Five for the Money of Three

Dear friend,

The riddle first, as the tradition demands. Back in the old town there were two burners of lime, both honest men with the same stone and the same coal, and the difference between their years was a sum no customer of either ever saw.

Two limeburners on one river, the same stone from the same quarry face, the same coal off the same wharf.
Both sold lime at ten shillings the ton, and both were honest to the bushel.
A builder putting up a terrace asked each of them for a shilling a ton off thirty tons.
One said yes before the man had finished the sentence, and was glad of the order.
One asked for the evening to look at his book, and gave his answer in the morning.
A year on, one had burned more lime than ever and ended poorer. Why?

Hold your answer. Story time.

The Story

Two limeburners, in a town I have never named. Both had a drawkiln on the same river, both bought off the same quarry face and the same wharf, and both burned a lime that masons asked for by name. Both had the same dust in their hands and the same sore eyes by Friday. Neither was the better man, and neither was idle.

One difference. Through a wet February, with the kiln cold, the first burner sat down with a candle and worked out what a ton of lime actually cost him. Not the coal, which he knew to the hundredweight. Everything. The stone and the carting of it, the two men who drew and loaded, the horse, the weeks the kiln stood idle waiting on weather, the ton in five that went to a man who paid at Michaelmas, the rent, the kiln lining, and his own wages, which he had worked all his life without once writing down. Seven shillings and sixpence. Which left him, on a ton sold at ten, half a crown of his own.

In March the builder came, with a terrace of eight houses to put up and thirty tons to buy, and asked each man for a shilling a ton off.

The second burner said yes while the sentence was still in the air. Thirty shillings against an order of fifteen pounds, and it kept his men on through the spring. He was not a fool and he was not weak. He had the only two numbers he kept, the size of the order and the state of his bank, and against those a shilling looked like nothing. What he had done was hand over twelve tons' worth of his own living, and settle himself at eighteenpence a ton for the season, since the builder told two other builders and the new price held. He burned more lime that year than in any of his life, and ended it poorer without being able to say where it had gone.

The first burner asked for the evening, and in the morning said he could not do a shilling. He did not show his book. He said a shilling was not a tenth of his price but two-fifths of what the work left him, and that at nine shillings he would be selling five tons for the money he now had from three. Then he offered what he could afford. The ten shillings held firm until the terrace was finished, whatever coal did at the wharf, which was rising and both men knew it. Carts on the days the builder named rather than the days the kiln was drawn. The builder took it inside the hour, because what he feared was never the shilling. It was lime on the wrong Tuesday with eleven men standing about, and a price moving under him halfway up the second house.

That same burner gave sixpence a ton in November, to a farmer wanting a hundred tons through the dead weeks when the kiln would have stood cold. He knew sixpence was a fifth of his profit as he said it, which is the whole of the difference. He was not being kind. He was buying a winter.

The Lesson, Since You've Earned It

A reduction does not come off your price, it comes off the only part of your price you were ever going to keep. Every man in trade agrees with that when it is put to him plainly, and almost none has the figure to hand at the moment somebody asks.

Do the sum once and it stays done. Take a job at ten pounds which costs you seven pounds ten to do, leaving you fifty shillings. Give a tenth off, as reasonable men do a dozen times a year, and you have not given away a tenth. You have given away two-fifths. To earn what three of those jobs used to bring, you must now find, win, do and be paid for five. Nobody in a yard on a Tuesday thinks of it so. A tenth sounds like a gesture.

The sum runs the other way too, which is why it is worth having. Put the ten pounds up to eleven and you keep seventy shillings instead of fifty, and could lose a quarter of your work and still end the year ahead. A price nobody ever argues with is not the proof of fair dealing you take it for, as I have said of the work that is never once refused. A small movement either way lands entirely on the narrow part, and the narrow part is your wages.

Knowing the number does not oblige you to refuse. It turns a flinch into a purchase. A reduction bought on purpose, to fill a dead month, to open an account that will order fifty times, to be paid in a week instead of a quarter, can be the best money you spend that year, and I have argued before that a reduction ought to buy something. The figure prevents the other thing, which is giving your Thursdays away in shillings, to people who would have bought anyway and asked out of habit.

Two cautions. First, the cost you set against the job must be the true one, or the number lies to you in the comfortable direction. Put in your own wages at what you would pay a man to replace you, the hours spent quoting work you did not win, the idle weeks, the slow payers, the rent, the job in ten put right for nothing. Most trades doing this honestly for the first time find the margin about half what they assumed. Second, having the figure does not mean reciting it. No customer ever bought because your margin was thin, and a man who hears your costs begins auditing them.

Three questions, and the first wants doing before the week is out:

1. What does your commonest job leave you, after everything? One sheet, one job, every cost written down including your own time and a share of standing expense.
2. What does a tenth off do to that figure, and how many must you sell to stand still? Divide the old margin by the new. That ratio is what you will want at short notice.
3. What reductions did you give these last three months, and what did each buy? List them, total the money, write beside each what you got for it. Any line with nothing beside it was a gift you did not know you were giving.

The Answer to the Riddle

A year on, one had burned more lime than ever and ended poorer. Why?

Because he gave away a tenth of his price without knowing it was two-fifths of his living, then worked harder to make the shortfall up, which is the one thing that cannot make it up. Volume on a thinner margin is a treadmill with a fine view of itself. The other man knew what a ton left him, so he could hold his price with a reason instead of a sulk, offer the two things that cost him nothing and answered the builder's real fear, and later spend sixpence on purpose to buy a winter. He had no more nerve. He had a number, which does the work of nerve.

The verse:

A shilling off the ton sounds nothing in the yard,
But it is not the price it comes from, it is you.
Know what the ton leaves over, before the asking starts,
Then give it if you choose, and know the cost.

Until next time. Go and work out on paper, today, what your commonest job leaves you after every cost including your own wages, and what a tenth off would do to it.

P.S. Keep the sum by customer as well as by job, since a customer's costs are not all in the work. The man who always wants a shilling off is usually also the man who wants the cart sent twice, changes the order on the Wednesday and pays at Michaelmas. No single job of his looks bad. His year does. Work the figures and you will find a name or two the others have been paying for, and a decision that has nothing to do with your price list.

Also in the archive: Made for a Colder Winter, The Good Iron on the Axle and The Pencil in the Margin.