Measure by Measure

June 4, 2003

So how are you figuring your prices today? Are you considering all your overhead and muliplying by two? Or is it a sliding scale by material, where the multiples increase depending on stone type? Maybe a seasonal sales-volume target? Or…
… Are you pricing by tape measure?
You’ve all been there. The customer wants an on-the-spot number of how much the job costs per square foot. Then the sighs and funny faces come out, along with the various quotes for a variety of other materials. And, finally, you begin pulling the tape measure out and then letting it snap back, as you ponder how to make your number come closer to theirs.
This process came home recently with another of those syndicated articles on stone countertops. It began with the description of how granite can really do something for your home – and then the dreaded but transitioned into a long discussion of alternatives, including the qualities of solid-surface materials.
Then it’s time to get down to cases. The other materials do well, the article noted, considering that installed granite usually runs some $80-85 ft².
The point here isn’t that the theme of the article tried to compare apples to tomatoes to rutabagas. Or that quartz surfaces could be installed easily at a discount of some 20-percent to granite, which will surprise many of the fabricators I’ve talked to that handle both materials. Or that comparing natural stone to solid surface is like calling Warren Buffett and Warren Beatty alike, since they have the same first name, were both born in the 1930s, and both last names start with a B.
What we have here is something I call price allure. Don’t confuse this with just being cheap. People get hooked on narrowing comparisons down to a simple measurement of price, because it’s easy to justify any decision. It also makes the product being considered a commodity and not an investment, which can play havoc with pricing and profits.
Let’s get one thing straight: I like strong-willed consumers. I’m one of them. I search the Internet and local stores for the best deals. Occasionally, I go on a binge and hoard my favorite breakfast cereal when I find a case with a not-quite-expired product date at a closeout store. I live for triple-coupon days at the supermarket.
And, I can be found at the massive discount-hardware stores near my home on a semi-regular basis. It’s here that stone gets its widest retail exposure, with good and bad results.
Those who avoid being flattened by a forklift full of ceiling fans find that granite, marble, travertine, natural-quartz surface and other stone on display isn’t just for the rich. Unfortunately, the setting is smack in the middle of a cut-rate home-improvement universe, which leads directly to an attack of price allure.
Take, for example, the day when I wandered down the tile aisle after seeing a forklift deliver a massive display of Chinese marble 12” X 12”s. I picked up an 18” X 18” tile of travertine for a closer inspection, much to the consternation of two women with a severe case of the tsks on their way to the ceramic section. “Nine dollars for a tile!” one exclaimed. “Who’d be stupid enough to buy that?”
The thought occurred to show the beauty and strength of stone, and its ability to stay in one piece as it fell to the floor as it broke their toes, but I let it pass. After all, they didn’t understand one thing about the product I held, except for its price.
It’s a belief that reinforces the notion of pricing by tape measure and taking stone out of the buying decision. Unfortunately, as an industry, we’re not going to eradicate it, either.
In a way, we’re patsies for pricing by tape measure because, if we apply the same standard to fabrication and installation, we’re all over the price map. For some fabricators, that $85 ft² figure is just too low. Others wouldn’t move a slab into the shop for less than $65 ft².
Then there are friends of mine who recently built a house in a booming Southwestern U.S. city that shall remain nameless (although replicas of the Eiffel Tower and the Sphinx are within a couple of miles) and put some nice Brazilian granite, hand-picked by them in a fabricator’s yard, for less than $50 ft². And they only quibbled about quality, not price.
Some fabricators will charge more than $100 ft² and get it. For a large majority, though, this is a time to sharpen the pencils to a finer point, and take a harder look at material costs, waste and any other scrap of overhead to be reduced. In some ways, there’s the specter of the tape measure for current and future business.
However, don’t let it become all-consuming. Stone, and what you can do with it, holds a value that goes beyond a measurement and a price. It’s something to be explained and sold before taking one measurement for an estimate. It also means sizing up customers and finding ways to break the spell of price allure.
The results can be painful if you end up walking away from a job when you can’t break the price barrier. The offset is that there are customers – and more than you might think – who understand that you can enhance where they live and/or work, and you’re selling more than a slab, a polish and an edge.
The tale of the tape is likely with us to stay. It’s important to remember, though, that the crucial time to sell is before the tape measure comes out.