How much to charge per square inch....?

[kcollinsdesign]

Roshmosh: I agree. It's materials x markup + hours of labor x labor rate. Always. If you don't do that, you will go out of business.

My main point is that you need to look at all of your material and labor options. It is often less expensive for me to order printing and fabrication than to do it in-house. By leveraging buy-outs and logistic opportunities, you will often find you can come up with a much more competitive price while still maintaining your profit margins. I suppose that if your client accepts a non-competitive price, you might as well just go with the flow, but eventually you will start losing clients when they will realize they are paying more than they need to.

ESSENTIAL READ: "How to Estimate and Price Signs", by Dan Hale. You will not regret this!

 

[unclebun]

Roshmosh: I agree. It's materials x markup + hours of labor x labor rate. Always. If you don't do that, you will go out of business.

My main point is that you need to look at all of your material and labor options. It is often less expensive for me to order printing and fabrication than to do it in-house. By leveraging buy-outs and logistic opportunities, you will often find you can come up with a much more competitive price while still maintaining your profit margins. I suppose that if your client accepts a non-competitive price, you might as well just go with the flow, but eventually you will start losing clients when they will realize they are paying more than they need to.

ESSENTIAL READ: "How to Estimate and Price Signs", by Dan Hale. You will not regret this!

The question is, if YOU get a deal or buy-out and save money, are you bound to pass that on to your customer? Isn't the deal meant to benefit YOU, as the middle man? Particularly in the sign business, where customers may purchase something every few months (or years), if one time you have an email coupon from your supplier for 20% off or EQP, and you pass the savings on to your customer, a year from now when the customer reorders, they will expect the lower price, even though the provider you use isn't offering the discount or promotion any more.

Your rationale that when you use a supplier for quantity ordering the only thing you need to add to the wholesale cost is an hour or two of your time is not correct. Once you start buying this way, the calculation is no longer materials x markup plus labor. In the example everyone has commented to you about, you didn't mark the wholesale price up at all, and merely added $200 for your trouble, saying you made a killing for the time invested in ordering 3000 decals you got at 20 cents apiece. Yet if you look at a pricing/quantity table, 3000 pieces is probably a C or D, meaning a 30% or 20% markup. Then you add any time you have involved.

Whatever you use as the actual price has to be something that can be rationalized all the way to making a single piece so that the pricing looks logical when a customer buys varying quantities.

 

[kcollinsdesign]

Unclebun: I always mark up my prices. I would not be in business if I did not. In the example you cited, my complete, shipped purchase cost with use tax (around $585.00) was marked up, and I added a $70.00 charge for the time spent talking to the client and placing the order.

My pricing method is based on over 35 years of doing this and tens of millions of sales. I don't worry about passing along "special deals" to customers, I just charge a fair price. If I happen to get a "special deal" from a supplier, I will typically retain the savings, but I don't generally shop for "special deals" and most of my suppliers don't mess around with pricing gimmicks.

Probably 80% of my clients trust that I have the pricing right. The others will shop me, and usually come to the conclusion that my pricing is fair. The internet is the number one place most people will go to check pricing. I could care less. I try to help my clients get a better deal, and if it is not through me, I am 100% OK with that. If I can't furnish the product competitively, than I don't want to do it.

I could, I suppose, not let the client know that my price is higher than the market rate. It would be good business, perhaps, to use the good will and trust I have built up over the years and turn a blind eye to the client's ignorance and take whatever money is on the table. Wouldn't they do that to me if the tables were turned? You could extend that to design too. I suppose it would make good sense to keep design costs to a minimum. If the client says it's ok, then go with it. No need to develop anything further. And what king of idiot would argue with a customer if they came in with a crappy design?

I just don't roll that way. All this sign stuff is secondary to my passion for and emphasis on design. I will spend thousands of dollars of the client's money coming up with effective design solutions, and gladly give up whatever profits I could make on the production side if I am not able to produce at a competitive price point. In my thinking, my client is not coming to me because I can order stickers on the internet (or print them on a ten-year old Versa-Camm with clogged nozzles), but because I have a proven track record of coming up with exciting and effective designs.

 

[iPrintStuff]

This thread worries me. No company will ever charge the same because everyone has different overheads, different amounts of work, different costs of materials, inks.. the works!

Everyone will need to charge differently to make sure the job can (at the very least) sustain their business and give them a comfortable life and/or make actually doing the job worthwhile!

Sure, this place is great for advice but you should only ever come here for, at the most, ballpark figures. There’s no exact price for each type of job because every sign shop will be different.

 

[TimToad]

This thread worries me. No company will ever charge the same because everyone has different overheads, different amounts of work, different costs of materials, inks.. the works!

Everyone will need to charge differently to make sure the job can (at the very least) sustain their business and give them a comfortable life and/or make actually doing the job worthwhile!

Sure, this place is great for advice but you should only ever come here for, at the most, ballpark figures. There’s no exact price for each type of job because every sign shop will be different.

Absolutely!

What seems to be an impenetrable defense in the thread is that despite claiming to have 4 or is it 5? decades worth of experience and financial success, kcollinsdesign steadfastly refuses to acknowledge the tried and true price calculators that businesses of all types have used for centuries. The calculation of fair market value for products and services many of us are defending and promoting is not some abstract concept, throw a dart at the wall and come up with a price process. His commercial success and dedication to design is admirable and a goal many strive for as they tire of hands on production, but apparently that success has not resulted in enough revenues to even update a 12 year old, low cost website for accuracy or new work examples.

Materials times 1.5-2.0 times markup combined with labor time spent and expected profit margin added in is one of the oldest price calculators used anywhere. Its universal acceptance and adherence to with adjustments for local variables is what has been the foundation of business for centuries.

He doesn't want to produce some or all of his own work anymore after a long, storied career in signmaking itself. Bravo! Good on him! He has condescended to about 95% of the industry who still maintain brick and mortar shops, with the equipment and personnel to produce work in-house. I get it.

Perhaps we all should just move on and hope that the OP and others have gleaned some good food for thought.

 

[kcollinsdesign]

If the "tried and true" pricing methods do not a yield a competitive price, then one of two things is happening:

1. You are taking advantage of the client's ignorance. Not a good recipe for maintaining healthy client relations.

2. You will lose sales because the guy down the street will be able to offer a better deal.

I love hands on production, but in many cases they have invented machines that do a better job. Economies of scale have resulted in commodity pricing that opens up new opportunities for shop owners. Someone still needs to do the design work and installation.

I offer my advice for those who are either considering going into the business or buying new production equipment. Take advantage of the opportunities modern technologies offer, and consider your business plans carefully.

 

[Move It Signs]

Thanks to everyone who contributed to this thread; I found it insightful and informative. I have two book recommendations-
The E-Myth by Michael Gerber especially for those who want to move away from making all the signs themselves and,
No B.S. Price Strategy by Dan Kennedy especially for those who want more profit than the "tried and true" method gives.

Mike

 

[kcollinsdesign]

Move It Signs: I concur with your reading recommendations. Gerber addresses issues around what is it to be a business, and why you want to do it. Building an asset rather than producing income. He talks about scalability and developing turn-key systems, and emphasizes vision as an essential element of the process, Kennedy and Marrs discuss the importance of profit, and address strategies for developing niche markets and a fundamental marketing approach to create value for the products and services you sell.

I am in business to create an asset. If I wanted a paycheck, I would work for somebody (did that for years). These days I spend my time coming up with ways to make money at the lowest cost (without sacrificing quality), developing systems so I don't have to do it myself, and identifying my market and developing tools to attract clients. My profits are high because my costs and overhead are low, and I am able to sell a premium product to a niche market (brand creation and reinforcement for small businesses).

Many of the contributors here have outstanding technical abilities and have built businesses based on fabrication, maintenance, and installation. The same principles apply: replicable systems, low overhead, smart marketing, and maximum, sustainable profit. But the most important element is vision. Figure out where you want to go and go there.

PS: I figure it is time for this to go to a new thread. This started out as a discussion about sticker prices. But all roads lead to Rome!

PPS: At age 61 I am starting a new business (the branding business I mentioned above). All of my working life I have been preparing for this. It seems like a good time to start!