Transparency in Business

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A little thing has been tingling at the back of my mind when I think about what it means to say “furniture for the people”. Like any good product designer hoping to make a buck, I present my ideas to what I’ll loosely call a focus group. I might mention the materials, the process how easy it is to assemble and then I’ll get that look. That look is always followed  by, “It’s nice but a little too expensive for me.”

Transparency

And that bugs me. I know down to the nickel what it will cost to produce a certain product. They are made of solid wood, use brass or stainless steel hardware and are all made at home by people you know. As a small business owner in a big world, it can get frustrating. I don’t order pieces by the 10,000, vendors don’t take me to lunch for breaking their quarterly goals.

I think this is a problem that stems from a lack of education. I’m sorry. Good people don’t realize how much good things cost to produce. I wan’t to sell my furniture at material cost, but frankly, I need to buy beans and stale bread to live on.

Education

One thing I hear a lot of is consumer education. That you have to teach your customers why you are so great. This is true in spades. The old way way to go to trade shows, craft fairs or even door-to-door. Unfortunately, as a brand available to the entire world, I can’t quite do that. You’re more than welcome to see the workshop, read about our materials and volunteer in a charity sponsored by us, but sometimes that isn’t enough. A customer may still not understand the cost of things. That 1/8″ baltic birch plywood is $15 per sheet. Powder coated steel legs are $50.44 apiece. Most of us can’t look at something and gauge its worth. This leads me to my next point.

Fashion is Doing it Right

I have had a dangerous thought to display how much my products cost to produce. Why not? I figure that I’m telling everyone exactly how my business has started, how to make a website just like mine and how much I’m paying for everything. Why shouldn’t you know how much it costs to produce a chair and how much profit I’d like to make to ensure that I can make the next one?

Just yesterday I saw an article that praised certain fashion boutiques for being transparent. Not just in who their suppliers are, but down to what pesticides are used on the cotton in the fields. That’s amazing. If you stop and think about it, it makes sense. This clip by John Oliver will get you thinking about it:

Some really bad things have and are happening in the fashion industry. People want to know, or at least be aware, that their products are at least humanely sourced. The even better ones have taken it a step further.

Everlane

I found Everlane through the same article. I can’t find the original again and I regret it. However, look at this pricing tree for the Men’s Zip Hoodie.

pricing transparency

Amazing.

Maybe the numbers move around a little, but I doubt it. At the end of the day, the hoodie is $65 and you can see that they claim a net profit of $40.07. Not bad. They double down on their costs and you still save money over luxury brand apparel. You can feel maybe not good, but OK at least, with someone making $40. They do have to pay for their salaries, web fees, marketing and all that stuff from that 40 bucks.

I think it’s fair. Maybe transparency is the best way to educate our customers. Maybe our customers aren’t as dumb as we think and all the education they were looking for was a shot of honesty. For sure it will get you thinking about your own costs. Imagine being able to find a new supplier based upon an email a customer sends you and you can lower the numbers in your transparency tree. How cool would that be?

I think I might give this a shot. I’ll certainly be talking about it as we continue on in our Product Design series in the coming weeks.

Tell me what you think about business transparency in the comments.

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