September 2007

Hold, Please

When printedgoods.com started up, it did so as so many distributors in the promotional products industry do: as a small “Ma-and-Pa-type organization where we got a job and said, ‘Hey, let’s do it,’ and we didn’t pay much mind to what it cost us to produce that job,” says Jason Williams, president of the Atlanta-based company.

That might be because orders for apparel items, for example, weren’t too complicated at first. Then, several years ago after business picked up, Williams says, the company began to realize that on complex apparel orders the “profit wasn’t as high as what they could be.”

To stay competitive, Williams realized, it was crucial for him to understand the total costs that went into producing an order. “We see a lot of out-of-home-type companies start up and go out of business,” he says.

Williams didn’t want printedgoods.com to become one of the industry’s next casualties. So he started conducting “time and motion studies,” as he calls them, tracking exactly how much time and expense were spent producing each apparel order. What he discovered – that 60% of the time, on average, is spent setting up, taking down and cleaning screens, for example – might be reason to charge more to ensure a solid profit margin.

As the advertising specialties market becomes increasingly more competitive, learning how to quote complex apparel orders accurately is crucial to ensure a certain profit margin on each order and a solid bottom line in general. That’s particularly true of orders where figuring out a quote on 100 shirts, every 10 of them a different color or design, can take an exorbitant amount of time for distributors and leave some of them wondering if they have a reasonably strong profit margin.

Automate it
For Williams, the answer was to develop an online pricing system, through a customized software program so sophisticated that visitors to the company’s Web site can shop much like they would at Amazon or other major Web sites, while guaranteeing Williams a healthy profit margin on each complex order. Spending the time and money ($17,000 over three years) to develop an online ordering system for complex orders means client retention has risen, since prices are instantly totaled. Before, even a 15-minute delay to tally an order might have meant losing a customer who had moved on by calling the next distributor on his list, Williams says.

Like Williams, many distributors are finding that it’s crucial to build costs such as production and artwork into the final quote. To make his complex orders easier to price, Glenn Arnold, executive director, of CMajor Net in Knoxville, TN, created an Excel spreadsheet that not only includes lists of products, such as shirts, hats and duffel bags, but offers the ability to create suborders within each of those categories.

So, if a customer wants to order T-shirts and long-sleeve sweatshirts, Arnold first clicks on those products, and then screens sizes, say, for an adult or child. By doing that, the spreadsheet then subdivides again, prompting Arnold to click on the quantity. After that, the spreadsheet moves into color categories, including pricing discounts for certain shades.

Having the ability to subdivide each order in a spreadsheet this way not only allows Arnold to take into account all possible costs for the order, but makes putting together a quote for a complex order that much faster. A quote that once might have taken an hour or more, now takes “a matter of minutes,” he says.
That type of automated system is crucial, says Bret Bonnet, president of Aurora, IL-based Quality Logo Products Inc. “I can quote a million pieces down to the most simple order in 15 seconds or less, depending on how quickly I click my mouse,” he says.

Bonnet’s company uses an automated program that he built while taking an eight-week college computer course to determine price quotes by drilling down into complex orders. The program, which took him about 16 hours to build, prompts each salesperson to click on fixed variables already entered into the program. A seller starts with the net price of the garment, and then “from there they eliminate the [production] options, they choose more and more variables, and then it spits out the end results instantly,” Bonnet says.

Before the program, which the company has used for four years, “we did it the hard way, with a calculator and a pen,” Bonnet says. When that got too inefficient for sellers, he explored developing a software price quoting program instead, freeing up sellers to spend more time prospecting rather than quoting. Now, “I can quote under a minute,” Bonnet says. And quoting is so fast through the program he created that, he says, “I would fire a salesperson if they hung up on a customer without giving a quote on the phone.”

Know your products
Of course the key to having such organized information is really knowing your products – along with their costs. At WorkflowOne in Dayton, OH, where annual sales are $1 billion, with offices in nearly every state, the company really has to track the cost of its goods, particularly for complex orders, says Dan Welborne, the company’s vice president. “We can break it down to the price of a box, the price of putting something in a box and the price per square foot in our warehouse,” he says. All of that’s vital, he says, when calculating complex order quotes to make sure the company is creating margins that’ll cover overhead.
By the same token, distributors are well served by using the same vendors repeatedly when figuring out complex orders, says Jeff Anderson, sales manager for Promopeddler.com, a distributor in Sherwood, OR.
At Promopeddler, for example, Seattle-based SanMar is the company’s vendor of choice for almost 90% of its orders. Settling on a specific vendor for nearly all his orders means Anderson can guarantee pricing on certain garments, and be assured of other fees, such as embroidery, change fees on varying quantities within one complex order and other costs. That speeds up his quoting ability.
Using a specified vendor also helps Anderson because he can access, for instance, SanMar’s Web site, which offers pricing models and online help in formulating complex price quotes. “I tried organizing that information from different vendors, but that doesn’t work,” Anderson says. For him, it was easier to utilize the tools of a supplier rather than build his own.

Like Anderson, Rob Platt, president and owner of Branding Solutions in Beachwood, OH, says knowing a supplier’s products well is often the key to effective pricing. “One of the things that’s very important, especially with wearables, is to align yourself with three to four companies that you’ll do all of your work with,” Platt says. “You become very familiar with the lines.” So much so that Platt can “quote on the fly,” he says.

But he’s not that casual. Platt knows that to guarantee a certain margin on complex orders means he has to be diligent in his pricing. “We handle orders where someone calls in and says, ‘I’ll take 10 of that style, five of that style, two of that style, and these two logos on 10 of those and six of those,’” Platt says, rattling off an order that’s confusing just to listen to, let alone price. To handle such complex orders, Platt has developed a pricing grid through Excel based upon standard pricing from his suppliers he uses regularly. But Platt has also built costs such as bagging fees, embroidery and other costs and then divided it per piece, to make sure he’ll get at least a 60% margin on each quote. “I don’t work on markup, but margins,” Platt says.■