When It's Not A Good Idea To Discount Your Product
A business that doesn’t lower the price of goods and services during an economic downturn is relatively unheard of—which puts high-end Colorado jewelry designer Todd Reed in the minority.
Reed and his general manager Amy Ash stand rather firmly against lowering their prices beneath the actual value of their products. They focus instead on targeting a consumer who appreciates the scope of the work—not those gunning for the best deal. Perhaps because of this commitment, they’ve managed to survive and thrive for 19 years in the jewelry business. (Over the last four years, they’ve grown over 30 percent, says Reed.)
Part of that has meant steering clear of deep-discounting platforms dominating consumer spending like flash-sale sites Gilt and Rue La La, while the other part is finding ways to adjust to the price increases of metals—Reed’s primary material—in order to sustain and grow further in the jewelry industry.
“We do not try and get deals, and do not try to give deals,” says Reed. “The power of the piece is in the story of the piece. Under my design principal, manufacturing process, and relationship-based style of selling, there [is] no room to discount. My work is not that expensive or over-priced in the scheme of it all. If we get known for that, then we send the wrong message to our collectors.”
Reed bluntly explains that the discount has to come from somewhere. In his business there really aren’t any areas to cut percentages.
“Should I work with a cheaper factory with less of a priority on safety or human rights? Or should we take it out of our excellent customer staff and generous policies?” says Reed. “We could just chop it out of our employee wages, or benefit packages. As you can see, when you discount the work you send a negative message with it.”
We spoke with Reed about his philosophy, and he shared a few of the rules he tries to live and run his business by.
There’s no buying into the ‘this is the jewelry business’ story
Reed is steadfast in not practicing the ‘mark it up super high, then give a sale or discount price.’
“It seems odd and disconnected,” says Reed. “It fuels the strong fire of disharmony in our industry where no one knows where anything came from, why it costs a certain amount, and of course raises questions about the object’s value at the end.”
Instead, craft your own story
Simply put, Reed’s work doesn’t begin and end with price in mind. He lets the stories of each piece take its journey and prices accordingly.
“[My story] uses gold and diamonds and has a price, but the price is only a part of it,” says Reed. “The metal, stones, design, passion and emotion evoked from the work all tell a story.”
Introduce your business’ story one-on-one with clients
Rather than restructure his philosophy when things slowed down, Reed instead saw the challenging economy as the perfect time to focus on best business practices and brand building.
“Certain stores and clients wanted discounts and other creative options, and we focused instead on being very clear about our policies,” says Reed. “That was a great strength for us. We probably did not get some sales, but then again, we got a lot more sales in other areas. While certain customers were not going to buy because we were too expensive or unwilling to give discounts, other customers were happy to get the product and service we offer and are pleased with the many added values they get for their money.”
Be flexible with materials
As a designer, Reed isn’t completely impossible with his work, only in creating his products one way and not budging on price. He adapts and finds materials that accommodate a fair, lower price point while still employing the essence and style of his creations. That can also mean repurposing a client’s old and unworn gold and or diamonds to use into a piece.
“If I have a ring that is $12,000 and a client really cannot afford this price but loves the look, I can redesign something that can typically fit the price and uses a more simple construction, or, lighter weight metal or stone,” says Reed. “With me and my company you get a process. That client that wants the $12,000 ring, but can only afford the $6,000 ring will get from me an understanding of what she loves that I then design for her. This is not discounting a price as much as nurturing a process between artist and collector and jeweler and consumer. While we won’t discount a price on a finished piece of jewelry, we will happily engage in the process and discovery.”
Image credit: Ann Staveley Photography