n the first part of this
series of articles on pricing, I discussed my method for determining
how much a workroom should charge by the hour for its services using
the Manufacturerís Pricing Technique (see D&WC, November
2003, page 72). In the second part of this series we learned how
to perform a time study and analyze how long it takes us to make
each different style of window coverings we offer (see D&WC,
December 2003, page 47). We then put both answers into our pricing
formula (CHARGE = HOURLY CHARGE X TIME) and used the result to create
a set price list.
Well, that all works great if you have all the information you need.
There are some questions you might have that havenít been covered
yet, and thatís what this monthís article is all about.
Q: What do I do if Iím just starting my business and do
not have a yearís worth of expenses to count up or havenít
had the time to do a time study yet?
I have several suggestions for you. The first is to guess.
You calculate as closely as possible what you project your expenses
will be for a year and how long it takes you to create each treatment.
For help, try to find someone else who has a workroom with a setup
similar to yours and ask them to share with you what their expenses
have been. (You may be wondering how you could meet someone who
has a business similar to yours. The answer is: networking! And,
of course, the annual Custom Home Furnishings Educational Conference
and Trade Show is a good place to start!) The instructors and attendees
(even the vendors!) are very willing to share and help each other.
Many new, long-lasting friendships are formed there.
Another option is to temporarily use the price list of another company
until you have been in business long enough to accumulate your own
information. You could collect price lists of your local competitors
or from industry friends.
When you have been in business long enough to determine your hourly
charge and to perform a time study, you then can revise your temporary
guessed price list to the exact pricing you desire. Review your
price list each year to determine if it still meets your goals.
Regularly repeat the entire price-setting process to update your
Q: If all prices are based on how long it takes me to make a
treatment, how can I price a one-of-a-kind treatment that Iíve
never made before?
Thatís one of the toughest challenges we face! I
first would analyze very carefully exactly how the treatment had
to be created. Then I would visualize the fabrication step by step,
making the treatment in my mind.
While seeing myself perform the steps, I would mentally keep track
of how long it would take me. I then would add up the time, making
my best estimation of how long it would take to create. Then I would
double my estimate and base my quote on that time.
I would double this estimate because no matter how carefully and
thoroughly Iíd plan a fabrication it always took me about twice
as long as I figured. If the job went faster than I guessed, I would
just make a little extra profit on that treatment. But there always
were jobs that Iíd end up losing money on, so it all evened
However, if I ever felt by the time I had finished a job that I
had overestimated, I could certainly reduce the price. Itís
always easy to greet a customer with a price that is lower than
Another suggestion is to ask other professionals if they have ever
made that particular treatment or one similar to it and if they
would share with you how they established their pricing.
Q: What if while analyzing the results of my time study I discover
that I am not making money on certain treatments?
Several different solutions exist to handle this situation:
1. Raise your price on that treatment. Obviously, if youíre
not making money on a treatment, you could raise the price you charge
for it until you do make a profit on it. But what if you donít
think the market will bear a higher price? Then go on to suggestion
2. Produce it faster. Sometimes a simple little tool or piece
of equipment can increase your production so that you are not losing
money. Sometimes, itís simply learning a faster method through
3. Contract it out. Often, a workroom that specializes in
a particular type of treatment can make it much faster and cheaper
than a workroom that only makes it once in a while. Beside that,
you can be making money creating a different treatment (one you
make a profit on) while at the same time making money on the treatment
you contracted out. Itís a win-win situation.
I know of quite a few small in-home workrooms that just donít
have enough room for a professional 12-foot table. Creating large
pleated panels would be very difficult. They still sell the draperies
in these large sizes, but they contract that work out to someone
else to actually make.
4. Stop offering that treatment. You could decide to stop
making that particular treatment altogether. Although most workrooms
find that they must be full service and offer a wide variety of
styles, a few workrooms specialize in one particular style or a
limited number of styles.
5. Keep making it at a loss. Why would you still want to
make a treatment that you are losing money on? For two reasons:
First, you could use it as a loss leader. Grocers use this tactic
all the time to get buyers in the door. They know that once there,
the shopper will not pick up just that one sale item; theyíll
leave with at least a basket, if not a shopping cart, full of other
items. Your customers could do the same.
Second, you can continue to offer it because you provide full service.
If you sew for decorators and designers, they do not want to travel
all over the place to get their work done. If you are profitable
on everything else they bring you, you will gladly make the treatment
they need along with all the rest of their order to accommodate
a good customer. Besides, do you really want them taking any work
to another workroom if you can help it? They may be so happy with
your competitorís service that you lose them as a customer.
As you can see, determining the perfect pricing for your business
does take a little effort, but it is not all that difficult. Try
the Manufacturerís Pricing Technique and see how well it works
Strickland is owner of Professional Drapery School, Swannanoa, NC,
and is an internationally acclaimed speaker with 20 years experience
in the window coverings industry. She is the publisher and editor
of Sew WHAT?, an international monthly newsletter for professional