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Arnie,
Interesting information. Am glad I don't have to fight that profitability
battle any more like I did everyday in my working career. Analyzing the
client's sales successes and failures, looking for new
opportunities, creating and writing the ad plan and the ad
material, then selling it to the client, including an accurate estimate of
advertising, creative and production costs, and time "working" with the ad
manager to get reasonable budgets to implement the finished advertising
strategies successfuly, made for a lot of long days. But, like you say,
when it came off with a good sales year, it was fun...at least the creative
stuff was fun.
Maybe "fussy" was the wrong word..."complainers" might have been
better. The retail stores seem to just send them to the factory and
not deal with the problem. With my prices, and overnight service on repairs, I
don't have nearly as many of those as the pro shop. Since I only build clubs on
request, I just have about one customer every couple years who isn't
satisfied with anything, but won't go away. :-)
----- Original Message -----
Sent: Friday, December 13, 2002 6:24
PM
Subject: Re: ShopTalk: Tom Wishon's
Co.
In a message dated 12/13/02 5:24:33 PM Eastern Standard
Time, [EMAIL PROTECTED]
writes:
Three times as many OEM sales...that would be a big difference
in OEM income compared with components....and far fewer fussy
customers. Have no idea what the mark-ups are on OEM equipment, so
might be way off base on this one.
As for fussy customers,
I'm here for them. To change shafts, grips, loft/lie. When a customer
convinces himself/herself that the "name brand" is the most reliable they have
taken the hook! That's what the proline company spends ad bucks for.
Endorsements by Pros sets the hook so that the customer places poor
performance on themselves not the manufacturer. That's why they take their
stuff to Second Swing or Play It Again Sports when it doesn't put them on the
tour.
As for proline markup. Take the manufacturer's suggested retail
and multiply by 60% that's dealer cost. Now discount the suggested retail to
"street price" (what retailers are actually selling the product for).
Divide dealer cost by street price and subtract the result from 100. The
result is Gross markup percent. Subtract business expense and you have net
profit. Example $800 sugg. retail for set of irons, cost $480 "street price"
$699.99 equals 31.428% after expenses this will be reduced to about 25%, run a
sale and it could come down to 20-22%. At 22% gross profit is $135.38. Would
you give me $480 to make $135.38 profit? Yes, if you can turn the goods fast
and easy! Yes, if you can have 90 payment terms. Yes, if you get co-op
ad allowances. Absolutely yes if you can stock balance out outdated
merchandise. Dreamer! That's what is squeezing profit out of the proline
dealers. Faster introduction of new products is forcing clearance prices and
lower p! rofit! This is becoming the current method of "sucking through" golf
equipment! A custom builder doesn't experience as much risk (head
inventory may go "stale" but shafts/grips/ferrules don't). And head inventory
is low compared to inventory of completed sets in various shaft flexes. Would
you spend $125 (approx.cost of components) to take in $260 for a set of irons
with about 1.5 hrs. labor and 1 hr. sell time for the same $135 profit? That's
what a good clubmaker is doing. Can you reduce the time factor? Can you get
the sale faster? Can you get MORE sales? Can you accept sloppier tolerances
and correct them yourself at a reasonable cost (adjust loft/lie)? Profit
picture will improve! You can give your customer a better set of clubs (fit)
for a much better price!
I haven't even touched on the profitability
of repairs, retro fitting, regripping! You could make more profit on a
reshaft/regrip/loft-lie adjustment job than the dealer who originally sold the
clubs!
Smile at those fussy customers. You will never be
able to please some people! Ponce DeLeon never found the fountain either! Say
Thank You for letting me have so much fun while getting paid.
Lecture
over, I've got to get the deposit to the bank!
Arnie
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