Tales Of A Fourth Generation Textile Executive: Stop Selling So Cheaply For Your Own Benefit
Let me start off by saying that I value all my customers very much because they have so many other vendors to choose from, but they choose us. It is truly an honor to be able to serve them all the different fabrics produced by the Jaftex Companies. Let me also say that I hope their businesses stay open and profitable for as long as they need them to and as long as they are happy working.
Anyway, the key word to focus on in the opening paragraph is profitable. In order for one to make more profits and have a successful and long lasting business, one needs to make higher profit margins to cover their growing overhead (costs of running a business). Profit margins (selling price of an item minus all the expenses that go into producing and selling it) are key. Most people in business right now are kidding themselves if they think their costs aren’t rising every year. I know my expenses are going up whether it is shipping, insurance, processing, rent, labor, electricity, technology, commodities, etc.
The real point that I am trying to make here is for fabric resellers to stop selling so cheaply online and offline because they are killing their margins and profitability. Moreover, they don’t need to be giving the fabric away because there is plenty of demand for it. On top of that, cheap selling destroys the value of our brands and all the hard work we put in to bringing fabrics to market. With that, I ask fabric resellers to review their pricing and do some back of the envelope math to see if they are making enough money to survive and thrive in the fabric business.
Consider how hard so many different people work to bring a fabric line from imagination to fruition. Lots of people and lots of man power go into every line every step of the way. Please help to maintain the value of this hard work by NOT selling too low. It is not my place to tell people what price to sell at, but anyone who is selling too cheaply is probably well aware of that already. It is never too late to change prices. Increased selling prices will benefit both you and us and help us both to survive for the long term which is what I care about most.
Consider this quandary. As everyone lowers prices, the margins dwindle for everyone like a chain reaction. As I am sure you have heard me say before, I like to refer to this as the race to the bottom i.e. each person undercuts the next guy until no one is making any money. This is a vicious cycle. The thing is that the winner in the race to the bottom is probably out of business and they just haven’t realized yet. That is the key to take home here because if your margins go too low, you may actually be losing money and wasting your time working so hard.
The end of the year is a great time for business owners to review their profit and loss statements to make sure their businesses are profitable. I hope we can all agree that if a business isn’t profitable, it isn’t worth having. We don’t want business owners to lose money because that could lead to them closing their business and then we lose them forever and all their hard work and finances go down the drain. Just be careful please and take what I am saying to heart. I see ridiculously cheap prices all too much these days and it isn’t going to end well.
As the new owner of Freespirit and current owner of Studioe, Henry Glass, Blank Quilting, Fabric Editions, A.E.Nathan and 3 Wishes, we would the support of our resellers. Someone has to be the lowest, but it doesn’t always have to be you. The deep discounting benefits no one in my mind. In fact, I wish you would consider raising your prices starting in 2019. You may be surprised that you can increase pricing and still sell the same amount of yardage.
In closing, please know that I care about the success of my customers/partners. I also care about our great industry. For that reason, I ask everyone to carefully review their business models and make sure that they are making sufficient profits to succeed. Low selling prices are not the key to the higher land. Take my word for it.
Have a great week and let’s start thinking about greater profitability in 2019 or sooner.
23 Comments
Nicole Gray
I just seen a gal selling Tula Pink Zuma for $7 a yard right now. I think I am going to get sone seaglass amd a couple others.
Scott Fortunoff
Hi Nicole,
I don’t blame you for buying it. But it is a shame they are discounting it so much. As I have said, this extremely low selling will not pan out well in the end.
Have a great thanksgiving.
Scott
Robyen Gibney
I own a sewing &quiltibg store in Australia and I love my job. I have a bricks and mortar store and I am competing with online stores with very few overheads. I am often asked why my fabrics are more expensive than those online ? And my answer is yes they are fractionally more expensive but for the extra you get ME!! Customers get to ask my advice and you can’t get that online (and I am no way not suggesting that online shops do not give great service but in order for them to stay competitive online they seem to get into a price war and in turn it makes my pricing seem more and more expensive). Not sure what the answer is but I will continue to soldier on.
Scott Fortunoff
Hi Robyen,
Amen to that! You hit the nail on the head. You, and all the hardworking shopowners out there, are worth the extra money.
Have a great day.
Scott
Betty Smith
Why not implement a 60 day or 90 day required MSRP?
Scott Fortunoff
Hi Betty,
We have explored this and will continue to do so. I know others are starting to do that. I would like to see how it works out in reality.
Have a great week.
Scott
Pennie Annie
Scott,
It has been so enlightening to get your perspective and insights on so many aspects of the textile business. I would have loved to added fabrics to my brick and mortar shop but with the rents here in Seattle it just wasn’t feasible. My partner and I have found another option and will be setting up a our mini boutique/fabric shop at a local Sunday Market and your advice here came just in time!
Scott Fortunoff
Thanks Pennie Annie. Appreciate the compliments. Good luck to you on your new venture.
Regards,
Scott
Joanne Hubbard
This is a really good post!
Just like everyone else, I love a good bargain. But (there’s always a but!), I also know that a low price is not the only determining factor for a bargain. I will gladly pay a higher price when I receive good customer service and have a nice selection from which to choose. What’s the old saying, “You get what you pay for.” Well, I’m willing to pay a little more for good service.
Your comment about value is important. Many times, shops will offer low prices on a variety of items in the hopes that customers will flock to the store and purchase those items as well as other “regular” priced items. Sometimes it works and sometimes it doesn’t. I know quite a few people who only shop during sales and they rarely buy things that are not on sale or for which they do not have a coupon. Their logic is that unless they need it right now, it will eventually go on sale and they’ll get it then. Either way, we must always be careful of giving away too much, and thus devaluing everything.
As an instructor, I’ve had many students ask for the pattern/book to be included in the cost of a class. I will gladly do that, but of course that raises the cost of the class. Those same students who asked for the inclusion now comment that the class is too expensive. They want a bargain and I understand that, but I cannot absorb the pattern/book cost and still make it profitable for me to teach. (Fortunately, I am not trying to pay all my bills by teaching quilting classes. That will never happen.) Many people forget that my costs include the pattern, the fabric, my time making the sample, prepping for class, and writing up “bonus information” to hand out to students. They think I’m making a killing because when THEY do the math, they figure my profit is the number of students times the class price. They forget about my costs and do not subtract that from my gross pay. Of course they also forget that I’m taking a pretty big risk too. As every shop owner and teacher knows, sometimes you miss the mark and nobody buys the product or takes the class. We actually lose money when that happens.
I’m off my high horse and am done with this longggggg comment.
Carrie Newman
Hi Joanne,
I sure know what you mean regarding patterns and all that goes into the making of it. Unless you’ve done it yourself it’s more than one can imagine. It takes a lot of effort and time. Wow…how valuable is your time!
We are an online shop trying hard to Keep Patchworking Affordable here in Australia. We do try to keep pricing down but yes to keep a business going there are so many factors to consider when you get into the pricing. I always think wow..in the states you buy so much you get free shipping. I can only wish! It is illegal here to suggest any retail price!
I guess everyone wants a bargain don’t they…but at what price LOL.
Sue Fenwick
Hi Scott,
I started out offering big deals and my margins were painfully small, so pricing things correctly is definitely a big challenge. I generally use MSRP as a guideline, but still see my competitors charging more (especially on the coasts). Now I find it hard to compete with the big volume stores because they buy so much and sell off at the end of season so low, way undercutting.
Do you have any advice on pricing beyond MSRP?
Thanks! I appreciate your experience and your advice.
Scott Fortunoff
Hi Sue,
Everyone’s business is different and i don’t know the intricacies of yours so it’s hard for me to answer. This post was really meant as a warning for people who are selling too cheaply and maybe overlooking the fact that they aren’t making money or enough money to cover their expenses. I guess there is a happy medium. Also, online is tough these days b/c it is so competitive.
All i can say is good luck. It’s a dog eat dog world.
Scott
Barbara Esposito, The Quilted B
Hi Scott – so much to ponder in this post and these comments. But who doesn’t love a bargain? I prefer to shop (in store and online) where customer service is top notch. I have stopped visiting two local brick and mortar shops because of very poor customer service and selling practices (and honestly, if they only knew how much fabric I buy they would be sending a stretch limo to pick me up – hahaha). There a few things that come into play when I decide how much I will pay for fabric – will the shipping costs be fair and affordable, do I need that particular fabric for a specific purpose, how much of that fabric do I need (one yard or six for backing), will I regret not purchasing that fabric for later use? I think the important thing here is that you are not saying “hey, everyone raise your prices”. I don’t mind paying fair prices for quality products and excellent customer service.
Happy Thanksgiving to you and your family!
Scott Fortunoff
Well noted Barb. Thanks for your insightful comments. I know we all love a bargain, but not sure we want it at the expense of someone’s livelihood. Happy Turkey!
Scott
Linda Williams
You made me smile, Scott. I recently had a conversation with 3 customers, all shop owners from back east, about the cost of doing a special event. I expressed my concern about whether it was really worth it – due to all the extra hidden costs of supplying food/giveaways, travel to meetings, advertising, extra helpers, etc. All three of them looked at me blankly and said I should not calculate any of those things into my profit calculations for the special event, since that was just the cost of doing business. One of them actually said she never counted her time/extra time spent in the shop as a cost of business – since that actually saved her money on payroll. My guess is that I would find lower prices in their shops, but I wonder how long their shops will be there. I guess some of us just see the world in a different way.
Scott Fortunoff
Hi Linda,
Hope you are well. This comment is scary to me and I hope those shop owners are reading this post. This business, or any business for that matter, is not for the faint of heart or unsophisticated business owner. This isn’t a game. People who don’t have a grasp of the business accounting risk losing their shirts and I certainly don’t wish that upon anyone. CAUTION! CAUTION! is all i can say. have a great week and happy turkey.
Scott
PHILIP JACOBS
Excellent advice.
Scott Fortunoff
Thank you Philip.
Scott
Michelle Tothill
Great post. Often a business has no idea what the different profit centres are contributing to their bottom line, Nor do they keep track of their inventory turn over rates.
As a customer with a limited budget price is always a consideration and I do check out the sale racks in every shop I visit, but I also buy off the full price racks. Customer service is far more important to me than price. I will not return to a shop if I received poor customer service but the prices were low. I will buy again from a shop with higher prices and stellar customer service.
I am very lucky to live in a place with 8+ quilt shops within 1.5 hours and three of them within 10 minutes of my home. All provide great service.
Scott Fortunoff
Thanks Michelle,
You hit the nail on the head. Some considerations are more important than price alone. Great comments.
Scott
Kara Benavides
I agree with you Michelle. My closest quilt shop is specific to batiks and 25 minutes away. The next is 35 minutes which is not bad. But their inventory is a bit stale for my taste. (not a snob, just have moved on from the calico of the 80’s). Of course, within yon city also lies at least 3 Walmarts and 2 Joanns. The next, an awesome shop, is nearly 2 hours away and do not offer on-line/off site sales. So I surf the net, watch the videos for Scotts challenge, and see how they market their product. Of course, I am looking for Jaftex lines 😀 Since I don’t own a shop, I feel I can name names. I have looked at fabric.com, but have never ordered from them. But it recently took me hunting through over 25 sites before I found Moody Blues. I understand why companies can’t list who bought from them. So there must be a better answer.??
CHrisitne Walters
Scott – I so understand where you’re coming from and yes, every business must make a living profit otherwise they can’t survive let alone help those less well off as you do; however we live in the UK – and already any quality fabrics are hugely more expensive than in the US.
I have no problem with paying for quality – but please consider that here if the prices go up very much more sadly they may become beyond the reach of many a pocket and that too will push businesses over the edge.
Have your increases – but please, still be mindful that your customer needs to still be ABLE to afford.
On a personal note – thank you Scott for all the generous support you give to those who are in need.
Christine
Scott Fortunoff
Hi Christine,
Thanks for the comment. Please note that I am just focusing on those that are selling too low. Many are selling at the proper price and making a proper markup. Those who aren’t are the ones in danger and that is my concern. I agree with you.
Appreciate your compliments.
Thanks.
Scott