Loosing money - best estimating program

[SV Signworks]

Hi - Pretty certain I am losing money every month by not creating accurate estimates. Can anyone recommend a software program THEY are using and give me an estimated monthly cost for same? I am currently using SignCraft Magazine tool - but it really doesn't cover everything and I'm sinking. Help! Please. Thanks

 

[WildWestDesigns]

To be honest, in my mind, the key thing in order to actually create an estimate, is to know what things cost you and what you need to know to survive. That's something that is relatively unique to you. No matter what software gets recommended, what someone else is using, even if it's just pen/pad, have got to know what things are costing you.

I think not knowing what things are costing you is at least part of the issue because you said this:

Pretty certain I am losing money every month by not creating accurate estimates.

Accurate estimates come from "knowing the numbers". Know those, you'll be able to know for certain if you are losing money due to lack of accurate estimates. Most suggestions are just going to be averages at best, you may or may not be in that average and even if you are, it may be on the low end of what you are needing to survive.

 

[Gino]

He's right. No software is gonna do this task for you. You need to know what's going out and what coming in, down to the penny. You'll hafta input your each and every cost on everything. Overhead, insurances and whatever else, you're spending money on goes into the calculations. Your time, your emplyees time, taxes, permits, can of this, bottle of that, this ink and that vinyl roll. How long were you on their job vs. just goofing off. You need to be brutally honest wtih yourself. Will a software program do that ?? Yes, if you are good with it. Til then, pencil and paper will do just fine.

 

[equippaint]

Are you sure that Signcraft is really that out of line? The elephant in the room is, do you have enough work to sustain your business?

 

[TimToad]

Hi - Pretty certain I am losing money every month by not creating accurate estimates. Can anyone recommend a software program THEY are using and give me an estimated monthly cost for same? I am currently using SignCraft Magazine tool - but it really doesn't cover everything and I'm sinking. Help! Please. Thanks

What you should be taking advantage of from your subscription is the Overhead Calculator. The SignCraft pricing guide is simply a starting point with a few shop rate levels factored in but even that isn't 100% of the picture. If we accept the fact that most materials we use are similar in price no matter where you operate, the next step is to determine what our true costs of operating are. Where things start diverging is that a 2,000 square foot shop may rent for $1,500 in your neck of the woods, but might be $2,500 per month where I'm at.

Also, the variations in wages, quality, established local pricing and a million other things color how to calculate your overhead and pricing structure. We operate in a town of 28,000 and it has 4 brick and mortar sign companies and several other snappers working from their garages, living rooms, etc. From what I can see and hear from my colleagues when we talk, the shop rates fluctuate from about $40 per hour for the one man shop working from home still doing only cut vinyl to $85 per hour for our three person shop in a 2,500 square foot shop in a bona fide, high exposure industrial park. When we bought the business five years ago, the shop rate was only $50 and the outgoing owner needed out. He had succumbed to the race to the bottom with a shop a few blocks away that was only charging $45 per hour and doing wraps without laminate, using the lowest grade materials, paying his help substandard wages and NO benefits whatsoever. Not even paid holidays.

Given the high cost of living and wages needed to attract and retain decent help in this area, everyone's rate should be closer to $100 per hour.

You have figure out what it costs you to operate day in and day out and then check it at least once a year. You also need to take whatever feedback you can get on your pricing and see what the market thinks of your value. I imagine there are only a few shops in a town your size, so you'll need to try and establish good enough relations with the other shops to get a glimpse of whether or not you all are commanding similar pricing. Are there big talent and skills disparities among you. If you're new to the trade and it shows and you're up against my long time friend Noel Weber, a master craftsman with over 50 years experience and world wide recognition, that could be why you lose bids, not just how you price the work.

 

[kcollinsdesign]

I think the Signcraft guide is pretty accurate. I always figure it out both ways and compare my estimate to what SignCraft says. Usually SignCraft is a little higher, so I go with that. If you are much higher than SignCraft, I would suggest checking your supply sources (assuming nobodies goofing off on the job).

Overhead can also kill you. Mine is gut-bucket minimum, so I can afford to be a bit more competitive. But when I figure out my hourly rate, I pretend I have a $1500/month shop and add in a few bells and whistles I currently do without. It's more a reflection of what my overhead should be, not what it actually is. So I come out a little ahead on that too.

Another thing to watch out for is vehicle wraps. There are guys out there that are so good they will blow your mind. If you are one of them, you know who you are. If you are not one of them, those guys will eat you alive. Don't compete on price unless you want to lose your ass.

 

[SV Signworks]

Thank you - each of you for your responses. They have been very helpful. I realized I don't know what I don't know to even ask further questions. I wished I'd gotten more time apprenticing The three years I spent at a shop and my youthful cockiness made me believe I HAD this!

I believe we have considered all of our expenses but need to revisit that. I think there is enough work here to sustain us. It's a small/mid size mining town(s) valley with only one other shop that mostly does vehicle wraps. They refuse to have any sort of "friendship" with our shop so getting info, creating a positive relationship has been a challenge. We have zero interest in doing vehicle wraps.

kcollinsdesign how you calculate and use signcraft is what we do. But some things I think are lacking - maybe - example we had a job yesterday. I looked at the site and quoted - they then removed the posts and reinstalled them higher on the hillside with a tough slope. I think I should have been able to contact the client and say - "hey, this is not what we quoted". But I don't know how much or if that's kosher.

Thank you all again we're going to revisit our overhead... try again to connect with the other shop, charge for things we are not currently considering. I think a change of job parameters should allow for a change in the quote. We don't always charge for laminate... label printing may have to be dropped - labor/return too low.

 

[bannertime]

There's really no substitute for knowing the production process, knowing how much materials cost, knowing how long it takes for certain process, and most importantly where your own money is going.

 

[SV Signworks]

Thank you. Indeed it's true. Hard lessons we're learning. Would like to see a profit before our savings runs out.

 

[equippaint]

There's really no substitute for knowing the production process, knowing how much materials cost, knowing how long it takes for certain process, and most importantly where your own money is going.

Yup. Figuring this stuff out can turn into quite the unintended investment when you're getting started.

 

[SV Signworks]

Indeed. But the good news is - I LOVE, love love the work.

 

[JTBoh]

Honestly... if you're losing money it's not an internal issue - it's an external one.

Brute force is sometimes the answer. Get outside sales going and go hard and go far. Expand your area - you need to meet a baseline amount of income and can't rely only on walk-ins and repeat customers.
Bang the door of every business in your town, then go further.

I've ALWAYS said you can't sell a sign. You're selling yourself and your experience. A customer is always going to have a need for a sign before making a decision to purchase one. Figure out which companies have needs, and cherry pick in areas outside of your town.

I'll go out and come back with 5-6 RFQs almost every time, cherrypicking 25 miles from base.

Once you have that baseline income, THEN worry about making it more streamlined and efficient. Pushing papers around today isn't going to solve your problem.

 

[player]

If they change the spec, revise your price.

 

[johnwon]

You asked about software, we use Estimate software. We purchased it years ago when it was not a monthly subscription. I find it easy to do pricing with a pen and paper, however, my staff cannot do that. Once a year, I look at the overhead and update that and we regularly update the material costs in the software. The software is not perfect, but it helps us to not give away work by mistake. The software works on a simple material * markup + labor. When quoting installation, we typically charge by the hour, but have a minimum charge. When digging a hole, you never know what is below or if a customer changes the location and it's next to a tree or on a hill like you experienced, billing by the hour should help. We find that we need to set the expectations on how long we feel that the installation will take to avoid price shock later.

 

[WildWestDesigns]

If so inclined, could create a spreadsheet (wrap it up in a nice GUI, if necessary) and have essentially what all the other software is under the hood.

It does take time and it does require knowing the formula and knowing "your" numbers (which in reality, business owners should know as it is), but it would be "in house" and won't have to worry about subscriptions, payments etc. It does take time and some of it will have to be refined over time.

But it's been my experience, most estimation modules/programs are spreadsheets under the hood.

 

[Tattoosleeve]

Honestly... if you're losing money it's not an internal issue - it's an external one.

Brute force is sometimes the answer. Get outside sales going and go hard and go far. Expand your area - you need to meet a baseline amount of income and can't rely only on walk-ins and repeat customers.
Bang the door of every business in your town, then go further.

I've ALWAYS said you can't sell a sign. You're selling yourself and your experience. A customer is always going to have a need for a sign before making a decision to purchase one. Figure out which companies have needs, and cherry pick in areas outside of your town.

I'll go out and come back with 5-6 RFQs almost every time, cherrypicking 25 miles from base.

This is only half the equation. Me and my business partner did this exact thing for years and lost money or barely broke even. It wasn't until we looked at our expenses and adjusted our pricing accordingly that all of our hard work started paying off.

Having gone through your problem myself, I would recommend doing what everybody else has been saying and figure out your real expenses first. Figure out how to make money at the volume you currently have before you go and drum up more business. There is no sense getting more business if your margins are off and you're losing money in the process. You're just working harder to lose harder.

If you focus on quality product and customer service you will build up a customer base over time even though your prices might be higher than the guy down the street. Don't be afraid to tell customers that either. I straight up tell people we're not the cheapest in town. BUT we focus on using quality materials and processes, getting the job done on time and in the circumstances where something is not correct we stand behind our work and will find a way to resolve the problem. You will lose some business to the people that are ONLY concerned about the lowest price but those aren't the customers you want anyway.

 

[Tattoosleeve]

*deleting double post*

 

[Jeremiah]

Something to consider would be your product. If 85% of your business is small swap meet kind of signs, and the market value of that sign is 100.00. Just because your overhead creates a cost to produce of 190.00 . I'm sure you get the picture. A product is only worth so much.

 

[WildWestDesigns]

Something to consider would be your product. If 85% of your business is small swap meet kind of signs, and the market value of that sign is 100.00. Just because your overhead creates a cost to produce of 190.00 . I'm sure you get the picture. A product is only worth so much.

And to add to this little joy is is that market value a true legitimate value or is it due to a "race to the bottom" that quite a few people indulge in nowadays. Sometimes that's hard to distinguish.

But something else to consider.

 

[Jeremiah]

I have worked in different businesses. When you have an item that is working, suddenly other people cut your price and or maybe lower the quality. Time to decide if it is really worth keeping that item. Is it a lost leader? Does it open the door to other profitable item. To me a dozen eggs is only worth so much and very few people will not pay 4.99 for a dozen box of eggs.