Just In How to Calculate Your Hourly Shop Rate

[FireSprint.com]

I feel like this comes up alot, so I took some time to make a simple calculator and a video explaining it. Let me know what you think. I would love to hear your feedback, good or bad.



Thanks everyone!

 

[ColorCrest]

I feel like this comes up alot, so I took some time to make a simple calculator and a video explaining it. Let me know what you think. I would love to hear your feedback, good or bad.

I think the question has lately become; "How does one actually use this shop rate figure when calculating prices for sign products?"

 

[FireSprint.com]

ColorCrest That makes sense too. I think the hard part is actually calculating how much time something will take.

Time x Hourly Rate + Materials + Material Markup = Selling Price (To put it very simply)

Calculating times takes experience. It was the hardest thing I fought with during my first year or two.

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This all assumes you are producing/designing something inhouse. When you sub work out (especially if someone like us just drop ships directly to your customer) you throw most of this out the window.

 

[Gino]

Why would you throw most of this out the window ??

* Is a wholesaler not a tool ??
* Is it not part of one's cost of doing business ??
* Do you not still have quite a bit of other time and even costs involved, even if you are not actually making the job in-house ??

That sounds like if you aren't hands on, you just toss your calculations out the window. Don't you have workers doing this for you ?? Are they not like an extension of you in some respect in your facility ?? Are you, as a wholesaler, not an extension of someone's sign shop ??

 

[StarSign]

We sell everything at $100 and hope to make it up on volume

 

[FireSprint.com]

Why would you throw most of this out the window ??

* Is a wholesaler not a tool ??
* Is it not part of one's cost of doing business ??
* Do you not still have quite a bit of other time and even costs involved, even if you are not actually making the job in-house ??

That sounds like if you aren't hands on, you just toss your calculations out the window. Don't you have workers doing this for you ?? Are they not like an extension of you in some respect in your facility ?? Are you, as a wholesaler, not an extension of someone's sign shop ??

This is an important point you bring up Gino

You have to be careful when calculating subbed out work because it's more than just your time and materials. Subbed out work should fall more within a market rate, or sell it at the similar price to what you would sell it at if you were doing the work yourself, inhouse.

What I meant by that is you can't figure that a $4000 yard sign order took you 1 hour to process and send to FireSprint, so you charge your customer $4000 + your shop rate of $55/hr. Then again, you might not be able to support a 40% margin on a nice order like that either, you might need to take 15% on that portion of the work and reserve your 40% margin on the installation of all the vehicle graphics you'll do for the same customer.

Perhaps this is so elementary I shouldn't even mention it, but I wanted to be clear.

I sure hope I am making sense here.

 

[ColorCrest]

I think the hard part is actually calculating how much time something will take.

To get started, simply conduct, at least cursory, time trials to learn what it takes for an operator to make ready and load a printer, for example. The test should be for routine products. Then time the actual print time for a typical size, length, whatever. Compare the shop time to advertised machine vendor's time. Reality is one goal and might be an eye-opener.

Most small shops can arrive at a realistic figure in just a few hours for most of their machines and operators. Again, time keys products at key sizes. The goal is to find labor times to operate the machine(s) and productivity rates of the machines. These numbers are required by rather simple formulas to make calculations.

Don't fret whatsoever about getting the absolute accurate times because, especially in the near term, one is very likely to price per the market's going rate. What the responsible shop wants to learn is where they're ahead or behind as far as costs compared to competitor's prices. Sometimes it may take 3 years to know the numbers are gospel. Everyone can likely throw out last year and probably this year because of the pandemic. Just know things will get better and some costings can now be had for formulas.

 

[FireSprint.com]

ColorCrest I don't think you're anywhere near us, but you seem like you would be a very knowledgeable operations manager.

 

[ColorCrest]

ColorCrest I don't think you're anywhere near us, but you seem like you would be a very knowledgeable operations manager.

Flattered. I know you all are doing a fine job already.

 

[Stacey K]

I think the question has lately become; "How does one actually use this shop rate figure when calculating prices for sign products?"

I think it makes sense to know what your shop rate is. The shop rate keeps the lights on, bills paid, etc. However, do you want to spend 2 hours at $100 per hour working on vectoring clipart or do you want to send it out for $15, and letter a vehicle where you're likely to make more than that $100 per hour? Always looking to get more than my shop rate and if that means sending jobs out and charging "market rate" and "double dipping" doing something else then that's what I do. Just because you HAVE to make $100 per hour doesn't mean you can't make more

Design work can really be a time sucker, especially when you charge XXX for 2 hours of logo design and anything over that is "shop rate" or "design rate".

Not to mention it's a good idea to be able to tell some idiots who think you should work for free..."I can't work for free, I need to make XXX per hour to keep the lights on!" - I said it twice this week LOL

I like the tool FireSprint.com I watched for a while and I'll finish up tomorrow. Thank you!

 

[Texas_Signmaker]

I feel like this comes up alot, so I took some time to make a simple calculator and a video explaining it. Let me know what you think. I would love to hear your feedback, good or bad.

View attachment 154687

Thanks everyone!

Robert Armading talked about making videos for a year, but Firesprit took the time and beat him to the punch. Good job making the video'

 

[Notarealsignguy]

If you have a shop and employees, sub'd work doesn't cover your overhead. You hear on here that someone else can do this cheaper than me but fail to ask themselves if someone else is also paying their rent.
Sorry if this doesn't fit here, I just skipped straight to the comments

 

[FireSprint.com]

If you have a shop and employees, sub'd work doesn't cover your overhead. You hear on here that someone else can do this cheaper than me but fail to ask themselves if someone else is also paying their rent.

Certainly true.

 

[White Haus]

I feel like this comes up alot, so I took some time to make a simple calculator and a video explaining it. Let me know what you think. I would love to hear your feedback, good or bad.



Thanks everyone!

Cool, thanks for this! Will check it out.

 

[GAC05]

I feel like this comes up alot, so I took some time to make a simple calculator and a video explaining it. Let me know what you think. I would love to hear your feedback, good or bad.

View attachment 154687

Thanks everyone!

Nice work. I will wait for the spreadsheet that calculates how many hours I will have to work until I die, so I can set a timer and have something to look forward to.

 

[Johnny Best]

Great video. Wish I had that 45 years ago. I would just add up my expensive for the month and try to make that in half a month and the rest of the month would be profit.

 

[FireSprint.com]

Great video. Wish I had that 45 years ago. I would just add up my expensive for the month and try to make that in half a month and the rest of the month would be profit.

I'm sure an accountant would disagree, but for a one or two person shop, I think this is perfectly reasonable.

You made it 45 years in this business, I can't say that yet. You've done something right!

 

[Johnny Best]

Finding a good accountant is very important with business. Luckily I found one early and he taught me a lot about investing my money. I listened. And after years of working, it all worked out.

 

[Christian @ 2CT Media]

If you have a shop and employees, sub'd work doesn't cover your overhead. You hear on here that someone else can do this cheaper than me but fail to ask themselves if someone else is also paying their rent.
Sorry if this doesn't fit here; I just skipped straight to the comments

This is true to the extent that the sub-work is your primary work. If the sub-work is ancillary, overload, or unaccomplishable in house then that sub-work should be above and beyond your overhead and a revenue generation method.

 

[Stacey K]

I think especially for a one man show like myself it's important to know. There are only so many hours I can and WANT to work. I have to think carefully the best use of those hours to make sure I'm making my hourly rate, and then some just for fun. Hiring a part timer to do menial tasks like weeding, vehicle prep, etc. keeps more hours free for me to do the things that make me money - and it was a great decision. Hiring out the vectorizing, subbing certain things out also makes sense to me. It's very easy to get burned out when you try to do everything. For larger companies or those with employees I'm sure its more difficult to calculate these things.