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I’ve put my foot down!
I did a regular job for a customer – I was new to the sign business, and worked out a price with little thought about my costs, etc. Attached is a sample of roughly what I was cutting.
I used to get orders from the customer for 50 sets of these stickers, cut from black or white vinyl.
I was using quality vinyl & app tape.
Now for the maths —
50 sets required 5.5 L/M + additional for spoils, set up, re-cuts lets say 7m…
7m of vinyl & app tape was around £2.30 PLM total cost on materials was then £16.10 for the 50 sets.
I was charging the customer £45.00 for the 50.
In my nievety I thought great I am making around 175% profit!
I didn’t account for the time on the plotter – easily an hour
Then my time weed and apply the app tape as around an hour.So for 2hours work I had made £28.90 and my customer had bought the vinyl and app tape at cost from me, and paid me £28.90 for 3hours work…. 😳
I knew my mistake, but was reluctant to do much about it… I then realised this one customer is purely price motivated. No interest in the materials, service, quality (until something goes wrong no doubt)
So in my spur to stop being taken as a mug when the customer asked for another set cutting I submitted a quote.
My logic being – 9 sets per meter (9x 90p) gives me £8.10 PLM including app tape, so that’s my materials reasonably marked up enough to account for wear and tear on the machine + overheads + a wage!
The 50 sets will take an hour to weed… so lets add that odd… not really a skilled job so a lower rate of £25.00.
I put the quote in then for £1.40 per set, a 50p a set increase… well the customers gone ballistic!
I don’t think it is unreasonable? I explained that I cannot run a business not charging for my time, and that I also have a growing, loyal customer base who appreciate the quality and service… and they pay the premium for it!
Just wanted some other opinions on what you think? I am not trying to rip the customer off?
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9 Replies
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You don’t have to justify your prices to anyone. If they’re not happy they can go elsewhere. Meanwhile, you’ll be much better off doing more lucrative work.
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I’ll buy em from you at that price David! check your pm’s box in a mo…
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Coming from another angle if you were pricing this for the first time you work out your cost and profit lets say £1.40 but put your self in the customers shoes and that sounds cheap,most wouldnt quibble at say £2.50 per set on those multiples 50 sets would get you £125 and thats probably more like what I would be charging as a list price with discreationary discounts on repeat work, bigger volumes, customers you like, those who pay on time etc etc.
As someone on here told me its not necessarily all about the cost but what the jobs worth to the customer in arriving at a rate to charge, and lets face it hes probably selling them on at a fiver a set so that would still be 100% mark upo on his investment for no real effort
John 😀
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Yep i would chard him 5.5 meters @ £20.00 as its black and 1 hour @£30.00
£140.00 + VAT
Its not really skilled work weeding but you are a skilled worker and should be paid as such
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I’m glad your knuckling down David and if the customer doesn’t want to pay, it’s really no great loss to you.
You’ll find customers that are willing to pay and you will end up doing half the work for double the profit for them.
And in relation to what John says, I find there are two kinds of costing, the one I work out using my software based on sqm etc etc and then…the perceptual cost. if it looks like it should be more than you work out to be, then charge more.
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I always struggle with guessing perceived cost… Especially when I know what it costs me!
I suppose the internet has its uses to see what others charge.
Same day as loosing this customer I picked up a new customer, on a recommendation from an existing customer. Who should be passing me much more business!
Cheers for your help, feel much better!
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I often work on perceived value and, to be fair, it can work both ways!
I’ll sometimes view something as being worth more – especially if I see a high end user retail price attached to it in the case of a reseller.
equally – I’ve rounded prices down because after adding all the materials etc and putting the usual mark-up on it, it looks horrific! as long as I am content tat I’ve charged a fir amount for my time and not gone in cheap, I see no problem with doing it.
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it’s also very easy to fall.in the trap. My example here, Me. Having only started doing this a couple months ago.things have been really quiet and.despite every advertising package under the sun I’m not getting the sales.calls. now Im far from a.salesperson but I have to get the customer before.I can move onto a.sale and without the first the seconds.not.possible.
so I fell into the trap of looking.on eBay for similar.items and making my own version of.it.and advertising at a similar amount..reckoning.if.others are.doing it then it can’t be that bad a price. After a couple weeks of seeing.most.of what comes in going.back out.I did the.sums and realised.I’mnot.doing.bad.if.iI.Don’t mind working.for.a.fiver an hour and never need the equipment renewing. so.now I’ve swung the other way and.I’m using the.time.to do.a couple.vinyl fitting.courses.to.give me some good experience and offering to help other busier sign shops out for a.reasonable.hourly rate (pm me if your stuck for help) this way I gain mode experience.and some.New.friend / contacts in the process and help towards the bills .
I’d.much rather do it that way rather than wearing out.the equipment for.peanuts and the handful.of customers I was doing.it for, We talked.about it and came.to an amicable agreement with only one exception and I’m sure he will be back when he discovers other people’s sensible.prices.
I think your doing.exactly the right thing and think of it like this, any customer who wants to.leave their supplier in a situation where they are paying.so.little their supplier will go out of.business.first major breakdown he gets and be unable.to.offer a top.level.service with after sales support. These type of customer are not worth having in the first place. we will both still be there when the right customers come along.
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Forget the price, what does he want with all those cougar stickers? My brain hurts just thinking about it… I need to go.
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