Price Surprise from a Manufacturer’s Point of View

Part 1

My instinct for self preservation must be in full gear as I keep hearing the word “the bearer of bad news gets shot first” buzzing in my head repeatedly as I am putting my thoughts and feelings in my writing today.

Yesterday, I finally received the email coming from one of the buyers, our design team had spent months doing product development and tweaking the designs to come up with new collections specific to this buyer’s description and profile. This was the same buyer, who had asked us if our company can guarantee that we only supply nickel-free, lead-free and cadmium-free metal components and that all our resins are phthalate-free. The very same buyer who has asked us if our company practices fair trade and that if they can send an agent to inspect our factory, all of which we replied with a YES.

Portion of the email read like this…

”Thank you for your follow up and pictures; I really appreciate your help and responsiveness.  Actually, we have been rethinking our costs and this is the reason too why I needed more time to reply back. And unfortunately, we come to realize that we can not make the items at the costs you have be feasible for us. I know that you have really tried hard to address the cost issue many times. But some of our vendors have responded to us with almost a third of your costs and so maybe your company is just too expensive for us, and maybe rightfully so as you have nice items but we just can not make it work for us.”

There is nothing wrong with this email, and being in the fashion jewelry manufacturing business for 13 years now, this is also not my first time to encounter such type of client.

What irked me though is that, right at the onset of this engagement, I have asked this client the following standard questions which would guide us as designer and manufacturer to come up with specific items to fit their requirements:

             1.) What sort of items are you looking for in terms of design, materials and colors?

             2.) Which season will you be launching the collections? Spring, Summer, Autumn, Winter? Are the items for day or evening wear?

            3.) Who is your target market for these designs? Are you positioning the items for low end, mid end or high end market?

            
                 And last but not least,

            4.) What is your maximum target price point for the items (necklace, bracelet, earring etc) you are inquiring from us?

We were told that they wanted to launch items made of fresh water pearls which can be mixed with any other materials. Target price for a necklace should not be more than USD 10 and the bracelets and earrings are expected to be much less. Likewise, we were also told that we can offer any designs whether it is for evening or day wear, as long as it is based around these parameters. The client also showed us some photos to give us an idea on what sort of designs they are looking for.

The next weeks were followed with several emails to the client containing images of our designs carefully selected based on their guidelines.  The client promptly replied positively and has in fact picked a few pieces from the images sent, then came the silence for the next 2 weeks. The silence was then followed by the bomb… the most recent email, excerpts of which I have posted earlier.

Now, injustice assumes so many faces and forms. I think this is one of it.

One of the biggest fears of designers is to have their designs copied and manufactured elsewhere without any hint of recognition from the consumer who the real owner of the creative work. The fashion industry is incestuous this way and surprise, surprise, it’s not just the small players who does this. Big players and big brands do this too… why else do you think lawsuits concerning infringement of designs are always in season?

Now, back to this client, I have yet to reply to the email and I have a few thoughts of what and how to reply to her.

Option 1: I can reply negatively and tell her exactly how unfair she is. After all, we have laboriously complied with all that was required from us.

Option 2: I could politely reply and say, “thank you we understand” and move on.

Option 3: I could explain to her what makes our items priced the way it is and why it is not “a third” of the price we quoted.

Option 4: I could ignore and pretend I did not receive her email.

Believe me; I am tempted to go for option 1. I think that even if I lash out, it would still be a justified anger.

But, that’s not who I am as a person and it serves me no other purpose than venting out negative thoughts and feelings. I think I deserve better than filling my day with negativity. Besides, the optimist inside me cannot help but look forward to the brighter side of things.

For instance, there is a big difference in price with seemingly similar looking components. A brass-based metal chain versus an iron-based metal chain of the same design would look exactly the same when both are electroplated with the same plating color. However, brass-based chains are priced five times more than iron-based chains. Why? Well, brass does not corrode and rust while iron does. Most iron based components contain nickel too. Fashion jewelry made of copper or brass based chains or other metal components last longer, safer and do not smell. They stay longer on the shelves and definitely consumers would be able to repeatedly wear and enjoy the fashion piece.

Now don’t get me wrong, there is a market for iron-based components---stylish, cheap and disposable fashion jewelry will never ran out of avid fans. However, as a designer and manufacturer, we also have the option to choose what sort of product comes out from our factory and which market will these products be intended for. Options, it simply is one of my favorite words.

So, my final reply to this client? Oh I don’t know, I’m still weighing my options actually.

Despite the injustice in this world, the universe has its way of balancing out. I still believe in reaping what you sow and I simply trust that this client will know soon enough how wrong it was that she let us slip off her grasp.

That’s me talking, venting out in my writing, dusting off with my head held high, back standing straight and feet planted firmly on the ground…. peace!

How about you? Have you encountered similar incidents with your clients?

On my next article, I’d like to share how and when I think it’s okay for a buyer to say NO because of price issue. Talk to you soon…

Designing, Writing and others

Even the most passionate needs breathing space from doing what they love doing, not only to refuel their creative energies but also to gain another perspective.

It has been sometime that I have been contemplating on taking a sabbatical, a personal hiatus from my day job - my main line of work which is designing fashion accessories, components, gifts, and home accents.

For me, this is not a case of “falling out of love” if such term is actually true, but my longing for this break is propelled by no other than to give way to my other passions. My other loves has been neglected for quite sometime now yet it continues to pulse deep within the recesses of my heart and mind. I think about it. I imagine working on it. Heck! I even dream about it. I guess that’s what passion is about. It simply invades and pervades your entire being.

I head up 2 important departments in our company: the first is Sales and Marketing and the second is Design and Product Development. When the world economy turned from bad to worse, these 2 departments had to work frantically in order to cope. Several of our clients, whose companies date back by as far as 50 years, closed. Suddenly buyers and designers are too timid, too unsure of what design and products to launch. Budget cuts are the most influential buzz words. A lot of buyers cancelled their travel to work with suppliers and manufacturers in Far East to lessen expense. It was a period that was immensely chaotic and truly uncertain.

The game has changed dramatically. The already competitive fashion industry became even more intense. No longer can even the most established manufacturers and designers sit idly and comfortably waiting for buyers to come. Even repeat buyers now needed prodding and reminding. Big snooty manufacturing companies who used to ignore small start up clients are now willing to work with small orders and at faster lead times.

Since none of the buyers and designers came to work on designs, to be on top of our game, our company had to be more creative not just with our designs but also in the way the orders would get through.

With 13 solid years backing me up, designing comes easy to me as breathing. And just like breathing, the business side of design---estimating cost, production lead time, aligning team and craftsmen, imagining the technicalities and equipment needed to run the order, comes naturally to me too. While I have never been one to sit on these laurels, the turn of the tides meant countless hours, even burning the midnight candle, researching and evaluating trends, design forecasts, reviewing past designs, and above all, understanding the core competencies of our company and what Philippines can uniquely offer to the world.

Our company has never joined the price war. In the first place, we are priced fairly and competitively. Unreasonably bringing down the cost further to bag the order just doesn’t make sense to us. To lower the selling price, one has to cut somewhere. In the end, something gets compromised. A lot of “enlightened” buyers demand certifications—fair trade, fair wages, no child labor etc. and yet the very same companies are haggling for unreasonably low prices. Manufacturers can only do so much to bring down the cost of materials. So if buyers want further discounts, there is a danger that the labor cost is the one that gets compromised, as simple as that.

Since price is not the place to look at, we had to focus our sight elsewhere; mainly, in the design, materials, production efficiency and service. We have also launched several new product categories—corporate giveaways, bespoke and thematic gifts, and even small furniture. All of these are still within our competencies and capabilities. Instead of heavily using imported components such as semi-precious stones and pearls, we have also turned to our roots, using more of the Philippine local materials such as wood, shells, seeds, and natural fibers. This change of material focus was very timely since a lot of Filipino manufacturing companies have closed and so there are fewer players in this product and material category. There certainly is opportunity in every situation no matter how bleak it may seem.

So, back to my epiphany, I am certainly passionate about designing and doing creative work. I love my day job. I love seeing my simple drawing on the sketch pad during my coffee break turned into a best selling item. I love the continuous learning process, the “eureka” moments of designing and manufacturing products. And yeah, I love writing too. I love, love, love, putting my thoughts into solid body of words. I am one with “to do” lists on sticky post-it papers. My bag is never without a journal so I can pen my thoughts as it comes. I am one who needs paper trails. Sometimes, I can write and design at the same time but sometimes, both passions battle each other in my head and definitely in my time table.

What do I love writing about? I love to write about fashion, the design process, possibly even manufacturing. I have also been thinking of writing a book; a compilation of anecdotes about my children which I have compiled through the years. I also like to write about issues that matter to me like natural and organic products, gardening, and my love for animals (our house is now home to 10 adopted feral cats) and who knows what else. I guess my spirit simply wants to soar with paper, pen and ink or in the modern world, tapping my computer keys, to set it free.