Episode 222: Open Mic: “How Do You Price and Handle Kitting Projects?” with Yvonne Zeman

Welcome to Skucast, the podcast for entrepreneurs in the promotional products industry. Skucast shines a light on our industry's best work, features maverick personalities, and discusses what's really involved in running a modern promotional products business. Skucast is the official podcast of Common Skew.

Hi friends, I'm Bobby LeHew, Common Skew's Chief Content Officer. Welcome to our first episode called Open Mic, where we take your questions and ask a member of the community or a member of our team to join us as our experts to provide some answers. Once a month, we'll tackle one topic and provide tactical ideas you can apply immediately. Before we get to our first question, a real quick mention. Yesterday we opened registration for Skew Camp Brooklyn to be held September 19th through the January 31st at the Ace Hotel in Brooklyn. And after only one day, we are already 80% sold out. So if you want to hear folks like Michael Scott Cohen from Harper Scott, Sheila Haspert from Foxtrot Marketing, Dan Pantano, David Nicholson, Jonathan Isaacson, Lindsay Davison, many more of the brightest minds in the business, hop on over to skucamp.com to scoop up those remaining tickets. We cannot wait to see you there. And now to Skucast's open mic. Our very first question comes from Alyssa Ethington, an account executive over at Promo Assets in Lexington, Kentucky. Promo Assets was founded by our friend Nick. Go check out their cool branding, by the way, at promoassets.com. Alyssa's question is about kitting, and it's a two-part question, one involving pricing for kitting, and the second part is a platform-related question regarding kitting. How should we price these out accurately to take margin and transfer the products through presentation depicted as a kit to POs? For the first part of our question, I invited Ivan Zeman from Juice Marketing. Ivan is a master at kitting, having created amazing kits for clients both in-house as well as outsourced. So we talk about that debate plus tips on client management kitting projects that are now in demand, and a few tricks and tips about presentation that might surprise you. For the second part of the question, I invited our very own Erin Couture, Vice President of Customer Success, to join us to answer how to handle kits in the CommonsCube platform. First, here's Yvonne. What goes into kitting pricing?

If you had to simplify down to like just a few steps, what would those be?

I think about kitting pricing in the sense of what the product goes through. So you're going to think that as a product, I need to be produced, I need to move, somebody needs to pick me up and put me in another box, they need to package that box up, they may need to put me with other products, make sure that I'm snug, and then make sure that the information on the box is accurate of where I'm going, and then ship me back out. The way that I kind of think about it is there's production, there's anything with movement into a warehouse, that's one of the pieces of our pricing pieces I most commonly forget, is that I need to actually move the product, even if it's coming to me or if it's going to another outsourced warehouse. I constantly forget about that. And then there is receiving, quality control, all of your warehouse labor, putting the actual kitting, and then there's crinkle, there's inserts, there's packaging. That's kind of its own bucket. And then creating the labels and then logistics. So in a nutshell, production, shipping, labor, and I guess logistics, but that's shipping. I really had to simplify it.

Yeah, we both have done kitting in our professional career, and so we would think through terms of exactly what you did. We have receiving, staging, assembly, staging for outgo. Um, but the thing that we would overlook the most is the admin. Usually you have an expensive person— expensive meaning the sales rep or an account director, account executive— working with the client in terms of the admin back and forth around that. You said this or inferred this, that every time the product moves, there's some cost attributed to it, right? Some kind of labor going into it. What's the most overlooked when you would do this?

For me, I commonly most forget the actual shipping. Two things on what's most overlooked: if I'm doing it in-house, it's time. I think that I myself can repack 10 jackets quickly. I did the other day, took me an hour and a half. Lots of time. And then if I'm outsourcing, I think that presentation are overlooked a lot. I might forget that it needs crinkle or bubble or branded packing tape, or maybe I want the crinkle to be colored. I think when it's out of sight, out of mind, it's a little easier to just be like, put it in a brown box, you know? Yeah. But if it's in my house or in my warehouse on the street, I'm kind of like, wait, this doesn't look right. When I'm doing something in-house, the time overlooked every time. And then when I'm doing it outsourced, it's usually the presentation costs that go into the presentation of the item.

That's a great point. What about markup? Like in our case, we would have a 3 to 4 time markup on the overall time and labor into the product. What kind of markup would you typically do? And I think we were a little high when we were doing it. So that might have been too high.

I price the product usually the same because a lot of clients will ask to break it out. I usually don't go nuts on the product. Agree on the labor. Yeah, I do 50% or more.

Okay.

I agree with these hidden things too.

Yeah, I'd agree with you. We would rarely, if ever, roll up those service fees into the product because the unit price of the product can't stand that kind of bloated, you know, price comparison in the market. So we would too break out those prices for customers in the assembly and quoting. And often we would say, here's the product price, here is your kidding price, here is freight, because freight too, depending on how you kind of roll that up.

What about— you touched on this—

what about outsourcing versus in-house? You have now sat in a position where you've done both. You have with— when you had Monarch as a distributor, you did it in-house. Now with Juice, you're doing a lot of this with outsourcing. What have been the biggest pros and cons for both?

I am definitely more on the bandwagon of outsourcing now.

Did you think that was impossible before, like quality control would lose?

And—

or— no, I didn't think it was necessarily impossible. I just enjoyed it. Yeah, I enjoyed having things come in-house, and, and I was always taking photos. And also, like, the trust level is just unbreakable there that, right, if I knew Anna was doing like the kitting, or she was usually managing the people that were doing the kitting, but she oversaw everything, it was truly like I could focus on what my next task was. I didn't have to get pulled back into that at all. So I think that if you're going to do it in-house, my biggest advice is to, um, have somebody on your staff oversee it or oversee contractors. And then don't do it yourself. And then for outsourcing, what I love about the outsourcing part is there's only a few, like there's receiving, which is by the hour. So I kind of have to estimate that. Other than that, it's flat cost. So there's no surprises really. If it takes them an extra 3 hours to kit, I'm not gonna get charged for that 'cause I'm getting charged per item. So that's kind of one way to cut down on that oversight of the time. And then if you are gonna outsource, I would recommend finding a fulfillment center or kitting center that's within driving distance of you, just in case you do need to go there. I think if there's peace of mind, you can be a better partner. You can run things over if, you know, crap hits the fan.

So that's great advice. I remember one distributor recommended they, they outsourced to a partner who was in a completely different state, and the project was big enough for them to obviously be there, fly there personally, inspect the kits, which I thought was really great advice for a huge project. That you're gonna do. Talk to me a little bit about client management through this process, because with fulfillment and kitting projects in general, you have a higher percentage of error rate compared to just dropship product. You have complexities through distribution, through addresses, shipping to homes. How did you manage the client through the process?

I'm pretty hardcore when it comes to like, it's your responsibility. As a client, I won't wanna hear this might go wrong, this might go wrong, this might go wrong. So the way I kind of look at it is like you have to be a student of kitting. And you have to be there to learn and you might lose a little bit of money. But if you manage the client expectation, not necessarily hiding things, but I don't think they need to know everything that goes on. I agree. You know, like I don't think you need to like precursor like, hey, shipping addresses are really difficult to manage. So just so you know, you know, I don't think that's appropriate. Right. What you can do, what we did is that, and this is a bit of a platform plug, is we would use portals to collect addresses and then export the Excel sheet. So when I got clients familiar with the software system, and then also there were, there were fields that we could put in and you can make 'em required. The nice thing about that too is that the client can send that out to everybody to get addresses versus having to do it themselves. To answer your question, I think that I manage the client process by giving them information that they need to know. Versus what I would like them to know. And then you have to learn. So you have to take something from the previous project and apply it to the next and keep adapting and you'll get it. I would say like after like 3 or 4 knitting projects, you'll be an expert. The learning curve is very steep, I think.

Yeah, and you'll begin to codify some of those things. So you'll have this set way of doing things from then on. You'll know to watch for this red flag or this red flag. And I agree with you on the client management side. We would often say we have about a half percent error rate in general. So just so you know, if we're shipping 1,000 packages, we're going to expect a certain number of errors.

Because you've had—

if you have a fairly green buyer, they might need to know that there could be some misshipments or things like that happening. It's not the end of the world, we're going to take care of it. This is actually what we expect. And here's our management plan when things do go south with a few of these projects. Outsourcing, in-house, you mentioned that, pros and cons. It's interesting that you have done both. What kind of kidding projects have you seen grow in demand? Have there been a certain kind you saw grow over the past couple of years? Can you give me an example?

Our meetings are coming back. So there's a lot of shipping to hotels. And because people are traveling, but I haven't necessarily seen a lot of people traveling to the exact same site if there's a lot of attendees. So if there's over like 150 people, I'll notice that there's 3 hotels. So it's still a virtual meeting, which is interesting. Yeah, it's still a virtual meeting, but people are getting together at these 3 different sites. So meeting kits and hotel drops. Also, there's been a lot of rebranding. People are getting acquired, people are merging. I also think coming out of the season we were just in, people want a new and fresh look. I also have seen a lot of office moves, which has been interesting. Yeah. Um, people downsizing, people, you know, relocating, things like that. And then also rebrands.

Okay, Yvonne. Last question. What's your favorite project you've ever done for Kitting?

The one that came to mind is there's a Quaker project we did for— they had a contest called Bring Your Best Bowl. The reason I loved it was because I executed with Anna, so I got to learn a lot, and there was a lot that went wrong with the project. So at the time it was not fun, but I was really proud of the way that it turned out. Right. Um, so I think that in the toughest of projects usually comes the biggest pride factor. I think that I learned that kitting is like 360. It's shipping, so you have to remember that things aren't gonna shift just side to side, but also up and down, which is a huge oversight in that project. Yeah. So figuring out just like tiny little like tricks, like blue dots and things like that to keep things centered in the box was really helpful.

Yvonne, so what's new about kitting that we haven't paid a lot of attention to in the past, but is really important now?

One thing I've noticed that we talk a lot about is pricing, logistics, and execution. And we don't talk a lot about the pre-work that goes into it and setting up art files, making sure that if you're printing something CMYK, such as a box, and then you're matching it to a PMS logo on a Tumblr, those things are going to be next to each other in the presentation. And so I think we don't really think about the work that kind of goes into the pre-production files. I'm very beginner-intermediate with the Creative Cloud. And so that has really come in handy just because I can do quick checks and things like that.

Yeah.

And then if you have a designer on your team, utilize them, even if it's just to say like, hey, does everything look right here? Do you see anything I don't see? You can rely on your supplier partners for that as well.

But that's a really great point about these pieces living together when they get the final product. It's really about that final product, imagining that final product and not taking for granted that you've got different product and print processes going on. And many of us were bringing in multiple products from multiple vendors. And so you even have the color match problem, not just on that one product, but on multiple products. Plus you have the whole design experience in the package when you get it to the customer. So it's a great thought. Well, Yvonne, thanks for joining today to talk about kitting. I know you were so— you and your team have been so awesome at kits, and now you're continuing to do that with our great friends at JUICE. And I wish the best to you.

Thanks for coming. Thank you.

From Kitting Secrets to platform know-how, here's everyone's friend, Aaron Couturier, Vice President of Customer Success. I left the blooper in, by the way, because if you know Aaron, anytime you talk to him, you're in for a laugh. I ask Aaron, hey Aaron, how should we handle these kits accurately inside the platform?

Yeah, this is so, you know, it's just, uh, line, um, Yeah, setting up kits inside of Commski is a question that we get pretty often on the support side. Generally, the best way that we've seen people be able to do it is by adding all the individual items that are going to be part of the kit to the sales order. So filling out your quantity, filling out your cost for each item, but not actually filling out the sell price for the item. Then from there, add in a custom item, call it kitting, whatever you want to call it, or add in a service PO for the vendor that's actually going to do the kitting. And then in that item, put in just the cost of your kit and then put in the total sell. So everything that you are having part of the kit, just have the zero— have that zeroed out on the individual items, but have the total sell for the kit on the actual kitting item. Then CommonSKU is going to round that out and show you the total margin for that order at the very bottom.

Thanks, Aaron. You're legions of fans. Everybody's going to be so glad you were here because— and I am always looking for an excuse to talk to you, so I'm so glad to bring you on SkuCast.

Thanks, Bobby. I really, really appreciate you inviting me this time.

Thanks, man.

Appreciate it. Thank you for joining us for our very first Open Mic episode. If you have a topic or a question you want to ask, either email me, bobby@commenscue.com, or give us a shout on Twitter, Facebook, or Instagram @commenscue. We're the work-from-anywhere platform that powers your connected workflow, enabling you to process more orders and dramatically grow your sales. If you want to learn more, visit us at commonskew.com.

Until next time, my friends.

Thanks so much for tuning in to this episode of SkewCast. Be sure to keep up with our latest content by subscribing to SkewCast on iTunes or to our blog at community.commonskew.com. Until next time, friends. Thanks so much for listening.

Mm.