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Monthly Archives: December 2013

Huh? What is Profit Margin?

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Several weeks ago, I was assisting a client with their charity fundraising event which was about to occur in an hour or so.  Prior to the event, I was giving a guided tour around the venue to the volunteers when we came upon a raffle which we were doing.  While explaining the raffle, that is when it “Hit” me, why using our items makes so much more sense.

ImageSee, I have always known why but could not see it in these terms, which made so much more sense to uneducated perspective clients.  On the raffle were eight (8) Gift Baskets (one of the most common donated items found at any Charity Event across the country) and while standing there, I asked all twelve (12) of the volunteers to tell me what their “MAXIMUM” bid would be on any of the items available.  The maximum bids for all eight (8) baskets was about $45 to $50.00 each.  But a total of approximately $345 to $350.00 for all of the items combined.  The cool part of the raffle was, using these items in that raffle profited the charity $2,100.00 with only the possibility of $355 on a Silent Auction.  That is when I saw it clearly….”Profit Margin.”

Every day, while speaking with perspective clients, we get the same questions on a constant basis – OR – the same response to what we are offering charities all across North America.  We have found, however, it’s the smaller Charities and Benefit Organizers who do not understand the ability we are giving them by providing such an incredible service.

Without ever thinking it through, these organizers respond negatively, while the larger charities, who commonly host large events, don’t even hesitate.  If these great people were to stop and ask “Why should we do this”…the question would be answered in two words – PROFIT MARGIN.

Let me explain it to you this way, most everyone will understand this.

From the next two items, which has more appeal?

  1. Gift Basket from a local Business
  2. Autographed Helmet from an Iconic Athlete

Do you even need to think about it?  First, let’s talk about the appeal.  Think about it like this – if you were to walk up to these two items, which would draw more of your attention?

Let’s use two more items:

  1. A $25.00 Gift Certificate from a Local Restaurant
  2. A highly decorative Collage from an Iconic Band

Still not sure, how about this:

  1. A Time Share from one of your friends at a local beach
  2. A Vacation Package to Disney including Airfare and a Gift Certificate

The answer to all of these questions is “B.”

I always say to perspective clients prior to beginning business is this and any of our Representatives can vouch that I warn people about is “There are two things people love and hate about me.  They love that I am blunt & honest.  They hate that I am blunt & honest.”  If you chose “A” on any of the options above, you are lying to yourself.  The truth of the matter is – across North America people only pay 1/8 to 1/4 of Retail on donated items – period.  You may get lucky and get 1/2 but that is it.

ImageSmaller Charities look at the LARGE blockbuster Charity events and wish to be raising that kind of money, but they can’t see the forest for the trees.  The reality of how those BIG BLOCKBUSTER charities get the items they do is, they work with us.  They understand what people want and they don’t even “Bulk” at the idea.

The reason our items are much more valuable to charity event guests is simply this – PROFIT MARGIN.  If you are not aware, the profit margin is how much potentially you will make (or profit) when an item sells.

We always recommend to our clients that they start the bid 20% above our Cost to Non Profit.  Using the Raffle items as an example with this idea in place, a Gift Basket’s maximum bid would be $45 to $50 but a $250.00 cost to nonprofit has a starting bid of “$50.00.”  So at the very first bid, a charity will profit $50.00 on only one (1) bid!!!

Now remember I asked you what has more appeal?  Let’s talk about maximum profit.  The items we carry are offered at or below Wholesale with no true Retail Value.  That means there is no known retail price – most of our items are priceless.

ImageLet me ask you a crazy question – how much do you think someone would bid at the maximum for a fantastic gift basket OR a $50.00 Gift Certificate?  The answer is – Not anywhere near the retail!!!  People don’t go absolutely “Bonkers” over Gift Baskets.  And – come on, the retail on a $50.00 Gift Certificate is….$50.00!!!

Remember what I said about what people love and hate about me!!!  People DO NOT, WILL NOT, WILL NEVER EVER, EVER NEVER pay anywhere near retail on a Gift Certificate!!!  They don’t…and if you are thinking I don’t know what I’m talking about because at your event they pay over and above the face value (which I have heard on several occasions from a multitude of Charities, only to find out the person saying did not know what they sold for – and they only sold for 1/2).

So (taking a deep breath), a signed Guitar is up for bid.  At the minimum or “Reserve Bid”, the charity stands to make at least $300.00.  Remember, a signed Guitar has no “Suggested Retail.”  The Guitar sells for $5,000.00.  The charity profits $3,500.00.

Ok, you want me to chose an item which is not as big as a Guitar, how about one of our incredible decorative pieces – Beatles 1st American Tour ticket Collage.  Cost to Non Profit is $225.00 and it routinely sells for $800.00 to $1,000.00 in a Silent Auction.  Make Sense?

ImageOn another note, recently, a autographed Bruce Springsteen Guitar was at the same event that I described above (with the gift basket raffle that made $2,100.00).  During the Live Auction, no one bid on it and it went “Unsold.”  But the following day, one of the event guests called and asked if was still available – which it was and the guest purchased it from the charity for the minimum bid.  On the same Live Auction, there was a Gift Basket filled with Household Paint items with a Gift Certificate worth “$800.00” for a professional painter to come to your house and paint for eight (8) hours – which was fully donated – guess what it sold for?  $300.00.

So the profit margin on the guitar and the profit for the gift basket was $300.00.

But what was most amazing was what the buyer of the Guitar told me “I wasn’t ready to see a signed Guitar from Bruce Springsteen.  We go to a lot of Charity Events and we always see the normal stuff…nothing like what was available there.  If I would have known, I would have been ready and spent a lot more money.”

A common falsehood charities also believe is that “No Risk Auction Items” pull profit away from their donated items – 100% false.  You have to give people a reason to spend their money.  Let me ask you this – are there stores in your favorite mall that only sell gift baskets?  No.  Remember that donated items are local items donated by local businesses, at a local event with local people attending – if they want those items or Gift Certificates, they would have gone and buy them themselves.  Now, you are asking people to spend “Top Dollar” on these same items.

I hope this helps you understand how you can go from a mediocre Fundraiser to a BLOCKBUSTER!!!  BW Unlimited Charity Fundraising can help you take the donated items you have and raise 5 to 6 times what you would normally profit.  Just ask us how.

We would love to help, contact us today at http://www.BWUnlimited.com.

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Posted by on December 6, 2013 in Uncategorized