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As forrest gump use to say

As Forrest Gump used to say: "Repairs are like a box of chocolates, you never
know what's going to come in the door."

by David Geller, Director of Profit

Yep! Forrest was right; you never know what's going to come in the door. But if
you price it right you'l always make money.
Whether it`s a simple ring sizing, half shank or rebuilding 7 channel set stones in a
wedding band, you should always feel like: “it'l be a profitable sale”. Why not?
90% of people say: "Ok, go ahead and fix it!"
One way to ensure profit is to price from your brain and not from your stomach.
What's the difference? Simple…
Your brain actual y thinks where as your stomach feels.
That's nice but not when it comes to the science of money.
Product side of the store:
Pricing from your brain, commentary from your stomach:

Product arrives and the cost has gone up. So you stock a ring #1234 that costs
you $400 and you sel it at keystone for $799. Simple brain math. "If our costs are
between $500 and $1500 we wil mark it up keystone."
Now gold has gone up. So what do you do?
Your brain tel s you what to do:
Stock #1234
Old cost: $400
New costs: $500
Brain Says:
"My overhead hasn't dropped, payrol continues, we have to make a profit. Let’s apply our markup formula of keystone." Stomach says
"OMG, nobody wil pay that! We must sell 100% of the customers coming in the
door. "
Brain Says:
"You fool, who's going to make payrol next week. Your friend: 'acid indigestion'?
We stil have to make a profit. We can't sell everybody. We need to continue
with our “sel ing 3 out of 10 people” closing ratio."
New Selling Price: (was $799) NOW: $999.00
We sell it, takes a little more explanation, but with all of the news coverage,
customers understand the cost of material has gone up.
Repairs & custom work side of the store
Pricing by the Brain:

"Cost of sizing stock, lobster claws and heads goes up in costs. One jeweler got a
raise (labor went up), another hasn't gotten a raise in 3 years and my
competition wil soon hire him away with a pay raise. The jeweler I want to hire is
asking 20% more than I pay anyone in my shop now. OMG!"
Pricing by Stomach:
"Yeah but if I raise my repair prices I'll have people leave and never come back.
This could jeopardize my business. It could collapse. I'd have to fire everyone."
Brain:
"You moron! Remember when it took you 7 years to raise your ring sizing smaller
from $20 to $25? A whole five bucks! That's a whopping 25% increase. You didn't
raise the price because of rising gold price but because 3 of your jeweler
buddies told you they raised their prices. Remember what happened?"
Stomach:
"I had a pit in me. Nothing happened."
Brain:
"Excuse me? Nothing happened? Repair income went up as wel ."
Stomach:
"Ok, but this time its different. We fight for every dol ar. We can't afford to lose
any customers."
Brain:
"You real y take the cake. How many people out of 10 who walk thru the door
with a repair don't leave it and go home?"
Stomach:
"One, maybe two."

Brain:
"How many people out of 10 come in, look in the showcase, don't buy jewelry
and walk out?
For whatever reason?"
Stomach:
"Typically 3 buy out of 10 so I guess 7 walk. But we've had many days where 5
people buy!"
Brain:
"And how much do you own in inventory, Mr. Big Shot and what is the average
dol ar sale when you do make a sale?"
Stomach:
"Half a mil, give or take. Average sale is maybe $400, if we're lucky."
Brain:
"So let me get this straight.
On showcase sales you keep 1/2 mil ion dol ars in inventory, so you can have
an average $400 dol ar sale. When 10 people come in to look to buy jewelry, 7
leave the store without buying, leaving you with 1/2 mil of unsold inventory that
ties up your accounts payables?"

Stomach:
"Yes, but you see…."
Brain:
This doesn't keep you up at night? Besides, every time a replacement item
comes into the store you just double it, without any thought to wil the customer
pay
? Even if it costs more to purchase it this time."
Stomach:
"Yes I worry but we've got to make a profit to stay open"
Brain:
"Indeed you do. But then when a repair comes in it has a 90% closing ratio. You
want to know why? Because unlike product, repairs are NOT price sensitive, they
are trust sensitive
. That's why so many folks say 'gosh just go ahead and fix it'.
But cost of labor and materials go up and you won't raise the price in the repair
department.
How about this question: 5 Years ago an average wedding band cost YOU $300
and you sold it for $599. How much does it cost you today?"
Stomach:
"Easy, it costs us about $475 now and we sel it for $950."
Brain:
"So let me get this straight. A plain wedding band has gone UP by $351 retail and
you won't raise your price from $28 to $39 to size that darn ring? Eleven dol ars
more to size a ring that itself increased by $350!
For crying out loud! No wonder you take so much Prilosec OTC. Heart burn city.
You know what you need?"
Stomach:
"No, what?"
Brain:
"Besides maybe a knock upside the head, you need a crutch. Just go get the
Geller's Blue Book to Jewelry Repair and Design, 2 shank jobs wil more than pay
for it and could easily increase shop income by 50%. The guy even trains you and
the staff on his website. You'l keep the same closing ratio but you'l be making
more money. Besides you can't sel everyone, even though in the repair
department it sure looks like you do."
It's a no brainer. Here, take the 5 Tum's, I'l speak to you tomorrow."
Stomach:
"Oh thank you brain, I don't know what I'd do without you."
Brain:
"One last thing, mama used to tell me this and it applies to you:
“Stupid is as Stupid does”.
Don't be stupid. Now drink this Maalox and start making some real money in the
repair department. "
Sincerely,
David Gel ar
Aka: Brain
Director of Profit

Source: http://marketing.polygon.net/pdf/DavidGellar_2012_10_04.pdf

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Il dialogo filosofico fra ragione e poesia

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