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Pricing issues again.
Not my own words but an interesting article I read recently.
“These days, with the sign shop requiring more than a couple of cans of paint and brushes to operate, pricing and profit margin become more important. You have to look at your day-to-day operating overhead and figure that into your pricing. I have people tell me they price according to the “other guy” in town. Keep in mind that being cheaper than the other guy can mean he or she is making a profit when you are not. Remember that it is not the expensive shop that goes out of business first. You cannot survive without sufficient profit to sustain overhead and to live on.
Without proper pricing:
1. You work longer and harder just to survive
2. You don’t have a “cushion” for equipment replacement or upgrades
3. The struggle to survive will cause you to burn out fasterEstablish your price even if you need to pay someone to help you do it. Review it often because your prices will have to change with the increase cost of materials. Once you establish it, stick to it. The customer that you lose because they can buy it cheaper somewhere else will never be a faithful customer. If you can’t make a profit on a job, you are working for free. Would you be willing to do that as an employee for someone else? A good thought to keep in mind is that there isn’t a person who walks through your door that can do what you do. You have a talent and you deserve to be paid for it.
Just a side note: Do you realize that we are the only business that works on weekends and charges the same price as we do all week?”
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22 Replies
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nicely put chris, the weekend working is realy getting to me now 👿
the usual story is ….er but i need the van all week! then when it turns up on saturday, its coverd in s*** i recently put up my price for work &
felt that if i lost the job, at least i wouldnt be killing myself working for no profit!! last week a bloke came in & asked me how much to do his traffic van, normaly i would have been around €400+vat just for the laugh i sead
€495+ he looked at me & asked how soon i can do it!
i suppose if you are to cheap something has to give! -
nice one chris… and agree with you 100% too eddie.
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Just a side note: Do you realize that we are the only business that works on weekends and charges the same price as we do all week?”
No we are not, supermarkets, petrol stations and restaurants all do So do most forms of transport, taxis, trains and buses. as well.
I work weekends because it suits my customers, but I will take time of in the week to compensate. you are the maker of your own prices,
if you cant compete in the market, perhaps you need a change of direction. Chris, what you said is spot on, but all industry, has to be competitive, and I respect what you are saying, but you will never get a cartel on pricing.
Peter -
As I said Peter – not my own words but an interesting read just the same and one that may be of interest to others users of the site and those just starting up? It has been a topic of interest on a number of threads and thought this was a valid contribution. I agree to a certain extent with your view regarding Supermarkets etc. However slightly different ball game as they are mass consumer markets.
As far as the more personal comments that you make “if you cant compete in the market, perhaps you need a change of direction” I am very sure it was not your intention to be offensive -so I won’t take your comment too literally. But quite simply, judging by our sales figures in just two days of this week so far, is enough to buy a new small car and the fact that 65% of this is from repeat customers I think is not a bad indication that we can compete well enough even though we are a small sign shop and have been trading just under 3 years. Our profitability is getting better as indeed is the efficiency of our operation and this is in no small part to the information and advice gained here on these boards and provided by you more experienced guys.
So its not about forming a cartel – its about providing information that helps new entrants to the market avoid the pitfalls of low pricing that I have seen mentioned, by the more experienced members of the boards and themselves may have fallen into the trap of pricing too low.
But at the end of the day, if it helps great, if it doesn’t so what, move on – life’s too short.
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No offense meant Chris,
I was speaking in general terms. as I said what you wrote was spot on. There are people though, who complain that they find it hard to make a living because someone down the road is undercutting them. Unfortunately this is business and faced with any sort of competition, fair or not, it is up to the individual or company to find a way to compete. the Low cost sign makers, whether legit or wearing a stetson are not going away.I respect All comments and opinions made on these boards, I may say things in haste sometimes, and it may come across the wrong Way sometimes, But I never intentionally make offensive comments, I try to keep to valid opinion and criticism
Peter -
I have to agree with Peter and the law of the jungle “survival of the fittest” if a price works for you who is to say you are wrong. There are many items regularly in the big supermarkets that are sold below their cost, these are called loss leaders.
If you dont buy it at the right price you cant sell it at the right price, some people are better buyers than others, what might be a rediculos sell price for you might not be for others.
Different sizes of companies have different overheads, different locations of business have different overheads, different companies have different aims and different requirements. Set your price or change it take the business or lose it.
Your choice
Regards Adrian
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None taken Peter 🙂 Your advice and posts on the board are invaluable and I have learned a lot from them.
As you say the low cost sign-maker and the stetson type are not going away and it is survival of the fittest. If its low cost because of better operating efficiencies and better buying then that’s a real and valid threat, if its low cost because of shoddy work and materials (stetson sign-maker) then they won’t be around long enough for us to worry about.
I think however there is another category as well – those that are newly starting out and due to inexperience price incorrectly i.e not including overheads etc. As Phill Fenton (said in his interview for the Mag – if anything he would do different in the early days would be to price higher)
That is the area that we can influence and advise through the boards and have a direct influence on for the benefit of all.Side note I had an interesting one today with a inquiry, ended that it would use around 10+ sq metres of vinyl to produce a 7 colour rainbow and clouds design and text to windows. 38 miles travel. I was too expensive! Compared to what I asked, another quote at £150 inclusive they said. I wonder which category of competition that one fell into? They are welcome to that one.
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Spot on Chris. Many new starts underprice their work without realising the damage it is doing to their own business. You can easily end up being a “busy fool” with a reputation for being cheap that attracts the least profitable work. You can also lose work by being too cheap as there is a perception of quality according to the prices you charge. That was my experience anyway – I learned the hard way because I didn’t have anyone to advise me otherwise 😕
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I’ve learned the hard way as well, but I’m going through it again with the Cadet, I’ve a fair idea of what to price a 1 meter print at but when it comes to 1 meter of die cut stickers I’m in the dark, I’ve gone on the assumption that I charge them at a similar price plus artwork as that’s all I’ve got to work on.
Steve
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Chris- is that right? Are you really saying that some numpty would do all that on site for 150?
What on earth is that all about??
Pity you aren’t a bit closer- I would love to see a photo of the job after whoever’s doing it has finished. Unless they have zero work or are just plain stupid I can’t see how you could justify the price unless you dropped the job off in a cardboard box and said to the shop keeper “tuck in”.
Mad, mad, mad, mad, madness thats all I can say. What a waste of your time pratting around with a cheapskate- what makes it even more bizzare is that they obviously though a ton fifty might have been a bit “steep”- unreal!
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There are nutters about who give work away, but there are also customers who either lie or are unable to read a quote properly. I recently had one swear blind that the ‘other bloke’ is making the sign to the exact same spec that I was going to do (Ali frame, panel etc) but when I drove past a week later: have a guess…..foamex NAILED to the existing timber fascia with no frame. Yes NAILED!
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And that is THE single most annoying thing you ever come up against- loosing fair and square is fair enough but when you’ve been beaten by THE biggest pile of old cr*p that is a million miles from the stainless steel lettered, Dibond panelled and toughlight illuminated “proper job” you farted about pricing up the blood pressure goes into orbit- well mine does anyways.
Do they come back with lower expectations when they don’t like the price for the bells an whistles they “just had to have”- no they assume you are related to Dick Turpin and get bodgit and leggit to make something to fit their budget- which has lost a few zero’s since you first saw it!!! Anyone can sling out a panatrim for a budget price- you’ve gotta know that’s the territory you are limited to by the budget- before you offer the tea and biscuits and get out the expensive samples!!
Is it me or does anyone else have trouble finding out what people’s budget is? To get something they can afford you need to know what they’ve got in the piggy bank to pay for it!!! It’s like getting state secrets or something!! I swear they think that what I had in mind originally will be what they end up with- just more expensive if they tell me what they want to spend on it. Do you get the builders round and get em to price up for a mansion when you can only afford a shed? No- so why expect us sign makers to have ESP or a crystal ball!!!
(sorry Andy that panatrim bit sounds like a dig but wasn’t meant to be- think you get the drift of my erm.. rant 🙂 )
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quote southernandy:do you get the builders round and get em to price up for a mansion when you can only afford a shed? No- so why expect us sign makers to have ESP or a crystal ball!!!totally agree.. well said 😉
nik
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I reckon I’ve got ESP 😀
Today I was idly staring into space when I was suddenly reminded of a quotation sitting on my counter to give over to a customer (I had finished it yesterday late on and had intended phoning him this morning to say it was ready). Just at that moment he walked in. Honest!!!
I told him I was just thinking I must ring you when in you came. (He probably thought I was sweet talking him but it was true and I was thinking what a co-incidence). Later I thought maybe it wasn’t a co-incidence maybe I’m psychic or something. 😮
Then again – he drives an ice cream van and I had just heard the tune “Hitler has only got one ball” prior to his arrival 😕
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No Andy, I understand exactly what you mean. I try to impress upon prospective customers that if they tell me their budget, they will get a sign worthy of that money. What they actually think is that I will charge them that because they are offering it. I don’t know how many times I have told someone that there are a hundred ways to make every sign and that whatever they spend, it will be made to the best spec available for the budget. I usually reel off a few rough figures and tell them what they can get for it. “A simple frame, panel & vinyl £400, for about £1000 you would get a lightbox….” that sort of thing. You can usually get some kind of budgetary feedback from that. Sometimes!
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quote southernandy:Chris- is that right? Are you really saying that some numpty would do all that on site for 150?
It would appear so from what I was told – it may be as Andy says they could be trying it on – or talking complete ******* Funniest thing was that this was supposed to be a rush job, enquiry Friday to fit Wednesday.
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i dont know as it works for everyone, and there are alot of other jobs i have yet to do to be able to include, but if i go and visit a customer i take examples of previous work (ones i’m proud of at least) and give them rough ideas of what each would cost, then i try and ask what kind of budget they had in mind, then i get out the catalogues and show what type of stuf is available to me in the way of panels, light boxes etc,
i do still occasionally do work that earns me nothing initially, but only if i can see it will make me more in the long run,
ie… got a friend of a friend who wants me to do some graphics for his go-kart race team, he’s supplied me with dimensions etc, and the graphics he wants, now i know i’ll spend hours trying to re-draw it, i think this may be time for me to visit vectorwise ! i’ll likely not make anything cos i’ll be making sure i come in around the £60 he can buy them for normally, but once i’ve got the outlines for the pods/fairings, i can re-use and just add any graphics i please, the subsequent costs will be minimal and maybe only an hour or two’s work for the same money (apparently they go thru quite alot of graphics, especially on the front pod !) .
this guy is particularly worth bothering over because he owns a business installing security gates, fencing, automated entry systems etc, and is looking for quotes on an ad-hoc basis, so long term i think some jobs are worth maybe taking a loss (time wise) on,
chased a quote yesterday and was told i was £200 more than a ‘competitor’, and i thought ‘d already cut it cos it seemed alot of money ! a day cutting and weeding etc, a day application (if not the folowing morning too), one large segmented window 10ft x 8ft, one sign board 5ft x 4ft to be covered wth alupanel and then decal’d up, , and a segmented glazed door, around 25m of materials to be used, needed to buy min’s of 5m in each colour so around 40mtrs to purchase, mostly transluscent, quoted £800 (incl about 6hrs working the customers design and two visits), oh well ! be interesting to see what goes up !
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I’ve found myself falling into the trap of being asked to give a price on the spot, a couple of times recently, when I should have said I’d get back to them with a quote.
Had thought that I now had a very good idea of how much we should be charging, which in most cases I do, but a slight change in the usual spec or can add quite a substantial cost if you are doing something in quantity.
Fortunately we didn’t lose any money but we didn’t make anywhere near our usual margin.
Shopping around yourself to get better prices for materials is essential, and any good buyer should do it a a matter of course. We’ve recently been awarded the contract to supply all the signage for a public house & restaurant, for which I was able to get the same quality acrylic panels we required 1/3rd cheaper than the original quote we received.
We noticed a new sign company has opened up on the main road on the way to our unit recently. Has put a few banners up out front to say that they will sign write vans and cars for £49. Wonder what you get for your money? -
That’s my point, £49 a van, most likely basic, but when they start doing van after van, do you compete by lowering your price to£45?
You can only go so low with price and quality, do you then buy 70p a metre vinyl, and start to turn out crap to compete, its all well and good saying do a better job, compete or change profession, it shouldn’t be like that..
If i had a unit to pay for, I would put out boards saying cars and vans £40, get a school leaver in for £100 a week or run this at a loss until the other firm foldedSimon
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How about putting up a top quality banner with a good image around your unit and say “We will remove your bad signage for £49, Call Today!”
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Now thats very good Dave.. 😀
Simon
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I’m always of the opinion that 70p/m vinyl isn’t worth it as you spend longer weeding / sorting problems etc.
I recently did a van for £60 single colour lettering on the doors only total job probably took 1 – 1 1/2 hrs but in that time we were talking about some stickers he was wanting as well.
For £49 I may have done the same lettering but only cos there was more work to come. Keep having to remind myself that it’s my wage not a hobby.
Steve
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