Hello,
 
It is my pleasure to make my first post and have the opportunity to speak with all of you.  This past year has been an exciting one watching GCU grow and witnessing our creative artist community reaching over 1,350 artists to date.  Thank you for all of your hard work!
 
The purpose of my post has to do with card prices and artist license fees.
 
When GCU started we set a license fee at a flat rate of $.50 a card sold based on a card-selling price of $2.49.  In doing so we knew there was little to no room for profitable discounting.  In fact, at a card price of $2.29 or below GCU actually loses money, considering costs like printing and fulfillment; artist, seller and merchant fees; and overhead (customer and technical support).  
 
As we learn and move forward, GCU’s goal is quite simply to sell more cards.  In the process make sure that GCU no longer loses money on sales and that artists continue to be compensated fairly.   This will also allow GCU to pursue marketing and advertising activities that have not been done in earnest to date.
 
Today we are all missing out on large quantity sales because our prices are not competitive.  With a few changes we believe we can begin to capture those lost sales and at the same time increase earnings for both GCU and our artists.  This will require a new pricing and artist fee structure.
 
We are considering the following and would like your feedback.
   
RAISE PRICES FOR MOST LIKELY SALES & INCREASE DISCOUNTS FOR QUANTITY ORDERS OF ASSORTED CARD - orders with two or more different card types.
 
We propose to raise card prices to $2.79 (see proposed pricing below).  This will boost revenues for the majority of our existing orders (99% of GCU orders are less than 25 cards).  From what we have learned we believe there is room for this increase.  At the same time offer deeper discounts for quantity purchases of assorted cards.
 
OFFER BULK ORDER PRICING – orders of quantities over 3,000 of the same card.
 
NEW PRICING AND ARTIST FEE STRUCTURE
In order for us to offer better pricing we require a partner with more flexibility.  We will soon announce our new printing and fulfillment partner who will not only offer higher capacity production at a lower cost but also offer some of the new services that you have been patiently waiting for like back of the card credits, international bulk shipping and more.  
 
We are suggesting an artist fee structure based on percentage of card sales price, net of discounts and promotions.  Note that with a card price increase to $2.79 for up to 24 cards, artists will actually earn more ($.56 per card vs. today’s $.50).  The suggested artist fee structure is as follows -
 
Price Range of Card Sold      Artist Fee Percentage
$2.29 - $2.79                                      20%
$1.89 - $2.28                                      15%
$1.70 - $1.88                                      12%
$.50 - $1.69                                        10%
 
Our new suggested pricing for Assorted Card Orders is  -
 
Quantity per order of Assorted        Card Price           Related Artist Fee
1 – 24                                                   $2.79                      20% = $.56
25 – 49                                                 $2.49                      20% = $.50
50 - 99                                                  $2.29                      20% = $.46
100 – 499                                            $1.79                      12% = $.21                  
500 – 999                                            $1.49                      10% = $.15
1,000 – Plus                                        $1.39                     10% = $.14
 
Our new suggested pricing for Bulk Orders is –
 
Quantity per order of Bulk          Card Price           Related Artist Fee
3,000  - 3,999                                $1.19                     10% = $.12
4,000  - 4,999                                $1.09                     10% = $.11
5,000 – 7,499                                $0.89                     10% = $.09
7,500  - 9,999                                $0.79                     10% = $.08
10,000  - 14,999                           $0.69                     10% = $.07
15,000  - 19,999                           $0.61                     10% = $.06
20,000  - 24,999                           $0.57                     10% = $.06
25,000  - 49,999                           $0.55                     10% = $.06
50,000  - Plus                                $0.51                     10% = $.05
 
Keep in mind these lower priced/lower artist fee orders are for the most part sales we are not capturing today.  It is not money lost out of your pocket nor ours, it is money on the table that we’d like to win!
 
I am certainly interested in your thoughts and feedback.  My goal is to implement changes by July 1, the beginning of the next calendar quarter.
 
Mike Fake
CFO, BigDates Solutions
Greeting Card Universe
 
 
 

WOW!  THANK YOU, MIKE....THANK YOU GCU!
I am truly revved up about this.  If the quality of our printed cards does not drop, perhaps some of us can, at long last, market our own cards on the outside world too.  This plan looks to me like a real winner, for ALL of us!
Do I approve?  "It's a noooo-brainer!"  
Thanks again,
Sue

Ditto to all of the above... good news.  Again I say I am privileged to be a part of GCU... It's a great place to be and I'm glad I'm part of it!
 
gina

Hello Mike,
When I first heard that there would be changes in the amount artists could earn on their cards I was a little concerned, but you have come up with what I think is a very good solution.  I have always thought the quality of GCU cards was so great that they could sell for more.  I think you have come up with a very good solution that I believe we will all benefit from.  I have been with GCU for almost a year now and I am so impressed with the artist community here and how GCU really cares about what the artists think.  Well done!
Kathy

Hi Mike,
 
First, welcome on your first forum post!  I'm sure we'll all be eager to see many more postings from you!    
 
I, too, am delighted to see that GCU will be making a move towards more advertising and making bulk sales more competitive.  The new pricing structure you've presented looks good at a quick glance ... I'd like to study it a little more closely, but it appears very attractive -- for the most part.  
 
One area that concerns me though is the steep drop-off under the Assorted Bulk pricing between the 50-99 and the 100-500 range.  That's a pretty severe cut from $.46 per at 99 cards to $.21 per for 100 cards.  I may be missing something that went into the considerations -- there may be a very good reason for such a sharp drop in commissions fees ... but at first glance, I can't quite imagine what it might be.  
 
This is right off the cuff, without having studied the new model closely yet, but I'm wondering if there's a reason why there could not be a more moderately staged drop-off.  For example ... 100-249 cards @ $1.99, and 250-500 cards @ $1.79 with commensuate artists fees of 15% ($.30) for the $1.99 cards and then drop down to the 12% ($.21) for the 300-500 card range.  Is that something that bears any consideration?  
 
I don't see any problem with reduced artist fees for bulk sales ... I expect it and endorse it for GCU's growth.  And I think the 10% across the board for single-card bulk order of 3k + is certainly fair and reasonable.  But having been fortunate in having a few bulk sales, I'm a little put off by the idea that a bulk sale of 90 cards which I recently had, will actually earn MORE than a bulk sale of anything less than 197 cards under the new structure.  Something just doesn't seem right to me about that.  If the $1.99 cards at a 15% commission is not something worth considering, then I would rather see the Assorted Bulk structure go from 20% for 1-49 ranges to a 15% fee for the 50-500 ranges ... personally, I would rather trade off that 5% on the 50-99 range and pick-it up on the 100-500 range.  And in reality, it would only be a 3% increase over the 12% in the proposed structure.  I can't speak for others, but I'd be happier giving up that 2% on the 10-99 cards and picking up 3% on the 100-500 card sales.  
 
Anyway, that just my initial thoughts on it.  I know a lot of work and thought went into this plan, Mike.  Just want you to know that we very much appreciate that GCU takes the time and goes to the effort of asking for feedback from us.  
 
Looking forward to hearing more on this topic over the next week or so.  Over all, though, great job to everyone at GCU.  Let's get those big bulks going!  
 
Teri

Hi Mike,
I think it is a great idea. I'm also very happy that GCU is artist-friendly and considers the interests of artists  and their feelings when making decisions and not only GCU's. . All of you are a very supportive bunch!  
Would like to quote henry ford on teamwork:
Coming together is a beginning.  Keeping together is progress.  Working together is success.  ~Henry Ford
 
have a nice weekend !
cheers, barbara

Quote from Teri Francis_131425 on Jun 20^th, 2008, 2:03pm:

 
The way I see it, the card price dropped by 50-cents going from Qty 50 to Qty 100, and so GCU split that reduction 50/50 with the Artists.  They get 25-cents less and we get 25-cents less.  This seems justified imo.
 
Also, we need to Retrain our Brain. BULK sales now are single card orders of 3000+.  Anything else is simply a "Quantity Sale."  
 
Also, as Mike mentioned, GCU lost money on orders over 25 cards ($2.29 card price and below), and it got far worse at 50, 100, 500, and 1000!  This was mainly due to the Artist fee being flat at 50-cents no matter what.  That clearly had to change.
 
Another Retrain our Brain is that the new commission is based on the customer order size.  If they place an order of 100 cards to get the card price of $1.79, then any artist in that order, and there could be several, will get 21-cents per card, regardless of qty of their cards sold in that order.  This is likely very rare, but we will have to accept this, otherwise, again, GCU could lose a lot of money since they only take in $1.79/card on an order like this.
 
The key point is that 99% of orders are less than 25 cards, and so artists will get a 12% raise in commissions with this new structure. The long term average order size is 2.2 cards. (I track this)
 
Also, I have received cards from the new printing partner, and I can't tell a difference.  I suspect they use the exact same POD printing machine as the current printing partner does.  

I also support the proposed changes. Thank you for giving us so much detail and involving us in the discussion. I have always appreciated GCU's excellent communication.
 
Thank you
 
Jen