Why We Have Minimum Orders

Minimum Order

A minimum order is the amount of merchandise that we must sell in order to break even. Shipping charges are not part of the minimum order.

Minimum orders are just a part of doing business when things have to be put in a box, with packing materials and other extras that don't happen when you come into the store.

There is no minimum order if you come into the store for your purchase. (Unless you ask us to package items for you for travel or shipment.)

We keep a low minimun order so that we can accomodate our younger customers or people who just want to try a new technique or material.

Full Explanation

Some people don't understand the principles behind the minimum orders. They feel that we are not entitled to enjoy a profit or they feel ripped off. Some are insulted that we would even dare ask for such a thing. In the old days, we didn't have a minimum order, but we paid a heavy price for it. We used to send out orders hoping that people would order more in the furture so that we could at least get our money back. Well, needless to say, that didn't work.

If you ask us to process an order that is below the minimum you are really asking us to lose money. If we owe you a favor we are happy to do this to return the favor. If you are an old friend or loyal customer we are happy to do it just so it isn't every time.

In the past few years we have been forced to adopt this policy in order to get costs under control. If you don't understand how this works, let me explain it to you.

First of all, there's overhead. Overhead is the cost of doing business, it includes labor, taxes, rent, utilities, insurance, interest, office supplies, etc., etc. People without business experience don't understand how all of this adds up. They think that because something is inexpensive to them it is inexpensive to us.

An enterprise must have a profit to stay in business. If it costs more to process an order than will be returned in revenue then it is time to drop that product line, raise prices, increase the proportions of the product or charge a minimum. Just like any business, we do all four.

Time is money. It takes time to process an order, about a half-hour average. Much longer for a foreign order. It often takes the same amount of time to process a ten dollar order as it does a hundred dollar order. The nice thing about a hundred dollar order is that we can cover the costs of processing with the purchase price of the product. The bad thing about a ten dollar order is that it costs us more for labor than we will ever collect from the customer. It just doesn't make sense to ship someone a five dollar item in three dollars worth of packing materials with ten dollars worth of labor.

Then there's shipping. It rarely costs less than $7 for shipping on even the smallest of orders. If you buy a $7 item and we have to charge you $7 for shipping you will be mad at us. A hundred dollar order might only have a shipping charge of $12. That's not a bad deal. Wise customers will save up a list of things they need so that they can amortize their shipping costs.

We are not McDonald's. We don't count on thousands of small orders to make a gain. McDonald's sells millions of products everyday. They are set up for high speed processing. They don't offer technical support. To compare us to consumer level businesses is unfair.

If you still don't understand how it works, please consider the following example. Suppose you get a cell phone and the salesman tells you that you can call anywhere for ten cents a minute. Your contract gives you 300 "free" minutes for $30 per month. This is a perfect situation if you use exactly 300 minutes per month. But let's say you only use five minutes a month. This means you pay $6 per minute. Even if you talk for twenty minutes a month, you still pay $1.50 per minute or fifteen times the amount you think you are paying. People who talk about cost per minute are really repeating the sales pitch, not their actual costs.

Let me try another example. Let's say you own an auto-parts store. Several times each day you need to send a "runner" to pick up and deliver parts and supplies. Let's say you have to pick up an eighty-nine cent gasket at the warehouse. It takes twenty minutes for your driver to get there and another twenty to come back. You will charge your customer $1.50 for this gasket. Does it mean that it cost you eighty-nine cents for this gasket? No, of course not, it probably cost about $25 for the gasket. Costs would include labor, gas, depreciation on the vehicle, overhead, social security and other taxes, and insurance. These are only the direct costs associated with having a driver and don't include regular overhead costs such as rent, phone, the accountant, etc., etc.. As a smart business owner you simply send your runner out when he has many parts to pick up at many locations. You are wise for him to get several hundred dollars worth of parts all at once and even wiser if he can deliver some big orders

On the other hand, people who are not actively employed, don't have such overhead costs. Their time is free so it doesn't cost them but the $1.50 for the gasket. Sometimes these people just don't understand how a for-profit enterprise works so they are critical when a business attempts to make a profit on the things they purchase.

I remember a nasty letter many, many years ago when we first started sending out our printed catalog. Someone had sent us a dollar for our catalog, but his letter had gotten lost in the mail. (He had atrocious handwriting.) We never received his dollar, but we did receive a second letter accusing us to ripping him and everyone else off by collecting a dollar from everyone who wrote for a catalog. We had a good laugh over this one because there was something he didn't know. We never took money for the catalog -- it was too expensive to process a $1 sale, so we just sent people their catalog with the dollar bill tucked inside. I hope that character never ordered from us, someone who would go into a rage so quickly and jump to such outrageous conclusions would probably never be happy with our service.

We love our professional customers and those who are on the way to success. These wonderful people never complain nor argue, in fact if they make a mistake and buy the wrong stuff they will often keep it knowing that they'll use it someday in the future. They understand how a business works and are appreciative of the time we give them.

On the other hand, we've had big problems with most of our "exception" people - the people who want to be an exception to the rules. They negotiate and negotiate over and over again. It never stops. You give them a break on one order and they want it for every order after that even if they insist it was "just this one time". They want stuff at our cost. In their eyes we are wrong to try to turn a profit. Their credit cards often don't work. They even want us to break packages for them because they "only need a little." They ask for favors they don't deserve. One woman wanted to us to break a federal law for a twenty dollars worth of dental supplies, then wanted me to drive it all the way across town because she didn't have a car to pick it. Sometimes these characters just wear us out!

Fortunately our minimum order policy discourages most of these people. When one of these characters threatens to take their business elsewhere I am relieved. In a very real sense our minimum order policy works as a frustration remover. It automatically offends people we don't want as customers and at the same time spares them the aggravation of doing business with us. It is one the best policies we've ever had.