Smugmug Shipping over 700% markup!

24

Comments

  • AdamNPAdamNP Major grins Posts: 178Registered Users Major grins
    edited October 19, 2015
    Thanks for the update, and proving me wrong. As I said much earlier in this thread:
    AdamNP wrote: »
    I would frankly rather you guys make up the difference somewhere other than shipping cost as well, whether it's in slightly increased print costs or wherever else. Let's face it, this is the era of free shipping. Amazon started it, and now virtually every online store offers the same. People expect their online purchase to have free shipping at this point. They will accept a small fee, but the sorts of numbers SM puts for shipping will drive off 90% of normal customers. The same customer will think nothing of a few more dollars for the print itself.

    I don't think any of us having a problem with SM making what they need to... but it needs to better concealed, preferably in the item price.
  • photoclickphotoclick Major grins Posts: 278Registered Users Major grins
    edited October 19, 2015
    Sheaf wrote: »
    I haven't been told to leave it alone, though admittedly it hasn't been our highest priority either. I'm sorry for not providing updates to this thread.

    Unfortunately, there is no easy answer. People have become accustomed to free shipping from Amazon or for expensive products with high margins.

    We can't sell a single 4x6 for $0.29 and ship it for $0.50. It's simply not feasible, for Bay or for SmugMug. There are quite a few costs associated with printing, shipping, processing the payment, and handling an order in general that simply would not be covered. We would be losing money on every small order.

    I just tried ordering a single 4x6 without color correction from bayphoto.com. The print is $0.49, higher than SmugMug's price without correction, and the shipping from their facility to my house (a total distance of less than 30 miles as the crow flies), is $5.99 for the cheapest option.

    The biggest challenge for me right now is simply not knowing how much we will be charged at the time of checkout or after the fact on a per-order basis. I need to explore ways to solve that problem with our carrier and with BayPhoto.

    In the meantime, we are looking at switching over from UPS to FedEx for Bay orders, hoping that it can reduce our costs.

    4x6 from Bay, withOUT color correction is .29 not .49. Bay does charge 5.99 for a single 4x6, that is true. At the sane time they do charge $1.5 on all orders (prints) over $12. You (SM)? Nope. I know first hand all small components that come in play when an item is shipped, so there is no expectation from you to lose $ on shipping me one 4x6 for free. But when order is over a hundred.... sorry, you are overcharging and you know it.
    Sheaf wrote: »
    There are quite a few costs associated with printing,.
    - you do not print, Bay does.
    Sheaf wrote: »
    ..shipping, .
    - you do not ship, Bay does. Perhaps you can work harder to negotiate better deal on behalf of your customers?
    Sheaf wrote: »
    ...processing the payment, and handling an order in general...
    - that is what you say you take 15% from each order for... unless I am mistaken, am I?
  • SoCalTedSoCalTed Beginner grinner Posts: 1Registered Users Beginner grinner
    edited October 20, 2015
    Close call!
    I am really glad I found this post! I had another browser tab open prepared to purchase a business account. I would have been really unhappy if that expense netted me $25 in sales for a year, having paid $25/mo

    If I don't find another solution, I'll be back to check this thread. But there is no way I can offer my customers a site where shipping exceeds the cost of the image by multiples.
  • rkw624rkw624 Rich Posts: 260Registered Users Major grins
    edited October 24, 2015
    Dare to compare
    Just got done ordering the exact same thing through SmugMug and a top competitor in photo printing. 7 - 8x10's, 1 - 12x18 and 1 - 16x24. All in metallic finish.

    SmugMug price - $50.34 + 12.99 shipping. Total $63.33

    Competitor's price - $33.56 + $5.00 shipping. Total $38.56

    On sale this week for an additional 30% off. - $23.49 + $5.00 shipping. Total $28.49.

    The figures speak for themselves.
    Rich
  • photoclickphotoclick Major grins Posts: 278Registered Users Major grins
    edited October 25, 2015
    I am interested to know what competitor you priced the order with. The prints price looks good. But, honestly, if it is crappy lab I do not care to pay less - quality is very important over price. I do trust Bay and similar labs. This thread is not about prints pricing - it's about overcharged shipping costs.
  • rkw624rkw624 Rich Posts: 260Registered Users Major grins
    edited October 25, 2015
    photoclick wrote: »
    I am interested to know what competitor you priced the order with. The prints price looks good. But, honestly, if it is crappy lab I do not care to pay less - quality is very important over price. I do trust Bay and similar labs. This thread is not about prints pricing - it's about overcharged shipping costs.

    It is a top notch lab. I did not post the name for a reason. Please read my post again and compare the shipping charge. If you want to know who the lab is send me a private message.
    Rich
  • SamSam San Jose CA Posts: 7,418Registered Users Major grins
    edited October 26, 2015
    I have read about this issue in the past but forgot all the details.

    I just contacted Bay Photo about an event shoot I have coming up where I need to provide the event with prints of the attendees. The event is located in the San Fransisco Bay area, there will be from 500 to 1500 prints, and the shipping direct from Bay will be $6.00 flat fee.

    While it's difficult to see a $5.99 shipping fee on a $0.29 order, it really is understandable. There are minimum costs associated with shipping and handling of any item, whether it be an envelope full of air or a couple of small prints.

    I am thinking that you could have ordered 100 4X6 prints and the shipping charges would have been the same.

    Every company has their shipping process and charges. sometimes it's not practical to buy a small inexpensive item and have it shipped.

    If the shipping from SmugMug is always higher than the charges directly from bay and are substantially higher, then yes I would agree there is a problem.

    Put together an order and price it through SmugMug, then price the same order through Bay directly and see if there is any real price difference.

    Then post back.

    Sam
  • OffTopicOffTopic Searching for the light Posts: 520Registered Users Major grins
    edited October 27, 2015
    I've done that comparison many times Sam, every time I am directly involved in handling an order for a client. I would actually prefer to order from my own account here and I would prefer to have my customers order from my site. I pay for my pro level account because I'd like to take advantages of the ease of use (my photos are already here so I don't have to upload to another system, I'd rather have my customers order through here because I don't mind paying the commission to have SM to handle the taxes, record keeping, customer service, etc. it's a big time savings, plus I have custom branding on my orders through SM). But when the difference in shipping price is $15-$20 per order...and even for small orders, if you often order a single print and it's $1.50 through Bay but $6.99 through SM, it adds up. But where it really hurts is when your customers are ordering art for their walls - finished products ready for display.

    If you have an account with Bay and you order through either of their ROES systems, the difference can be substantial. Standard shipping on most orders at Bay is $1.50 for 2 day deliver (it's $6.00 on orders under $12.00, and may be higher on orders over $500). Smugmug's Blue Saver which "typically takes 2 days" (plus the 2 day allowance for printing, which means realistically you are looking at a week when you factor in weekends) costs $12.99. Red Saver "typically one day for travel and delivery" is $23.99. The cheapest shipping option from SM on a single print is $6.99 (I used 11x14 because I happened to have an invoice for that size handy). When I add a frame and matte (for which we still don't get to participate financially in the up-selling) to the print the standard shipping increases to $12.99, no change in Blue Saver but Red Saver increases to a whopping $29.99, while it's still only $1.50 through Bay directly.

    So...two day shipping at Bay is $1.50 and with SmugMug it is $20.99. Add a frame to your print and use standard shipping and it is still $1.50 with Bay, but now the standard shipping with SM almost doubles to $12.99. Add a frame to your print and have it overnighted; that is $12.00 at Bay and $29.99 with SmugMug (and no guarantee on the 1 day delivery). Bay's price is artificially low, I understand that. What I don't understand is that SmugMug is offering Bay a captive audience of SmugMug account holders. Is Bay not offering SmugMug shipping costs that are somewhat similar to what they charge their own customers, is SmugMug charging us substantially more than Bay is charging them (and thereby profiting on the shipping charges), or is SmugMug not having Bay handle the shipping, but is actually doing the shipping themselves and paying full retail?

    In addition, guaranteed overnight shipping from Bay is $12.00. I can have the order drop shipped with white label packaging to my customer for an additional $6.00 (downside is that it doesn't have my branding, it doesn't have any branding). When I needed to get a rush delivery last minute custom order to a customer last Christmas, a 36" print mounted on gator board with blocks for hanging, I was able to have it overnight drop shipped to my customer for $15.00 (today it would cost $18.00). Shipping at SmugMug for Red Saver (2 days printing, hopefully 1 day shipping) is a whopping $40.99, and then there is the 15% commission on the sale that I would pay to SM. I was able to give my client substantially better service for a fraction of what it would cost me to handle it through my SmugMug account.

    BayPhoto.com has different shipping prices than does Bay ROES. I think most professionals who deal with Bay on a regular basis use the ROES system, and that is the pricing we are looking at when we discuss this issue. When the difference in shipping is often more than $25, it is very hard to justify.
  • AdamNPAdamNP Major grins Posts: 178Registered Users Major grins
    edited October 27, 2015
    OffTopic wrote: »
    What I don't understand is that SmugMug is offering Bay a captive audience of SmugMug account holders. Is Bay not offering SmugMug shipping costs that are somewhat similar to what they charge their own customers, is SmugMug charging us substantially more than Bay is charging them (and thereby profiting on the shipping charges), or is SmugMug not having Bay handle the shipping, but is actually doing the shipping themselves and paying full retail?

    Your whole post is excellent and accurate, but the part I quoted above is what I want SM to respond to. It's a very simple question, and one that they continue to refuse to answer. Bay is shipping our orders, NOT SM. Does Bay charge SM more than they charge individuals? Easy question. Answer it.
  • SamSam San Jose CA Posts: 7,418Registered Users Major grins
    edited October 27, 2015
    Lori,

    Thanks for your very detailed response. Based on this I must change my response to &^&*&$#@.

    I didn't know that if a client purchased a frame with the print we don't receive any of the increased profits. eek7.gif Of course I don't have any buy buttons activated. Except for a recent mistake which I am in the middle of trying to fix even as I type this. :cry

    I will still consider using SmugMug for small inexpensive event type prints and the clients will have to live with the shipping or not order, but for anything else, fine art prints, I do the printing myself.

    I also just discovered that, in CA at least, sales tax is being charged on the shipping. Actually according to the California State Board of Equalization shipping is not taxable when the amount charged for third party shipping is equal to or less than the actual shipping charges. Handling is taxable. So if the invoice lists the charges as "shipping and handling" then the total is taxable, but if the invoice separates shipping from handling then only the amount listed on the invoice for handling is taxable.

    Please note: Don't try and make any sense out of this, it's the government, arguing is useless.

    Sam
  • tartan snowtartan snow old guy UKPosts: 51Registered Users Big grins
    edited October 29, 2015
    Wow I have read this entire thread from January to October and am none the wiser, I don't really understand who is charging who for what. I'm in the UK and it's not Bay but another company who does the prints and the delivery is I think £4.99 (about $8 maybe?) for one print or for several prints up to a certain weight. That is about £1 more than at least one competitor and £2 more than another. People buy the photos so they mustn't be troubled by the delivery prices here. There was a lot of free delivery sites but that all went down the pan when the recession kicked in.
  • tartan snowtartan snow old guy UKPosts: 51Registered Users Big grins
    edited October 30, 2015
    I've actually logged out and tried the ordering process as a customer up to the payment point and shipping is only £2.39 for a single 6x4 or even a 12x8 photo here in UK. That isn't really over priced at that, it's cheaper than most other photo print companies here.
  • rkw624rkw624 Rich Posts: 260Registered Users Major grins
    edited October 30, 2015
    OffTopic wrote: »
    I've done that comparison many times Sam, every time I am directly involved in handling an order for a client. I would actually prefer to order from my own account here and I would prefer to have my customers order from my site. I pay for my pro level account because I'd like to take advantages of the ease of use (my photos are already here so I don't have to upload to another system, I'd rather have my customers order through here because I don't mind paying the commission to have SM to handle the taxes, record keeping, customer service, etc. it's a big time savings, plus I have custom branding on my orders through SM). But when the difference in shipping price is $15-$20 per order...and even for small orders, if you often order a single print and it's $1.50 through Bay but $6.99 through SM, it adds up. But where it really hurts is when your customers are ordering art for their walls - finished products ready for display.

    If you have an account with Bay and you order through either of their ROES systems, the difference can be substantial. Standard shipping on most orders at Bay is $1.50 for 2 day deliver (it's $6.00 on orders under $12.00, and may be higher on orders over $500). Smugmug's Blue Saver which "typically takes 2 days" (plus the 2 day allowance for printing, which means realistically you are looking at a week when you factor in weekends) costs $12.99. Red Saver "typically one day for travel and delivery" is $23.99. The cheapest shipping option from SM on a single print is $6.99 (I used 11x14 because I happened to have an invoice for that size handy). When I add a frame and matte (for which we still don't get to participate financially in the up-selling) to the print the standard shipping increases to $12.99, no change in Blue Saver but Red Saver increases to a whopping $29.99, while it's still only $1.50 through Bay directly.

    So...two day shipping at Bay is $1.50 and with SmugMug it is $20.99. Add a frame to your print and use standard shipping and it is still $1.50 with Bay, but now the standard shipping with SM almost doubles to $12.99. Add a frame to your print and have it overnighted; that is $12.00 at Bay and $29.99 with SmugMug (and no guarantee on the 1 day delivery). Bay's price is artificially low, I understand that. What I don't understand is that SmugMug is offering Bay a captive audience of SmugMug account holders. Is Bay not offering SmugMug shipping costs that are somewhat similar to what they charge their own customers, is SmugMug charging us substantially more than Bay is charging them (and thereby profiting on the shipping charges), or is SmugMug not having Bay handle the shipping, but is actually doing the shipping themselves and paying full retail?

    In addition, guaranteed overnight shipping from Bay is $12.00. I can have the order drop shipped with white label packaging to my customer for an additional $6.00 (downside is that it doesn't have my branding, it doesn't have any branding). When I needed to get a rush delivery last minute custom order to a customer last Christmas, a 36" print mounted on gator board with blocks for hanging, I was able to have it overnight drop shipped to my customer for $15.00 (today it would cost $18.00). Shipping at SmugMug for Red Saver (2 days printing, hopefully 1 day shipping) is a whopping $40.99, and then there is the 15% commission on the sale that I would pay to SM. I was able to give my client substantially better service for a fraction of what it would cost me to handle it through my SmugMug account.

    BayPhoto.com has different shipping prices than does Bay ROES. I think most professionals who deal with Bay on a regular basis use the ROES system, and that is the pricing we are looking at when we discuss this issue. When the difference in shipping is often more than $25, it is very hard to justify.

    Thank you for all the work in this response!
    Rich
  • DmitrySDmitryS Big grins Posts: 29Registered Users Big grins
    edited November 3, 2015
    Wow I have read this entire thread from January to October and am none the wiser, I don't really understand who is charging who for what.
    Actually the subject of the topic says it all.
    If you want more details then the original poster tells them: "I went to order 16x20 thinprint from Bayphoto thru Smugmug and the cheapest shipping option was $17.99! and when I went to Bayphoto directly it was $1.50. That's over a 700% markup, which in my opinion is unacceptable!"
    After that Smugmug supporters are desperately trying to find an excuse, while not questioning the facts :)
  • rkw624rkw624 Rich Posts: 260Registered Users Major grins
    edited November 3, 2015
    Here's another comparison. I just ordered 2 - 16x24's with Kodak Metallic Endura Finish through a competitor. No coupon codes, etc. Straight up every day prices.

    2 prints at $13.70 ea. = $27.40 Shipping $5.00. Total $32.40 w/ color correct.
    (They come flat not rolled in a well protected box.)

    SmugMug - Metallic Finish through Bay which uses the same process.

    $23.94 ea + $47.88 Shipping $12.99. Total $60.87

    Difference - $28.47

    If the prices were close I probably could care less. This is way out of whack.
    Rich
  • tartan snowtartan snow old guy UKPosts: 51Registered Users Big grins
    edited November 10, 2015
    Is Bay Photo the only option for SM users in the USA? (other than getting them done not via SM) Here in the UK we have I think 4 options and Bay Photo was one of them. I chose a UK printer though as I thought choosing Bay Photo would only result in them sub-contracting to a UK company anyway and therefore increase costs.
  • mrneutronmrneutron Support Hero Posts: 214Registered Users Major grins
    edited November 10, 2015
    Bay Photos is one of four labs. The three in the US are Bay Photo, WHCC, and EZ prints.
    http://help.smugmug.com/customer/portal/articles/93270-smugmug-s-print-labs

    The only one in the UK is Loxley Custom Colour. None of the labs sub contract work. if you order from Bay and live in the UK, it will ship from California to the UK.
    Andy K
    SmugMug Support Hero
    help.smugmug.com
  • SamSam San Jose CA Posts: 7,418Registered Users Major grins
    edited November 12, 2015
    mrneutron wrote: »
    Bay Photos is one of four labs. The three in the US are Bay Photo, WHCC, and EZ prints.
    http://help.smugmug.com/customer/portal/articles/93270-smugmug-s-print-labs

    The only one in the UK is Loxley Custom Colour. None of the labs sub contract work. if you order from Bay and live in the UK, it will ship from California to the UK.

    I would hate to see that shipping charge!

    Sam
  • leftquarkleftquark SmugMug Product Team Posts: 3,409Administrators, Vanilla Admin, SmugMug Product Team SmugMug Employee
    edited November 17, 2015
    As Shief mentioned, SmugMug is not making any profit on the shipping charges. At the end of the day, the shipping we've collected is the shipping cost that the UPS or FedEx sends to us. Comparing prices directly with the lab is unfair, as we're limited to the prices that we're billed at. We're not trying to be evil here and make money off the shipping charges. We're trying to charge the cheapest we can so that everything comes out even.

    One thing I've seen people do is to increase the price of the product in the Pricelist, in an attempt to offset the shipping charge, and then offer a free shipping coupon.
    SmugMug Director of Product / dGrin Afficionado
    aaron AT aaronmphotography DOT com
    Website: http://www.aaronmphotography.com
    My SmugMug CSS Customizations website: http://www.aaronmphotography.com/Customizations
  • AdamNPAdamNP Major grins Posts: 178Registered Users Major grins
    edited November 17, 2015
    Well, someone is making huge profit off of the shipping charges.

    Why is it unfair to compare to ordering directly with the lab? Generally, a very high volume customer (SM) would get significant discounts over an individual ordering on their own. I think the question we all want answered is WHY does Bay (apparently) charge SM a far higher rate than it does to any random person ordering from them? If that's really the truth, then SM needs to hire someone with basic negotiation skills.
  • photoclickphotoclick Major grins Posts: 278Registered Users Major grins
    edited November 17, 2015
    AdamNP wrote: »
    Well, someone is making huge profit off of the shipping charges......
    If that's really the truth, then SM needs to hire someone with basic negotiation skills.

    Exactly my point in post 33 (on page 2) :
    .... Perhaps you can work harder to negotiate better deal on behalf of your customers?
  • leftquarkleftquark SmugMug Product Team Posts: 3,409Administrators, Vanilla Admin, SmugMug Product Team SmugMug Employee
    edited November 17, 2015
    Bay Photo is actually taking a loss on the shipping charge. They're just able to make (all or some of) it back by having lower margins on the actual print. In some cases our prices are lower than Bay's prices, in some cases higher. We're constantly working with them to keep prices as low as possible but we also offer services, like 100% print guarantee's (though they're pretty good, they've cracked down a lot lately on reprints).

    Going to FedEx and shipping 2 16x24 MetalPrints to the east coast in a Flat Shipping box would cost ~$57 using FedEx express saver (FedEx 2 day is $78) based on the size of the box (assuming a 20"x28"x3" box weighing 2 lbs). We're not charging your customers that, so you can see our bulk discount from the shipping company is accounted for.
    SmugMug Director of Product / dGrin Afficionado
    aaron AT aaronmphotography DOT com
    Website: http://www.aaronmphotography.com
    My SmugMug CSS Customizations website: http://www.aaronmphotography.com/Customizations
  • DmitrySDmitryS Big grins Posts: 29Registered Users Big grins
    edited November 18, 2015
    Come on, we are not idiots. It's a simple math. Bay is shipping for $1.50. If they are able to do it, and they give you better rates, then you should be able to do it.
    Argument that you charge for shipping cause you offer 100% print guarantee's does not fly: 1) Bay does it too 2) Not a lot of people are really asking for it and 3) you charge 15% on sales to cover this.
  • leftquarkleftquark SmugMug Product Team Posts: 3,409Administrators, Vanilla Admin, SmugMug Product Team SmugMug Employee
    edited November 18, 2015
    DmitryS wrote: »
    Bay is shipping for $1.50. If they are able to do it, and they give you better rates, then you should be able to do it.

    Please don't forget that Bay adds additional shipping costs to drop-ship it to your customers. They're not able to get the prints for $1.50 as you've mentioned (only you can). It used to be an extra $10, though it looks like Bay Photo dropped the additional charge to $6 recently. Yes, that's still less than we're charging but that's because Bay Photo has higher margins on their products.

    I may have misspoken earlier: the print labs (in this case Bay) aren't charging us for shipping; they hand it off to the shipping company (FedEx) who then charges us to ship it. We get the bill for all the prints that went out, and, at the end of the day, we come out even (no profit, no loss) on the shipping. FedEx gives us the rate depending upon the volume of items shipped.

    Remember that Bay Photo has a minimum print order of $12 for the $1.50 shipping to apply. That's because they're making up the difference in the shipping charge on the margin from the photo.

    Let's do some simple math with an example then:
    From the Lab: Let's say it costs Bay $0.10 to print a photo. They charge, through ROES, $0.19. That's also the price that Bay Photo gives to SmugMug: $0.19. An order comes in for 100 prints. Bay Photo prints those 100 at a cost of $10. They charge the customer $19 + $1.50 in shipping and the total order is $20.50. The actual shipping cost, however, is $6. It cost Bay $16 ($10 to print + $6 shipping) to print and ship the prints, so they make $4.50 ($20.50 - $16) on the order. They've eaten $4.50 of the $6 shipping by using their profit margins.

    From SmugMug: Bay Photo charges us $0.19 for the prints, which is also the cost on SmugMug, so the 100 prints cost $19. It then has to be shipped for $6. Total cost is $25. There's no margin to eat from, so SmugMug charges $25 and comes out with nothing. If we charged only $20.50, we'd be taking a $4.50 loss on the order.

    I hope you (all) know us here on SmugMug/dgrin well enough by now to know that we're here to help you and to answer your questions honestly. We're not trying to cheat you and your customers, and we're not trying to fib our way through the explanations. I feel like we're being accused of lying to you, which we're not.

    We would love to get the prices as low as possible. We want you to sell more prints and we're always looking for ways to help do that.
    SmugMug Director of Product / dGrin Afficionado
    aaron AT aaronmphotography DOT com
    Website: http://www.aaronmphotography.com
    My SmugMug CSS Customizations website: http://www.aaronmphotography.com/Customizations
  • AdamNPAdamNP Major grins Posts: 178Registered Users Major grins
    edited November 18, 2015
    Well, for one, you could do what I and others on this thread have suggested. Charge a bit MORE for the prints, to cover the shipping. It's simply a fact that customers have a SERIOUS problem with shipping charges, of almost any amount. I have probably spent $100k with Amazon over the years. When I happen to find a product that is only third party, and that third party has a shipping charge, there's about a 1% chance I will buy it. If it's Amazon Prime, even if the price is/were higher, I would buy it that way.

    Yes, we can self-fulfill our orders, or jump through hoops with coupons and all of that. I pay SM a yearly fee, and SM takes 15% of every sale, to make the process automated and hands-off for me. I am fine with paying that. However, if I end up having to do it myself anyway, then why should I not keep all that goes to SM for myself?

    I don't think you guys are lying, I just don't think you are living in the present, and need to change models. Free shipping is a fact of e-commerce. I couldn't even tell you the last time I paid for shipping, from any company. Companies adapt to that or they fade away.
  • DmitrySDmitryS Big grins Posts: 29Registered Users Big grins
    edited November 18, 2015
    leftquark wrote: »
    I hope you (all) know us here on SmugMug/dgrin well enough by now to know that we're here to help you and to answer your questions honestly. We're not trying to cheat you and your customers, and we're not trying to fib our way through the explanations. I feel like we're being accused of lying to you, which we're not.
    I think people are having hard time believing that Smugmug with a huge volume of prints has worse rates with Bay then a random customer. In your example Bay charges me 19 cents + cheap/free shipping and charges you 19 cent and no shipping. Sorry it makes very little sense.
    You should understand how awkward is telling a customer "Don't press the button on the site, send me the list of prints your want to get, and I will place an order for you". It just a huge waste of time for everybody and make no sense in current digital age, especially when we are paying for subscription and 15% haircut.
    May be othes are correct, and whoever has negotiated your rates did a sloppy job. If so, there is an easy workaround: let me give you my Bay account number, and just place an order for me.
  • photoclickphotoclick Major grins Posts: 278Registered Users Major grins
    edited November 18, 2015
    Seems like this conversation is taking a wrong turn. We are customers, SmugMug is a business. It is not my place to question how and how much profit SmugMug makes (unless I am a shareholder:) ). The fact that Aaron has to prove they are not cheating is bizarre. However... since Aaron mentioned numbers I would like to elaborate.


    Ok, I got it. Bay can afford to fork $4.5 towards the $6 shipping cost because they have a product that they sell at a profit. So I only pay $1.5 for shipping.

    Bay Photo
    $0.10 per print x 100 prints = $10 + $6.0 shipping = $16.00 cost to Bay
    $0.19 per print x 100 prints = $19 + $1.5 shipping = $20.50 my cost of 100 prints from Bay.
    Good for Bay - they just made $9 margin on my order... and they paid $4.5 shipping. It makes their final profit ... 4 dollars and 50 cents.

    SmugMug.... $0.19 per single print order times 100 is $19. SMugMug simply relays the order to BayPhoto, correct? SmugMug does not print, thus does NOT have production cost. As we just learned - the carrier bills SmugMug directly for the shipping. So Smugmug has to pay $6 to FedEx. Obviousely SMugMug passed it to me. I agree with that....

    Wait, I forgot something. I do NOT order a 19 cents print from SmugMug. I personally order directly from Bay. MY (and your) customers, however, do order a print from YOUR (smugmug) website. They order it, let's say for $5 a print. So, what do we have:

    $5 per print x 100 prints = $500 + .... the same $6 shipping, correct?. I hope the shipping charges are still the same as when I am ordering prints at cost:) In this transaction SMugMug just made 15% off of my porfit. My profit is $481, SmugMug's 15% is $72.15.

    So, let's figure out, how come BayPhoto that makes, in Aaron's example, only 9 bucks in profit, can eat up $4.5 shipping cost so the customer pays only $1.5. But SMugmug, who makes $72.15 on the same number of prints ordered can NOT accommodate their customers in the same way????? Of course Smugmug processes the payment. I can assure you that the payment processing cost for this transaction (considering high volume business as SMugmug) is at most $1.7.

    But, again, as I mentioned at the top of my post - it is not my place to count Smugmug's money:) I can only hope that the more profitable they are the more chances they hire someone who can negotiate a better deal with the shipping company or with the printing lab.

    Alternatively, how about you do charge full shipping cost until the point when you start making profit on the order? If the order is jsut a few prints or udner 10 dollars - yes, charge full shipping cost. But when the order is obviously profitable to you - let's say regular size prints with orders that make you $50 or more... subsidize the shipping to, at least, 70% for us? I think it is a fair deal.


    In addition, I wanted to address another myth. Many times it has been mentioned here that SmugMug offers better price for prints than when ordering directly from Bay. Not entirely correct Most popular sizes are actually cheaper on Bay. Please see image below:

    Price.jpg



    leftquark wrote: »
    Please don't forget that Bay adds additional shipping costs to drop-ship it to your customers. They're not able to get the prints for $1.50 as you've mentioned (only you can). It used to be an extra $10, though it looks like Bay Photo dropped the additional charge to $6 recently. Yes, that's still less than we're charging but that's because Bay Photo has higher margins on their products.

    I may have misspoken earlier: the print labs (in this case Bay) aren't charging us for shipping; they hand it off to the shipping company (FedEx) who then charges us to ship it. We get the bill for all the prints that went out, and, at the end of the day, we come out even (no profit, no loss) on the shipping. FedEx gives us the rate depending upon the volume of items shipped.

    Remember that Bay Photo has a minimum print order of $12 for the $1.50 shipping to apply. That's because they're making up the difference in the shipping charge on the margin from the photo.

    Let's do some simple math with an example then:
    From the Lab: Let's say it costs Bay $0.10 to print a photo. They charge, through ROES, $0.19. That's also the price that Bay Photo gives to SmugMug: $0.19. An order comes in for 100 prints. Bay Photo prints those 100 at a cost of $10. They charge the customer $19 + $1.50 in shipping and the total order is $20.50. The actual shipping cost, however, is $6. It cost Bay $16 ($10 to print + $6 shipping) to print and ship the prints, so they make $4.50 ($20.50 - $16) on the order. They've eaten $4.50 of the $6 shipping by using their profit margins.

    From SmugMug: Bay Photo charges us $0.19 for the prints, which is also the cost on SmugMug, so the 100 prints cost $19. It then has to be shipped for $6. Total cost is $25. There's no margin to eat from, so SmugMug charges $25 and comes out with nothing. If we charged only $20.50, we'd be taking a $4.50 loss on the order.

    I hope you (all) know us here on SmugMug/dgrin well enough by now to know that we're here to help you and to answer your questions honestly. We're not trying to cheat you and your customers, and we're not trying to fib our way through the explanations. I feel like we're being accused of lying to you, which we're not.

    We would love to get the prices as low as possible. We want you to sell more prints and we're always looking for ways to help do that.
  • leftquarkleftquark SmugMug Product Team Posts: 3,409Administrators, Vanilla Admin, SmugMug Product Team SmugMug Employee
    edited November 18, 2015
    Almost all of that profit goes to the Pro, not to SmugMug, remember. And the overwhelming answer from our Pro's has been "maximize our profit and let the customer pay the shipping." There are some of you here on dgrin who would prefer the opposite: minimize the shipping cost and let me take the profit hit. If it turns out that our Pro's would prefer the opposite, we're more than happy to do what our customers want. Just remember that dgrin is a small portion of the SmugMug community -- often times a much more vocal group. The hardest thing for me, as a Product Manager and dgrin admin, is to be able to distinguish the voice of the majority of our quiet customers, from the minority of vocal dgrinners. That's often why we use obtainable data to help make decisions.

    Sometimes I wish you could all come to the office and see how hard we're working for you -- we're not trying to mislead you and despite your accusations that our staff is sub-par, we have some of the brightest and hardest working people I've ever met (and that says a lot, since I was a rocket scientist in my previous life). We're constantly reviewing best practices, data, tests, and customer feedback to ensure we're giving the best possible experience. It may not always seem that way but we really are.
    SmugMug Director of Product / dGrin Afficionado
    aaron AT aaronmphotography DOT com
    Website: http://www.aaronmphotography.com
    My SmugMug CSS Customizations website: http://www.aaronmphotography.com/Customizations
  • SamSam San Jose CA Posts: 7,418Registered Users Major grins
    edited November 20, 2015
    leftquark wrote: »
    Almost all of that profit goes to the Pro, not to SmugMug, remember. And the overwhelming answer from our Pro's has been "maximize our profit and let the customer pay the shipping." There are some of you here on dgrin who would prefer the opposite: minimize the shipping cost and let me take the profit hit. If it turns out that our Pro's would prefer the opposite, we're more than happy to do what our customers want. Just remember that dgrin is a small portion of the SmugMug community -- often times a much more vocal group. The hardest thing for me, as a Product Manager and dgrin admin, is to be able to distinguish the voice of the majority of our quiet customers, from the minority of vocal dgrinners. That's often why we use obtainable data to help make decisions.

    Sometimes I wish you could all come to the office and see how hard we're working for you -- we're not trying to mislead you and despite your accusations that our staff is sub-par, we have some of the brightest and hardest working people I've ever met (and that says a lot, since I was a rocket scientist in my previous life). We're constantly reviewing best practices, data, tests, and customer feedback to ensure we're giving the best possible experience. It may not always seem that way but we really are.

    OH Boy.........................

    Let me start with SmugMug has some first class employees. Smart, hardworking, etc.

    In my heart I don't believe your deliberately trying to mislead with your explanations.
    Yet the explanation provided here is the same as "hay, organically processed by a male cow".

    Gimme a break! Smugmug charges Pro account holders 15% to handle sales which I think is fair for both parties.

    I personally think that Smugmug is not paying Bay Photo retail for prints ordered through Smugmug. This may be on a order by order basis or some type of rebate bases on volume.

    This is also fine. No deception here. Good business.

    BUT! let me explain what's wrong with your answer / explanation here. You say Smugmug has a choice of providing max profit to Pro account holders or low shipping, not both.

    Why would Bay charge a random customer one rate and a volume customer like Smugmug a higher rate?

    Does that really make sense to anyone? Does this pass the logic test?

    If they have $6.00 shipping built into their pricing schedule why would they turn around and charge Smugmug more?

    The only rational explanation I can think of is that Smugmug had a choice of receiving some type of discount / rebate or pass along the subsidized shipping charges Bay offers it's random retail customers.

    If there is another answer I would certainly be willing to listen.

    But please no more nonsense answers. Ether provide a real believable answer or simply say, "that's the way it is, Smugmug will not discuss it's internal costs and arrangements with vendors.

    Sam
  • leftquarkleftquark SmugMug Product Team Posts: 3,409Administrators, Vanilla Admin, SmugMug Product Team SmugMug Employee
    edited November 20, 2015
    Sam wrote: »
    If there is another answer I would certainly be willing to listen.

    But please no more nonsense answers

    Shief gave a clear explanation, and I tried to step in and re-word it in a different way. I'm having a hard time understanding what's not clear. Let me try 1 more time, in a different way:

    Simple Explanation: Bay Photo's higher margins allow them to subsidize the cost of shipping. SmugMug, as the middle-man, doesn't have this luxury (sadly).

    More Detail:
    1) An order is placed. The cost of the print + shipping is paid and collected by SmugMug.
    1a) We collect: cost of the print
    1b) We collect: cost of shipping
    1c) We collect: any additional Pro profit
    2) Bay Photo charges us for the cost of the print (note: they do NOT charge us for shipping).
    3) We pay Bay for the print, based on what was collected from the customer (1a).
    4) Bay Photo turns the order over to FedEx.
    5) FedEx sends us the bill
    6) We pay the FedEx bill, based on the shipping collected from the customer (1b).
    7) We send the Pro Profit (1c) to the Photographer, minus the 15% fee.

    At the end of the day, what was collected in shipping (1b) is equal to what FedEx charges us (5). There's no hocus pocus: When we take all that we collected in shipping and then pay the FedEx bill, we're left with zero. No profit. No loss.

    So why is Bay Photo's cost of shipping (1b) lower? Simple: they have margin from the cost of the print (1a) that they can eat into, to subsidize the cost of shipping. Yes, they're subsidizing their shipping cost. They have higher margins that enable them to do this. It's partially why they have a $12 minimum on the $1.50 shipping, because that's the point where the margin allows them to still make a profit when subsidizing the cost of shipping.

    SmugMug simply doesn't have these margins to subsidize the cost of shipping. Even the best negotiator will never get the lab to agree to give us the print for the same as it costs them to make it. If we tried to subsidize the cost of shipping we'd be putting ourselves out of business, and I don't think any of us want that.

    We could charge the customer more for the print, and lower the cost of shipping, however we have data that indicates SmugMuggers sell less prints when the cost of the print is higher. While the shipping cost may deter some customers from placing the order, the # of people that stop at this point is much smaller than the # of people that would never even begin the purchase process if the cost of the print was more.

    If something is still unclear from this, please let me know but I hope this clears it up.
    SmugMug Director of Product / dGrin Afficionado
    aaron AT aaronmphotography DOT com
    Website: http://www.aaronmphotography.com
    My SmugMug CSS Customizations website: http://www.aaronmphotography.com/Customizations
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