Increasing Your Letterman Jacket Profits

One of the biggest mistakes we see with our dealers is the temptation to under-price chenille products such as varsity letters and sports patches.  In an effort to generate sales, team dealers and sporting goods stores sometimes forget that the goal is to create profits for the company’s owners or shareholders.

A perfect example: Most of our dealers sell a 7 letter double felt custom chenille name for the retail price of $26.95.  Yet, we have heard some team dealers selling the same product for $12.00 to retail customers!  That’s absolute insanity.  In some cases, these team sales are driven by commissioned salesman to generate sales, but it could just as well be caused by not fully charging your customer for all the services you provide, such as sewing, which is commonly given away with the jacket.  We refer to this condition as the “illusion of sales”.  This is often the result of the belief that generating sales automatically leads to profits.  Our family has been in the sporting goods business since 1977 and we’ve seen multi-million dollar sporting goods stores close their doors because of pricing decisions like the ones we described, while, at the same time, watching others, some of whom were very small companies, make a nice profit on a much lower sales volume.  It all comes down to the philosophy that drives your business.

A well-run letterman jacket sales operation should generate gross profit margins near 50%.  We all know it is hard to get even close to full retail on the jacket itself; in most cases, despite a suggested price of $220.00, the sales price tends to be closer to $180.00 at the retail level.  This is where chenilles come into the picture.  The value added by good customer service and offering a full range of higher margin chenille products to your customer allows you to raise the overall mark of the sale.

While there is always someone who is willing to sell product for 20% to 25% gross margins, those companies will come and go.  It is the companies that offer value to the customer and maintain a reasonable profit margin that will last over time.  The illusion of sales, however, often prevents our less successful dealers from seeing this and is frustrating because we want all of you to be successful and earn a great living.

That’s why in this new wholesale ordering system we implemented features such as a built-in retail price suggestion tool that will show you the average recommended retail price for each product (in some cases above 50%), as well as the estimated gross profit on that item.  It stems from one fundamental belief: You work hard to build your business and you deserve to get paid for your work.