Do You or Do You Not Show Employees Cost?
I worked for a store in Tallahassee, Florida while I was in college. At that store, employees were given an hourly wage and commission based off of cost—therefore we knew the cost of all items in stock. Or at least the cost that was in the computer. Knowing the cost of items didn’t help me one way or another. I know how to calculate gold prices from the market, burn off, etc. In addition, I knew a lot about melee and large diamonds as well—even knowing the cost—the item was still priced by someone else.
Where I learned all of this was while growing up at mom-dad’s store. There, I was taught cost was an important part of the business and strictly kept secret between owners of the company. My dad always says, “It’s how we run our business. When you buy well you can sell even better. You have to learn how to buy before you open your own store.”
Now I own my own store in Charlotte, NC and I do keep secret many things mom-dad have taught me throughout the years—though sometimes cost does become an issue—and here’s how. We do a lot of custom work and for a few of my employees not to learn costs—makes it very hard on me. They have trouble selling a custom made piece and I would have to be involved in each and every one of their custom sales—this is why I have started to let them in on a little—calculating gold, burn off, design, wax, casting, etc.
I keep secret—the costs of all inventory items as well as the cost of loose diamonds (basically, the POS has those fields hidden)…though they do know many items that are branded are keystone because the trainers who come in tell them about the catalog, and diamonds ordered from dealers are ordered by full-time trained sales associates working on customer-specific orders so they have learned some of that as well.
Do you share costs with your employees? Are all costs kept secret or some are divulged as the associate learns more or increases his/her sales?
JACK800 commented:
The question of divulging cost hinges on your understanding of
human nature. Unless they are enlightened beyond their station in
life, every employee brings their own expectations of
“honesty and fairness” into the workplace. They can and
will evaluate individual transactions in the simplest of terms;
here’s the cost, there’s the price, how can that be so
high? “Isn’t it dishonest to sell this xxxx of jewelry
since it was part of a free promotion last month? How is it fair to
charge $299.00 for an item that costs $100.00? “ If you admit
that your employees are not all business majors with an
understanding of net present cash value, depreciation, inventory
turn and loss, cash flow dynamics, federal, state, and local tax
obligations, etc, then you have no reason to, and every reason not
to, disclose cost information. Human nature will always pit the
employee against the employer when there is disconnect between
their values, even when based on the naïve conclusions reached
be a good employee.
necktie commented:
well those are many individual problems you have just mentioned
.....i have found that during my career each and every one of these
situations has been dealt with differently depending .....which may
in itself indicate that everyone runs there business as they see
fit....but personaly I havent witnessed employers allowing staff
full access to costs...nor do I believe it is a good idea to do
so.......it is your business and not anyone elses....and therfore
you are best to protect your interests by finding ways to allow
staff to quote without giving them key information.......you may be
inconvenienced at times in having to tend to matters personaly as
alot of business owners find is the best way....some companies i
have worked for have created ways in which their staff can work on
a more independant scale with use of pre-made price lists for
certain items... such as making up an in house diamond chart that
can be formulated to give the salesperson a final price with a
specified leeway percentage...all they need to know is how much
they can quote....its really up to you to find stategies to resolve
each situation....
Shanu S. Guliani commented:
necktie--Unfortunately custom work isn't so easy. Gold prices have
been increasing rapidly. Burn off is different for different items.
For example using a a bunch of 14k chains to make something
else--in chains there is more burn off than there is in rings.
Melee prices have increased. Loose diamonds are priced differently
dependent on vendor, etc. Design work prices differ depending how
intricate the work. Waxes and molds aren't prices the same
either--silicon molds.etc, etc.
necktie commented:
instead of spending all your time writing these silly articles..why
dont you spend some time programming some spread sheets so that
your staff can give final quotes without having to know exact
costs.
