Page 7 - Demo

Pricing Your Product
the target of $700, you can adjust the price higher to achieve a higher Octane. Again, this is a method to help assure that your pric- ing will be profitable. You still must learn what the customer will accept.
Another popular ap- proach to pricing is called “Hot Sauce” which is the upcharge for the enhance- ments beyond the basic countertop such as pre- mium edges, chip mini- mizer, digital layout, tile backsplash, expedited completions and any other feature that you can sell to your customers. A clever App has been created by Geoffrey Gran and Bill Hauer at The Countertop Factory-Midwest. The fact is that there is money to be made in selling Hot Sauce, i.e. the enhancements be- yond the basic counter- top. The App will help you encourage, manage and track those additional sales. Check it out at www. tcfmidwest.com .
The bottom line on pric- ing is that it has a major impact on your bottom line. As such, it should be a part of your daily routine. It is not an exact science, but there are techniques and strategies that you can uti- lize to make more money. After all, that should be The Goal of every company.
For more information on how to use Throughput ($T) to manage and con- trol your pricing contact Ed Hill at Synchronous Solutions, www. SynchronousSolutions.com or call 704-560-1536.
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The point is that the mar- ket was willing to pay much more for the Ralph Lauren Polo label. Our customer paid us more as well. So, this presented a challenge in level-loading our plant. If we had too much of the JC Penny product, it took a lot more units of production to make the same money. If we had a heavy load of the Polo shirts, we made more money even if production was low. Unfortunately, my boss at the time expected the high profits all the time no matter what we were manufacturing.
This phenomenon is not unlike the situation in a countertop fabricator that does work for retail custom- ers (who are willing to pay premium prices) and at the same time does work for box stores that emphasize low prices. The same job for a retail customer could be 30% more compared to that job for a box store, while the cost of production is the same. Ultimately, the cost of production has little to do with the price of your product.
A solution to the dilemma of level loading is to control the mix as best you can. Try to blend the high value and low value products in your daily mix so that the shop does not experience the “waves” of high and low de- mand that will diminish pro- ductivity and cause lots of chaos among your workers.
In the Synchronous Flow system, we use Throughput Dollars ($T) as the metric for planning, scheduling and
tracking the orders through the system. $T is “the mea- sure of value added” for your business. (See “Square Feet vs. Dollars” in the July 2018 edition of the Slippery Rock Gazette, at slippery rockgazette.net). Using that metric, you can also cal- culate the $T Ratio, which is the percentage of a sales dollar that will become $T.
We have learned over the years to target that ratio for given products. In other words, you can adjust the price until you have achieved the desired $T Ratio. The $T Ratio varies by product and a bit by region of the coun- try, but this is a good way to gain confidence that you are setting your price at a prof- itable point. Of course, this assumes that the customer will accept this price level, which is always paramount.
Another measure that we use in the Synchronous Flow system to set pricing is Octane, which is $T per hour of time at your system’s Constraint or Control Point. Typically, in the countertop industry, we use Install as the Control Point. We have learned that a good target for Octane is about $700 per hour. The process is to cal- culate the $T for the order as the projected sales price minus the investment in ma- terials and freight. Divide that number by the projected drive time and job time for the installation. That equals Octane. If the result is below
$T Ratio = $T – Sale Price
Training & Education
PO Box 188, Stinesville, IN 47464 Ph: 812-876-0835 Fax: 812-876-0839 bigcreekstone.com
If no one shopped on Thanksgiving Day, the stores wouldn’t open. End of Story. I say we all TAKE THE PLEDGE and stay home. Thanksgiving is a day to give thanks for what you have, not to save a few bucks to get more. – Anonymous
Slippery rock Gazette
November 2019|7
Natural Stone Council Updates Sustainability Standards
to Align with Evolving Green Building Programs
The Natural Stone Council – a collab- oration of natural stone trade associations to promote the use of natural stone in commercial, resi- dential, government, insti- tutional, educational, and all types of applications interior and exterior – is proud to announce updates to the Natural Stone Sustainability Standard (ANSI/NSC 373).
“Five years ago, the vol- untary natural stone sus- tainability standard was adopted, and companies in the stone industry have shown tremendous support by certifying and giving de- sign teams more options for what they’ve asked – certi- fied, sustainably produced stone,” says Duke Pointer, Executive Director of the NSC. “As the building and design market continues to demand greener and more sustainably produced ma- terials, green building pro- grams evolve to meet the rising needs. Updates to the natural stone certification reflect the stone industry’s commitment to aligning with evolving green build- ing programs.”
NSF International’s National Center for
Sustainability Standards facilitated the standard’s development, including re- visions, and published the updated standard in August 2019. The 2019 updates address a broad scope of issues including water, site management, land recla- mation and adaptive use, corporate governance, man- agement of excess process materials, and innovation.
Updates to the standard also address a wider range in variability of operations, natural stone dimensional deposits, and regulatory requirements across the country. The ANSI/NSC 373 joint committee, com- prised of members from a cross-section of stakehold- ers within and outside of the stone industry, worked to update the standard with input from task groups. Along with the updates, the committee has reenergized its efforts to educate the de- sign community about using the standard.
“The heart of ANSI/NSC 373 Sustainable Production of Natural Dimension Stone is continuous improve- ment,” says Kathy Spanier, Marketing Director of Coldspring and Chair of the NSC’s Sustainability Committee. “With the stan- dard being in the market for about five years, we took feedback from certified companies as well as input from key green building programs to make neces- sary updates and ensure relevance.”
First issued in 2014, the Natural Stone Sustainability Standard establishes criteria and methods for tracking, measuring and improving sustainability in the produc- tion of natural stone, long regarded for its durability and resiliency.
“Natural stone is one of the best building products we have from an environ- mental perspective, and the NSC’s response to feedback from the green building in- dustry with updates to the stone standard demonstrates their commitment to con- tinual improvement,” says Jason F. McLennan, au- thor of the Living Building Challenge.
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