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Yet another Disscusion on Priceing
Yes I know there have been a few posts on here about pricing, undercutting and competition. Just wanted to hear a few views on how YOU go about pricing for vans, trucks, banners, A-boards.
I know its all different but do you have guidelines for say mini-vans or ‘A’ boards?
One of the reasons I started with Sign Making is I knew there wasnt anyone in my area doing it! So competition isnt realy a factor with me!
I suppose I’ve never realy had a set price for anything!!, I’ve always sort of tryed to suss out the customer and what they can afford to pay!
I know this sounds very unprofessional, but when your just starting out you need to get as much work as possible!!
The stumbling block in this method however becomes apparent when recieving jobs from ” a mate says you dun a cheap job for him, well….”
………well I’m much busyier now and I suppose have to draw the line on some of these “cheapy” jobs!
Any advice welcome
Lawrence
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17 Replies
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The way you are running at present is ok for a hobby profit but business is business and we are all in it to make lots of pennies 😀 Plus as you have already experienced word will soon spread about “That bloke who does it on the cheap” not really a way to sell yourself and make money. You want your name out there because you do a quality job using quality materials not just cheap prices.
When we started out we had the same problem and probably so does everyone else in a new business…. what the heck to charge? But you just have to break every single expense down for each job you do & add a mark up. You have to take into account: raw materials, delivery charges, your labour time/fee, fitting charges, overheads .. electricity, running costs of machines etc etc. We don’t really go with a standard fee for small vans, large vans or a-boards as you can pretty much guarantee every job can be different in one way or another so every job gets a fresh quote.
I know we havent given any precise advice but hope our input helps a bit 😀
Ooooh look at me ……. must be our longest post yet? 😆
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I found this very hard to get to grips with when I first started out.
The biggest learning curve is when you first do a van, and it take’s 3 times longer than you thought it would. Suddenly that £200 or what ever, doesn`t seem alot. Then the next similar job you quote for, you remember the time it took, and adjust the price accordenly.
If you`re busier now, theres no need to do those “cheap” jobs. Let them walk.
I reveiw my prices for certain products, when that particular job keeps getting pushed to the back of the queue, because theres more profit in others that are waiting..
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Thing is with these cheapie jobs Lawrence, there is a way to turn it all around to your advantage 😀
Ok, so Mr Bloggs wants himself a cheap sign and he’s been a mate for years, so you quote him happy 😀 This isn’t an unusual thing, everyone does it when they startup, but when you quote him get in the comment ‘ I’d usually charge x amount for this, but because you’re a mate….’ When you’ve finished the job and he has a beaming smile from ear to ear, he can’t resist telling all his friends that he paid x amount ( its the whole ego thing I think 😉 )
This has happened to me recently, I’ve had a good ole boy as a customer so I gave him a price that was unbeatable by all counts. I then proceeded to say ‘it’d usually be this amount’ and within a couple of days a friend of his comes in. He quoted the price that I’d said I would usually charge, and asked whether I could do the same. Now this customer is paying full price, what I want for the work I do, but I’ve got him by referal from a cheapie job 😀
Obviously this is a risky one. Its essentially the loss leader tactic of getting started and it can backfire if its handle incorrectly, but I’ve found it to be a very effective way of turning a cheapie into a full paying job! 😀 I know it won’t work for everyone, but there is a way of doing this that works.
I know its a tough one when you startup, people can see you want the work and they take full advantage if you’re not careful 🙁 Its a case of just keeping at it, and sticking to your price. As has been mentioned before, quoting higher prices will inevitably loose you some work over a period of time, but it means you’re working for a decent amount every week and you’re getting the money you deserve for the quality of work you are doing 😀
Cheers, Dewi
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I’ll sometimes do a job and just break even in the £’s. But have stock left over for other jobs. ( like chunkie)
for example last year I quoted for some mag signs. As I had to order the magnetic, I quoted for a 25metre roll. Did the job, broke even, but it paid for all the magnetic. Now every mag sign that comes in, is nearly all profit.
Same as when a customer orders a colour I`d hardly use, I quote on a full roll. Then all other jobs using that colour are profit.
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Some very good points to bear in mind, thank-you!
Now Craig I have to say that is post is absolutely text book I can see you make a great buisness man!! However a couple of things that dont fit into the equation, 1 – The customer, they also have an idea of what they ARE going to pay, this shouldnt make a difference, but it does when you NEED a job. 2 Your quality of work! We all go out with best intentions, but YOU will find one day soon you’ll go out for a job (especially as vehicles is what your concentrating on) and things dont go as planned.. i.e. a few creases, a few tares. Its inevitable nothing to do with your personal ability! I think its difficult not to bear this in mind when pricing for a job.
Thanks again for all your comments
Lawrence
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So…erm…I should charge more than everyone else? because as a relative new-comer im bound to make more mistakes, I think its a bit optimistic to say your going to replace every single error, take that barbers pole for example ( in my other post ). There were a few small creases in that!! I mean I feel I have greatly Improved from when I started out, but there’s still alot to learn, but theres no way Im going to replace the whole thing. I didnt say I ran at a loss!! just a question of how much profit you can get out of a job, also craig I can guarente you its going to take you twice as long on any particular job when you start out, let me guess, your charging the customer for that extra time?.
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i disagree, we have a set method of pricing and have used it for years.
some large jobs like totem signage, high-up building work & the like, No.. but you can use the set method for the actual signage & vehicles, fitting, delivery etc is different.
we work it out at the set price and if we think the guy is a chancer, we price a bit higher, knowing fine well hes gonna haggle. so we knock some off & he thinks he has a deal. actualy hes just paying what we wanted in the first place.as for customer loyalty.. again, not being funny mate but lots of our biggest customers are based on loyalty.
e.g. a huge transport company manager uses us for years. he gets a new job with an even bigger transport company. 4 weeks later he calls us. i have a new job and they need their trucks done? thats our foot in the door, and we get the job and still do it to this day. on top of this we still do the work from his old company.
ths has happend on at least 5 occassions with different companies.
we build up a good relationship with these people. like at christmas, instead of a card or calendar we give them a good bottle of whiskey.
these little things are remembered more & it pays long term to do it. -
How much the market can bear is a VERY good way of pricing , that way no one leaves money on the table and it’s a win win solution.
Biggest factor in pricing is industrial espionage , IE what are up against – if pricing in the market is way too low for you to make a profit – get out!!
The essence of good business is to deliver on time , deliver quality and price reasonably.
At the end of it all , turnover is vanity and profit is sanity , you have to draw a salary and still have some funds to re-invest.
You also have to have a hook , IE why would someone use your services , and believe me , a cheap price is NOT the hook to cultivate – history teaches us that the joys of a cheap price are forgotten when poor quality shows thru. If your customer can’t understand that , its not the customer you want.
5x material costs is generally good formula , adjusted if it sounds too cheap or too expensive.
There is a major problem undercutting pricing to get market share , you cant adjust upwards enough to be profitable and fickle customers will leave in droves to support the next cheapest!! -
In print we used to have an hourly rate based on overheads add that to material costs then add 30% profit margin to the total.
This is just a rule of thumb and times have changed – nowadays especially on sign work – I find I have to weigh up the customer and on how busy we are – But I will not sacrifice the job quality for cost – if a customer won’t pay a decent rate for the work then I’d politely show them the door (on print jobs I’d usually direct them to Prontaprint where they’d be quoted at least 3 times what I’d said!) -
Have used the formula of 4x materials cost for quite a few years now and find it returns a healthy profit. ie, job is to take 20 metres of vinyl but price for full roll, @ £1.50 for 7/10 procal (610) thats £75 x4 is £300. easy formula that almost never needs adjusting.
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I used to be heavily involved in the transport industry (haulage), we always bought volvo’s……okay commercial vehicals wear out!! so the need for quality replacement parts prompt is very real, we used to toy with aquireing parts from other distributors at cheaper prices, but more often than not the part would be wrong!! not last!! or something along these lines. Cut a long story short, from those days we stuck with original volvo parts for our trucks, I suppose you might call it—–ahem—-CUSTOMER LOYALTY-we appriciate them, they appriciate us.
🙂
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its sometimes hard to have customer loyalty with the smaller firms. but not impossible.. we have lots of small local firms use us all the time..
yes you get the odd one that wants something based on price alone but i dont bother loosing them as you waste to much time pleaseing them for nothing.
the mid-sized companies and above i think look for service and quality most.. yes price comes into it, but if you can ease one less headache for these guys by giving a good service with a top notch product your in there.. EVEN if you arent the cheapest!
we have a set pricing structure to help as i have said, but not always possible to use.. we dont have a sales man & still we cant cope with the amount of orders on refferals as it is.. this is based on customer relations, service and good workmanship. price comes into it sometimes yes.. but the bulk of our repeat customers dont even ask for a quote upfront.. just do the job as fast as you can and do it right! -
Robert , Im with you there. I have customers that come in and say do it or just say I have Xquid for 10 classes , 3 awards in a class , makes something for me. I have standing arrangement that if the work I do in those circumstances is not to their liking , we will do something else and I really havent had any returns. Part of the reason is that if the customer trusts me enough to do as I wish , the last thing I want to do is sting them and I put in MORE care and generally give more value to the job.
I can tell you that the cost of aquiring new customers is HUGE , we are on a major marketing campaign right now and it’s hurting , hopefully it will pay dividends but it has made me realise just how expensive new business is – as an example we had an “open” evening for promotional agencies and ad agencies , we sent out 120 invitations (A very complax 2 sided laser engraved thing – cost about GBP3 to make) got 50 “yes” responses , made media packs , sample packs and tons of give aways , had a barman , upmarket snacks etc. 27 people actually turned up. At the end of it all , it cost me about 50-70 quid PER PERSON and a lot of these were exisiting customers , only about 12 were new. So extroplating this , it cost me well over 100 quid per NEW person. 10 days on , lots of enquiries , but no orders;).
Just one thing about small companys , too many of them think and act small , spending money on “professional” or big company “tricks” might sound like a waste , BUT a really good quality card , a very good telephone answering technique , proper compliment slips , printed letterheads and very professional stationery goes a long way to inspiring confidence. After all , the industry we are in is ALL about impression , the signage we make etc is mostly used to inspire confidence or entice a consumer , so we should act accordingly.
Another point is to define exactly WHAT one does as a company. For example saying you are a sign maker is very limiting , Being broader and defining oneself as a “visual image consultant” or something similar then opens other avenues. You are getting a digital printer capable of a huge amount of stuff other than mere signage – You really have to look beyond traditional signage applications to effectively market the new service , its a problem we have encountered , most of our traditional “signage” customers come in and say “Wow I didnt know you can do THAT with the machine” etc and it has required us to rethink the way we offer the service and to whom. -
100% agree Rodney. I hadn’t look at from the perspective of how much it would cost to get new customers. Up until now I’ve been lucky to get most of my work from passing trade and referals. Reccommendation and repeat business are important in most businesses, but when you think its actually going to cost x amount of pounds to get a new customer, you’ll make damn sure your customer is happy.
Cheers, Dewi
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It seems to me these days that everything I want to buy for myself is expensive. I usually suck in my breath and say, “HOW MUCH?”
Therefore, my guide is my customer’s reaction. If they don’t suck in their breath and exclaim, “HOW MUCH?” then I’m not charging enough.
Nothing worries me more than a customer who tells me that my prices are very reasonable.
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JUST SEE JOHNS REPLY
yesterday i did a little boat name the customer said how much
i said just a tenner
he said thats very reasonable
i said ok i dont argue with cuatomers so a round 20 then
i like your style and thrust 15 in my hand
so gave him a cup of coffeechris
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weve got a set method for pricing as well it works a treat, i think it should be noted that your hourly rate is the most important to get right… if you feel your job is priced to high a 1/4 hour here and there (depending on the scale of the job) can make all the differance.
chunkielad – more soap in the water!!! how are you getting so many bubbles?
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