilemma of the small shop owner.

At the time, I was feeling pretty good about the prices I was getting for my work. But, at the same time, the cost of everything was slowly increasing and I had begun to waffle a bit on my prices because there was a lot of manufactured stuff appearing on the market that was selling for less than I could make it for. As the years went on, I began to see the designer's prediction come true.

I was working really hard and had a big overhead to cover. Even though I was generating a good cash flow, very little of that cash was actually available to me personally. It covered my family’s expenses, but that’s about it.

I remember an HVAC guy and client were discussing his bid while I was in earshot. After a half hour or so of excruciating negotiations, the guy said, "But I'm not making any money!" The customer answered with a look that said "Good. That's how it should be!"

Good for the customer. Not so good for us.

D.D.