Luke Hughes' clients understand the difference between price and value.
They are wise enough to invest for the long term - which ultimately carries a much lower cost and a higher return.
So where does the money go when you buy furniture?
Generally, in the furniture industry, the amount that goes into marketing sales and distribution is about 48%. The amount that goes on direct or indirect taxation (in various forms: VAT, employment taxes, vehicle excise, insurance taxes, corporation, etc) is about 26%. That’s 74% so far. Allow a few % points for design, legal and professional and other overheads, that leaves only 12% to go on materials and craftsmanship. So, every time you buy a new chair, say, 88% is not going to the materials or labour necessary to produce a quality product. And if you throw away your chair after, say 10 years, you spend all the same money again - very little of it going towards a better chair.
What does that mean in practice?
If you buy 100 cheap chairs for £100 each, with an expected 10-year life expectancy, then the real cost over 50 years (not allowing for inflation) is 5 x 10 = £50,000. And that’s before we look at the £24,000 for sales, marketing and distribution or the £11,500 that's going on taxes. Who on earth wants to pay for that several times over? However, if you buy 100 better chairs for £200 each, with a predicted 50-year life expectancy, then the real cost is £20,000.
Net saving - £30,000
We have two views about value, both of them based on quotations by the art historian, John Ruskin.
‘It’s unwise to pay too much, but it’s worse to pay too little.'
When you pay too much, you lose a little money. When you pay too little you sometimes lose everything.
‘If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better.’
It is why we sometimes say to clients: if you want to acquire the best long-term solution, come to Luke Hughes.