Pricing V Carved Signs

[John David]

Walk into a Ford of Chevy dealer and see what their shop rate is. Probably $95 per hour, and I think everyone feels the same way about paying for a car to be repaired. Last thing I want is to be lumped in with car dealers.


The difference is Ford and Chevy have a book to tell them how to proceed after the computer tells them whats wrong. We here have to use our imagination to solve problems and thats what drives some of the pricing.

[navigator7]

If everyone working for you takes a 15 minute washroom break, once you have 32 guys it is like you are paying someone to take a **** all day long...

RIB

No doubt running a business requires proper leadership.
Focusing on the right stuff helps too.
Most employees I've met seem to think the employer's job to "get work" for the employees. They don't see The Customer as the source of sustenance ... they see the Boss as the source.
Employees exist to earn a profit from their labor.
Rewarding fairly those who produce and those who don't 'eliminates' the problem of paying for ****.

Yet....you bring up a previously untapped profit center idea: Install a candy machine, a cigarette machine and a pay per use internet service in the can.

[clueless]

You need to cover your expenses and make a profit. If you have 200 guys producing at $50 per hour you can cover everything. If it is just one guy, and you don't get to bill out everything you do then your rate needs to cover the down time.

So, as a customer, why should I use your services? If you are small and need to make $200 per hour to survive, and the big company down the street has 10 people and charges $75 per hour, how's that my fault? It's not my fault you only have one person working for you. It's not my fault your work book is not full so you have to make up the hours by charging me higher rates. As a customer, none of that's my fault.

Again, let's keep this in context, we're talking about wholesale sign work, not retail, finished product.

If I need letters cut out of 3/4" PVC, and I'm providing the file, why would I pay you $200 when I can pay the guy down the street $75? It's the same material, same file that I provided.

Now if we're talking about the design process and all the elements of going through that, that's different. We're talking wholesale use of the router.

As a customer, I don't see any value added service to justify paying almost 3x the amount.

[wberminio]

What if you're the only guy down the street?

[clueless]

What if you're the only guy down the street?

You won't be for long charging me $200 per hour for wholesale work. If you can get it, good for you, but your pricing should be based on value, not based on whether or not you have higher expenses because you choose to run your business a certain way or don't have enough work to keep you busy all the time. Using that philosophy, if I just hold off and do one job a year and charge them $150,000, then I should be okay.

[wberminio]

you finally found out my secret!

[joe]

Steve,

Once again it's a loosing strategy to price by the hour!

Please, please tell me how you determine your hourly rate?

What kind of work are you presently engaged in. Are your profit margins where they should be?

Joe

[clueless]

Must not be too losing of a strategy, we've been in business since '98 or so and I've been here doing it for the last 4 years. We have increased our business, profits, and revenue for the last 4 years in a row. When everyone else was complaining they didn't have work, we were swamped. So if that's a losing strategy, then I guess we'll keep losing.

I'm not sure how you price it anything other than by the hour. What's your pricing model, throw a outrageous figure out there and see if they buy it? It's simple, you take your labor rate add that to your burden rate, and then add the amount of profit you want to make and you multiply that by the time it takes to run the job. If you don't have enough work to keep you busy all day, every day, then that's a problem with your business plan and the customer shouldn't be punished because you can't get more work to bring your rates down and stay busy all day.

I quoted 10,000's of jobs in manufacturing and we always quoted the time it takes by our hourly rate.

If your model works for you, as I have said about 5 times, that's great, keep it up. Our model works for us.

[signtist]

Well here's my take on this.
I do a lot of this.
I'm a 1 man shop. I enjoy working everyday!
My overhead is fairly low.
My shop rate is $60 hour. Or I figure $500 a day.
This includeds use of any of my shop tools.
Plus materials, marked up 50%+of course.

I do wholesale to other shops as well as retail.
$60 min. router service. This usually takes 20 minutes to set up - take the phone call, open a email, set up the tool path,etc.
Now I'm ready to cut. The guy comes over with his material. A few minutes chit-chat, etc.
I clamp it down. Start the router and cut it. This takes only a few minutes of actual time. (maybe 20 minutes at the most)
They can wait for it. This is an excellent time for show and tell. Or in other words "Sales Pitch" about all the other things I can offer. This has worked well for me. I sold many complete gold leaf 3D signs upgraded to something way better than just a routed sign panel. I have lots of samples on the walls!
Sometimes I guess the job may take 2 hours to cut. So I estimate accordingly $125-$150. Still I make money and they make money.
A small job for another shop often turn into a big jobs.

John www.signgraphics1.com

[maxheadroom]

you'd think this is a pissing contest. Was wondering why Joe responded to 'clueless'. Didn't see that till I checked the profile, so there really is a clueless. Personally I'd never want a customer associate being clueless to my business.

FYI, for those looking on: Stick with experience, look at Joe's site, look at the work, look at his suggestions and comments. Then check the other parties commenting, same thing: web site, comments, work overall. The work they produce speak for themselves.

What DOESN'T work is ' I've bid thousands and thousands and thousands of jobs, we've been in business x years and continue to grow by x each year'. Joe's work speaks for itself, he doesn't need to sing his own praises. What DOES work is the results your provide to a happy customer.

Charging by the hour does not work for people like Joe, doesn't work for others, and I'd never work that way, nor does charging by the SF. There's an old saying that if you're so busy, you're not charging enough. I'd suspect this may be in play in this thread.

Joe has provided some sound advice. Either examine it, consider it and use it or forget it. Ever consider how long he, an others like him have been in business? A LOT more that less than half a decade!!

On another note, a $ 60 k CNC is not a 'high end' machine, it's the entry level of serious machines. A high end CNC is in the area of $ 100k - $ 500k. Way more than most sign shops have need for.

In this area there are at least 7-10 shops that have machines in the range of $ 250 - $ 500k, all 5 axis, all with a shop rate of $ 60 an hour. Right sixty dollars a hour. Many times they are running the machines just to generate cash flow. READ: Cash flow is not necessarily profit, it's just working to keep one step ahead of the bill collectors.

In the last year of the apprx 10 shops, 3 are still in business. I've seen one in person in a shop that's been there for 15 years, it was the $500k machine. By the time it was installed, training and tooling set up, the bank came in and repossessed it. Never did one paying job on it.

My point: Joe and others like him want to 1. make money, making a good profit from the job, 2. provide a good service and a superior product, 3. and enjoy our family, friends and life in general, not necessarily in that order.

Like Joe, I pursue the high end jobs and have been fortunate to be successful at it, and continue to. It's all a matter of the type of work you want to do. If you're happy where your at, great. But if you want to make more, listen to experience. You'll either learn it now, or later.

Lastly, I NEVER discuss prices with my customer. All of my work consists of design and fabrication. If there are multiples involved, 3 the same or 3 different, I give a price for the whole job, I never break the job down, i.e. design, overhead, transportation, fabrication, materials, etc. I will work with them to work within their budget if possible, but never, never break the prices down. As in the case in this thread the client doesn't need to know how much you are making an hour.

The only thing that gives them is information to shop around, pitting one shop against the other, and in the last year with other friends in the business, I have seen that happen time after time. A few times even after a PO and deposit was provided. I will not provide a customer with that ammunition. Fortunately after x years in business that has only happened a few times. I'm a fast learner: get bit one time, avoid it forever.