Poor business strategy

[HulkSmash]

I don't believe you can make that a blanket statement by any means. We have people call us for engraving their watch. Engraving a watch can cost about $15-20 many times. So I'm supposed to get in my truck, drive all over town and meet with jewelers to establish a relationship so I can take that job for $15, take someone's $300 watch, drive it across town, drive back, wait for it to be done, drive back across town (jewelers don't deliver around here), then call the customer, fill out the paper work, take the $15, mail the payment to the jewelery store, and skim $3 off the deal for my troubles?

No thanks. "Sorry, we don't do that" works just fine. Takes me about 15 seconds and it's done.

We get all sorts of requests that we tell people "sorry, we don't do that" all the time. Who knew I was leaving so much money on the table!

i don't associate engraving with large format sign making.

 

[SignosaurusRex]

There is a vast difference between a specific project or type of work and a specific client or type of customer that one may decide to "price down the road". If I am not mistaken, I believe that subject of the thread that spawns this particular thread refers to the later.

 

[Fred Weiss]

There is a principle in real estate called the highest and best use. If a property is suitable and zoned for a high rise office building, then the price for the land will be higher than if it was only suitable for residential two story use. The same idea, adjusted to the context of this discussion, is, to me, a basic business principle: The highest and best use of your time.

Taking all the personalities and emotions out of it let's assume that you are

• the owner of your enterprise
• profitable and you are not desperate for work
• interested in maximizing the income you generate from your enterprise

Now you examine your business in some depth and find that with all materials receiving a standard markup you are receiving the following average return on your time based on your competitive market and your own capabilities from the following categories:

• Design time = $175.00 per hour
• Major signage = $150.00 per hour
• Outsourced production = $175.00 per hour
• Digitally printed work - not banners = $125.00 per hour
• Digitally printed work - banners = $85.00 per hour
• Printed garments = $125.00 per hour
• Vehicle wraps, lettering or graphics = $90.00 per hour
• On site installation of minor work = $75.00 per hour
• In-house cutting and weeding of vinyl lettering and graphics = $60.00 per hour
• Production of magnetic signs = $55.00 per hour
• Production of coroplast signs = $50.00 per hour
• Etc., etc, etc.

Now, you've also done your homework and have arrived at an accurate shop rate of $75.00 per hour. So you can look at the laundry list above and realize pretty quickly that some things you are being asked to do are not meeting your income requirements. They either need to be dropped or improved upon.

But let's look at this from a different perspective. Let's come back to the highest and best use theory. And I'm not saying that I wouldn't bang out a pair of mags at a competitive price for a client who has already brought me high return on my time work. What I am saying is that with unproven or clients who only buy low end work, I will quote at rates that are in keeping with those where I am receiving the best return on my time.

Types of work are just like vendors and customers. Vendors bid for your business. You bid for your customer's business. And types of work also bid for your time. It's a free market. Printed vinyl mounted on a substrate bids $125 for an hour of your time. A pair of magnets bids $55 for an hour of your time. The auctioneer's hammer bangs and you are sold to the highest bidder.

So if that means I have to charge $125.00 a pair for magnetics instead of $79.00, then so be it. Simply put, I cannot afford to be competitive with those selling them for $79 or less and I will only sell them when the return on time meets a competitive standard that I am able to maintain in other areas. Likewise, if a customer cannot or will not accept the rate of pay I can achieve everyday, then I must be prepared to lose his or her business.

Just as many buyers will seek out the best price, you must seek out the clients who can and will pay you what you're worth in the marketplace. And you must specialize to the extent that you don't perform work that isn't going to compete with the returns you receive on other work.

 

[SignosaurusRex]

3Putt, There is a vast difference between a specific project or type of work and a specific client or type of customer that one may decide to "price down the road". If I am not mistaken, I believe that subject of the thread that spawns this particular thread refers to the later. As for the subject of "Dishonesty" in relation to pricing "someone" down the road.....I think you are wrong. Myself, unlike many others here, have a reputation of honesty and providing a quality product along with top shelf service at a fair price to almost everyone that we choose to trade with. Those PROJECTS or TYPES OF WORK we chose not to pursue are respectfully referred elsewhere. By the same token, If we like the project scope yet don't particularly care for the customers antics....that will be reflected in the sum of the quote. The best customers get the best return on their dollar. Period

 

[CES020]

i don't associate engraving with large format sign making.

Okay, so let's try again. Customer calls and wants me to do channel letters. We have no bucket truck (or knowledge), we have to sub it out. So I have to do all the drawings, I have to get them made, arrange for permits, handle all the details, sub the job out, inspect it when it comes in, oversee the install, etc.

In the end, for what? $500 left for me? What happens when the customer calls with an issue 9 months from now? It could end up coming out of my pocket. For $500, it's not worth the risk to me. It's like everyone else makes money off the deal and I take all the risk. "Sorry, we don't do that".

Customer brings in a $2,500 MacBook Pro that they want laser engraved. The machine is right in front of him, he can see it engraving. So do I want to work on a $2,500 laptop for $50? Nope. The risk is too high compared to the reward.

I'm not suggesting my methods are right or wrong for anyone else. I believe they have served us well in the past and it's actually gotten us loyal customers. I find that many people in our area would prefer to be told you can't do something, rather than to have you tell them you can do everything and then sub it out. We do sub things out, but those things are carefully selected to what fits our business strategy.

Let me restate this- this is our market, your market may be different. There's enough work here that it doesn't matter if we pass on something because something else will fill the gap. However, your situation may be different. You may take everything, regardless, because your market might be tight. Fortunately, our market isn't tight right now and we can pick and choose what we want to do or not do.

 

[Custom_Grafx]

Fred - a great explanation. Totally agree with having x amount of hours and giving them to the highest bidder (or in some cases, customers who respect and appreciate your level of service - even though they may not be the highest bidder - not lowest either though).

The idea that someone is doing you a favour by giving you work when it is less than what you normally make, is a huge mistake (which I have made many times in the past).

The more I stick to my formula of $/hr and my own worth, the more I notice there is better work, and better clients to deal with. It also does wonders for job satisfaction.

There are a few motivators apart from money as we know. When a certain customer fails to tick any of those boxes, on top of being a slow payer or stingy/petty PITA, then it really doesn't leave much to hang on to in terms of motivation and job performance - so for me, the very desire or ability to even answer their call, vapourises into thin air. It's unfortunate, and I always wish there were something I could do to avoid that, but sometime, that's just the way the mop flops.

 

[jc1cell]

Wow. Never thought one of my threads would cause such a stir. I feel my actual thoughts may have been misrepresented by my choice of words. It saddens me that I have come across as dishonest when that is completely opposite of what I am. Many explanations on this and the original thread have explained in detail what I meant to say and had the plan on doing with that possible project and in a much smarter way.

jc

 

[HulkSmash]

Wow. Never thought one of my threads would cause such a stir. I feel my actual thoughts may have been misrepresented by my choice of words. It saddens me that I have come across as dishonest when that is completely opposite of what I am. Many explanations on this and the original thread have explained in detail what I meant to say and had the plan on doing with that possible project and in a much smarter way.

jc

You were being far from dishonest. Nothing to be sad about .

 

[threeputt]

Thank you everyone for your comments, both pro and con.

It's obvious that people vary as to their business "styles".