Recently I was told that because the tools and supplies sold by Braxton-Bragg account for less than 2% of the total annual sales of most fab shops, our low pricing does not really matter. He said that the fact that we sell for less is irrelevant. After all, a 20% savings on a 2% expenditure is not that much money. (For a stone shop with $2 million in annual sales savings would only be about $8,000 per year).    

This of course was a gentle jab at our Better! Faster! Cheaper! tag line. It was also a jab at my focus on internal cost control, efficiency, and product selection.

In the short term, my friend may well be right. However, in the long term, I see a different picture.

Natural stone is and probably always will be a premium product. The economics of production follows the curve of other natural resources. If my customers just create granite countertops, the market for stone tools is very much a niche. He is right, in a niche industry, prices don’t really matter that much.

But the introduction of Quartz changed the picture. Although currently priced as a premium product, it is a manufactured product and will inevitably follow the curve for manufactured goods. This curve was clearly established by Henry Ford in 1908 when he introduced the Model T. I believe that his thoughts on pricing express the foundation of our modern economy. Here is my favorite quote:

“Our policy is to reduce the price, extend the operations, and improve the article. You will notice that the reduction of price comes first. We have never considered any costs as fixed. Therefore we first reduce the price to a point where we believe more sales will result. Then we go ahead and try to make the price. We do not bother about the costs. The new price forces the cost down.”

I often hear about two problems our customers face. The first is that some fabricators don’t have a firm understanding of their own costs. The result is that some fabricators bid jobs too low, hurting their own profits and the profits of their competitors. 

The second problem is that patents as well as massive marketing expenditures for engineered stone has kept the price of quartz too high. But this is a short-term phenomenon. In the long run, man-made products increase in value and decrease in price. At some price the market that now buys laminates will step up to engineered stone.

When that happens, the implications are staggering. First of all, exploding demand will mean that cost efficient fabricators will have more work than they can handle.  Second, natural stone will once again be at the top of the price chain and will be aspirational, (for only a little more, the consumer can step up to natural stone). Third, the price of quartz countertops will come down. It is inevitable that tools will become a larger percentage of the fabricators sales dollar unless tool purchases become a fabricator focus.  

Keeping this picture in mind, there is another quote from Henry Ford that is never far from my mind:

“Keeping that principle in mind we can attack waste with a definite objective. We will not put into our establishment anything that is useless. We will not put up elaborate buildings as monuments to our success. The interest on the investment and the cost of their upkeep only serve to add uselessly to the cost of what is produced.”

Substitute stores, vans, and middlemen for buildings and you have a pretty good summary for what drives us. Anything that increases cost but does not add value is apt to end up as a tomb.

Rich Hassert

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