So, after flying to California, after looking at my cable bill, after looking at my theater tickets, after signing my credit card slip for dinner, and after a bunch of other things, I have decided to reshape our industry. Yup, I am the one who is calling for nuisance fees and charges for everything sold in our industry. I want suppliers to charge distributors and distributors to pass on the cost to end buyers. So with this column, I certainly will win the “most popular column of the year award” with my out-of-the-box or out of his mind thinking.
Nuisance fees for the specialty/promotional products industry.
Do We Know You Fee – So you want to do business with me, and we never have. Welcome, but there is a fee to set you up as an account, get your resale number, SAGE or ASI number, your Zodiac sign, and a personal guarantee from your firstborn child.
New Account Set Up Fee - $20.00
Order Entry Fee – This is a service charge (just) because. Because every order in a bespoke industry where you can’t simply ship a toaster needs detailed and careful order entry. That means my order entry people should not stay up late or drink the night before work. The odds of an error or omission are great, so we need skilled people. Entering an order for a toaster takes little or no time. Add the name, address, and credit card information and it is done. Automation can take over from there. Entering an order in our industry is detailed. No two orders are alike as each is customized with an imprint. Details such as color, location, size, etc. are all variables. Even at order entry there may be the need for a call to check on something in the order or something left off the order (which is more frequent).
Order Entry Service Charge - $15.00
Credit Check Fee – Well, you never know. A distributor may be doing very well but, on any given day, they may run out of money for some unexpected reason. It is imperative that credit worthiness be checked if credit is to be issued. Sure, you may have a good credit record, but that is only as good as the day it was checked. Checking credit with SAGE, ASI or D&B takes time. Having to call other suppliers to dig deeper for larger credit amounts can add 15-30 minutes of time for an accounting department staffer. Time is money.
Credit Check Service Fee -$15.00
Acknowledgment Fee – It is good for both parties to have an order acknowledgment. This is SOP if you buy a toaster online, but that order acknowledgment is more like a copy of your bill. In our biz, after all is entered and checked, the order acknowledgment must be created and sent.
Acknowledgment fee - $5.00.
Graphic Arts Fee (sounds better than art charge) - Today’s art programs made me throw away my Letraset (transfer type) last week. It is not difficult to change a color or a size and rasterizing may only take a few minutes; adding copy is easy as well. If art is not “Camera Ready”, then it may need the time and talent of a graphic artist. We just happen to have one or more on our payroll, but we need to bill for their time. $40 an hour is a good rate, so your art requires about 5 minutes so….
Graphic Arts Fee - $40 an hour
Proof Fee – Here, too, a proof is important to both the buyer and seller. It is a time bandit. The artists set up their materials for imprinting. It could be a simple process, but it may be complicated by a proof. The proof needs to be neutral as the distributor just forwards them. Creating and sending a proof may take 2 or three people. It also generates paper. Outside our industry, suppliers such as 4Over charge for a proof. A nifty idea.
Proof Fee- $12.00
Reproof Fee – Now this can be one or more reproofs depending on the mental competency of the end user. There should be no charge if the supplier makes a mistake. However, if the order did not have the information or the buyer decides on something stylistic that was not called out on their order, then it is back to the drawing board and that will probably involve the artists and the people who dispatch the proofs. This can be a lot of additional time.
Reproof Fee - $25.00 each time
Exact Quantity Fee – To get 100 units of a customized item, you may have to pull 105 or 110 off the shelf. You may have to print an extra 5% or 10% of the calendars. All through the production process, there will be losses. If an exact amount is called for, the manufacturer must account for the loss of the product. Therefore, they need to build it into the price or have a service fee to account for the loss. If they build it in, then every order will cost more even if overs or under are okay with the next order.
Exact Quantity Fee – 5% of the total cost of units ordered.
Imposition Fee – Not often, but here and there, an order calls for a few not to be imprinted. That means the imposition, or imprint, needs to be removed from the process. No big deal, but it takes a bit of time for something out of the ordinary
Imposition fee - $10.00.
Sample of Job Fee- not a random sample for show and sell, but one or more samples from the job. This covers recovery of the product, shipping, and handling. It could be going to a home and that costs even more. This has a lot of variables, but so you know what fee you are paying… it is the same for any catalog or custom product under $10.00 net.
Sample of Job Fee - $25.00 (but that includes shipping and handling, so it is such a deal).
Shipping and Handling Fee - This is a big one. There are so many variables, we cannot give you a set charge. There are international shipments that require export documents, etc. There is carrier selection. There are inside, and outside and any side delivery requirements. Special packaging for long hauls, trade show shipping, special carton markings, insurance, etc.
Shipping & Handling Fee – To be determined, but no less than $10.00.
Third-Party Shipper Number Fee – In many cases this involves special paperwork and special-order entry. There is a cost to shipping always passed on to the end user. Despite there being a third-party number, most shippers hold the primary shipper responsible for unknown charges they may experience. They do not charge the third party. There is risk. This also covers the cost of cartons, tape, labor, and packaging.
Third-Party Shipper Number Fee - $10.
Track An Order Sent on Your Account Number - $25.00
Credit Card Fee – More and more we see this everywhere we go. To build it into the selling price may mean pricing yourself out of the market. It also may mean penalizing customers who pay by check.
Credit Card Fee – 4% of the invoice
Delinquent Payment Fee – Not paid to terms? Said fee is a variable relying on the number of days delinquent. This fee should not be paid by credit card, or the fee will have another fee. We know that two fees are not better than one.
Delinquent Payment Fee – 30 days 2%, 60 days 4%, more than 60 days 10%
Okay, I need to stop, or I will have to pay a nuisance fee to you for reading this. We are generous in our industry to date. Suppliers absorb a lot of costs to be competitive with direct sellers and keep their net charges in line. Distributors do as well. There is a growing trend to add a credit card fee, but overall, I believe the end buyer gets a great deal from you but does not really know it. I believe the distributor is getting outstanding value from 98% of all suppliers, but many do not realize the service they get beyond the apparent processes. True, you may be on hold for customer service, but I believe it is a lot better than trying to problem-solve an order that you bought online. The takeaway is that we built a hybrid industry that works for us all. The threat continues to be direct sellers and now media monster distributors. Other than a select few fees, we are thriving by not having them and there is no need to change unless margins are severely shrinking.
Joel D. Schaffer, MAS is CEO and Founder of Soundline, LLC, the pioneering supplier to the promotional products industry of audio products. Joel has 48 years of promotional product industry experience and proudly heralds “I was a distributor.” He has been on the advisory panel of the business and marketing department of St. John’s University in New York and is a frequent speaker at Rutgers Graduate School of Business. He is an industry Advocate and has appeared before the American Bankers Association, American Marketing Association, National Premium Sales Executives, American Booksellers Association and several other major groups. He has been a management consultant to organizations such as The College Board and helped many suppliers enter this industry. He is a frequent contributor to PPB and Counselor magazines. He has facilitated over 200 classes sharing his industry knowledge nationwide. He is known for his cutting humor and enthusiasm in presenting provocative and motivating programs. He is the only person to have received both the Marvin Spike Industry Lifetime Achievement Award (2002) and PPAI’s Distinguished Service Award (2011). He is a past director of PPAI and has chaired several PPAI committees and task forces. He is a past Chair of the SAAGNY Foundation, Past President of SAAGNY and a SAAGNY Hall of Fame member. He was cited by ASI as one of the 50 most influential people in the industry.