Pricing at CJ
Greetings reuse fans,
Today I am wading into the most challenging topic both inside and outside of CJ—how do we come up with our prices? The operative word here is “come up” because items arrive in various states of quality, age, cleanliness, condition and uniqueness and we can’t saunter over to the used building material pricing catalogue and look up a price that reflects all those variables plus the labor we put into the items. We do have a starting point, everyone needs one of those, right?
But I am getting ahead of myself, before we start with pricing, let’s start with our mission and financial sustainability. CJ was launched to address the reuse of building materials. Building materials comprise a significant percentage of the waste stream. Our budget to meet this mission; the building, equipment, trucks, training, advocacy and staff—80% of that cost is covered by retail sales.
Ok now on to pricing:
Where we start:
- What is the new price? The general pricing “rule of thumb” is 50% of the new retail price. But that immediately raises the question of whose retail price? Also, for example, not all windows are the same—a higher quality window needs to be priced higher than one of lower quality. Also CJ has three different acquisition methods: drop off, pick up and deconstruction each is more costly, but we apply roughly the same price for a panel door (for example) regardless of how it was acquired.
- We then work down from the new price based on the item’s condition, existing inventory stocks or our experience of historic sales or how much work needs to go into the item.
- What if there is no new price to reference? Meaning an item is antique, vintage, rare or in high demand. We have to research the price because we are not experts in all of the 100,000’s of items that annually cross our threshold. We look at a variety of sites across the internet and we still end up many times discounting the item from the prices we are finding. We also look at how rare it is that we get an item.
So a lot of work goes into pricing items and creating our on-line inventory.
Pricing can land too far in both directions, high or low. When we price an item too high we eventually realize it and lower the price or we may keep a rare/unusual item at a higher price. Naturally, there isn’t any complaining when we underprice something.
To address some comments from shoppers:
“Why is everything at CJ more expensive?”
Unsurprisingly, we don’t believe this is the case. In our opinion, we have simply gotten more knowledgeable in our pricing in an effort to not price things so cheaply they get scooped up by resellers. Also we have tended to over-represent our unique, pricier items on our website giving an impression that things at CJ are more expensive. We are working on putting a greater representation of our stock/common items on the website and our soon-to-be-released e-commerce site. We want shoppers to understand we consistently have a large stock of $35 white toilets, $25 to $35 doors, wall mounted/drop in sinks for $5 to $10 and light fixtures for under $25. These prices have not changed for a decade.
“You get everything for free”
This comes up particularly when people disagree with our pricing. CJ’s annual budget is 2 million dollars. That is what it costs us to set up an operation to accept donated building materials and advocate for reuse and partner with recyclers. Labor is 60% of CJ’s budget because our operation is very labor intensive. We have a staff of 30 plus our Goodwill trainees.
We have been challenged by pricing for our full 22 years of existence and that will continue. We appreciate feedback and I believe we will get more consistent with pricing our inventory—if only our inventory could be more consistent that job would be a lot easier.
