Archive for February, 2015

How We Set Our Pricing

In December, I wrote that this article was forthcoming. That was just before Christmas, my wife’s birthday, New Years, Patriots winning the Super Bowl and before we took about two feet of snow. You’ve probably been waiting with bated breath for it to get written and posted. It’s finally here. Be strong.

We wanted a schema that was fair. Fair to our retailers so that when they were busy and sent us a lot of work, we were busy and getting paid for it, but when they weren’t busy, they weren’t getting random invoices from CCBS. We do not want to spend a lot of time on the phone with customers who think we charge too much or feel that they aren’t getting a good deal – and with our plan, we don’t.

We have, and have had, customers all over the world (yes, we do currency conversions); we’ve also seen competitors that have come and gone for whatever reason and we’ve seen and considered myriad pricing ideas over the past 30-odd years.

Co-op ad claims is all we do. We don’t design or print flyers, we don’t wholesale any products; we don’t drive plow trucks. Just co-op claims.

We’ve pondered these scenarios:

• We don’t know when, how much, or if, you have any accruals. Why would we have any incentive to send out a claim if we know you don’t have any accruals?
• We don’t know what claims you’ve handled personally with a rep for, say, custom printed bags, which usually come out of your accruals.
• We don’t know that you got paid so that we can submit an invoice? (See: How do you know if your co-op advertising claim got paid? December 17, 2014).
• We could have checks and Credit Memos sent here but there other ways that you get reimbursed that you wouldn’t see, hence we wouldn’t get paid for. Plus, if we handle your checks it takes them longer to get back into your hands. Plus, I had enough trouble coming up with a plan for us to get paid for handling co-op claims; I didn’t want to figure out how to get paid for handling that, too. Plus there is other exposure like if we lost a check.
• How can we place the burden on our stores to do the extra accounting and work of generating ‘commission’ checks?
• What if you’re a farm supply store in Idaho that puts an ad in the weekly paper for paint? What’s a good deal for that guy?
• What if you run a 7-store chain in Pennsylvania that runs a 16-page flyer every week? What would be a good deal for both of them?
• What if you don’t use flyers, what if you just do radio, TV, newspaper ads, shows, wearable’s? What do we charge that guy?

I’m getting a headache just reliving it.

Finally, we considered what we actually do, which is basically handle paper and ad materials in the form of flyers, invoices, tearsheets, scripts, photos, printed bags, collateral, POP signage, music-on-hold scripts, ads on Facebook and elsewhere on the internet, and anything else you want to try to get reimbursed for.

We handle paper. And postage.

Paper and postage.

You’ll see what we came up with after I go out and shovel some snow, clear off the cars, run the snowblower and my fingers thaw out. I think it was fair, clever and, most importantly, fair.

 

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