Not Remotely Similar

Jan. 22, 2019

A former business colleague called today and we started our conversation by talking about the good old days. Times when 80% of your bids came through. Times when there was no internet, no big box stores and no Amazon. Times when the only competitors were locksmiths like yourself and we all had the same locksmith distributors and the same pricing structure. In those days we had a completely level playing field. If you really wanted the job, there were two possible variables -- parts pricing and hourly labor charges.

Very few locksmith distributors that I knew of offered the official, retail list prices of anything they sold. As a result, our locksmith business often doubled our cost of products from distributors and used that as the list price. If a good customer requested a discount, we gave them 10% off and still made an acceptable profit on every parts sale.

Hourly labor charges were determined by a combination of the cost of doing business, talking with other locksmiths at association meetings about their charging policies, and the experience of being in business long enough to know when you were over or under charging. Our locksmith business tried to be somewhere near the middle range of service charges and hourly charges in our local area. The idea was to obtain enough business to keep our employees busy without gouging the public while making a fair business profit.

My business colleague and I ended our conversation by talking about business as it is today. It seems like every internet site shows list prices of every item they sell. However, the list price is often crossed out and a much lower 'sales' price is also printed. No matter who the source is, there is no way for a locksmith to double their parts cost and expect to land jobs today. As a result, the bid winning success rate today for our family locksmith business is down around 10%. To win bids you really have to sharpen your pencil and look at every way to cut labor charges.

The business climate for locksmiths today is not remotely similar to the good old days. Yesterday nobody knew words or phrases like transponder, POE, IoT, digital, wireless and hundreds of other words which now flood the locksmith vocabulary. The best we can do is to grab on and see where the future takes us.