Am I being greedy??

[Texas_Signmaker]

If you can only get 10%, and nothing more then you need to not assume the risk of something going wrong. Work a deal with the supplier so you get a 10% sales commission and let them handle it

 

[rossmosh]

Also I think it's important to understand, being the middle man is always a dangerous position if you're not adding value. That's why I'm always hesitant to step in the middle of stuff that I don't really add value to. Yeah, I'll make a few bucks, but in the end, if the customer does a google search and sees I'm nearly doubling standard retail pricing, I look like a greedy guy and might lose the important business.

Just things to think about.

 

[rydods]

The grandson is taking care of most orders and overseeing most of the work. The grandfather just adds his 2 cents when he needs to.

 

[rydods]

I'm currently trying to work out a deal with the supplier to see if we can get a little better pricing for this particular customer for future orders. They do order a lot and hopefully it will leave more room for me to make a better profit because I do agree, there are a lot of risks involved. Thankfully I've only measured 1 face incorrectly in the past.

 

[Gino]

The grandson is taking care of most orders and overseeing most of the work. The grandfather just adds his 2 cents when he needs to.

That's par for the course. You are considered charging too much, but he can add 2¢

 

[Andy D]

Best advice I ever hear is "You're not in business to make signs, you're in business to make money"
20% markup minimum for products I order but never touch.

 

[kcollinsdesign]

I want a 40% margin on a small order (1-2 faces), I would consider going down to 35% or even 30% for quantity order that can be managed at the same time.

In addition, I would charge for my time to measure and produce layouts and proofs. Any knucklehead can order faces off the internet; what you are selling are your experience (and specialized equipment) for measuring and determining the correct size and type of sign face, and your ability to provide an effective layout.

Pricing example from recent job:

2x 2.5' x 8' .177 polycarbonate pan faces, 2-color painted decoration (per art), 1.5" depth, 2.5" flange: $560
Crating: $40
shipping: $150
Use tax: $49

Total cost: $799
Sale price: $1332 (40% margin)

In addition, I would charge for measuring and layout (prices will vary depending on the scope of the job, this is just an example of a job I completed recently):

Field survey (in town with 45' bucket truck): $105
Basic layout and proofs: $85

Total price to customer: $1522

My total cost: $799 + 3 hours time @ $40.00 (burdened labor cost) + share of overhead ($304.40 @ 20%/gross) = $1223.40
Net profit: $298.60 (19.6%)

Note: I would also take the opportunity to offer installation services and re-lamping, LED conversion or repair services based on the survey report.

 

[Reveal1]

I want a 40% margin on a small order (1-2 faces), I would consider going down to 35% or even 30% for quantity order that can be managed at the same time.

In addition, I would charge for my time to measure and produce layouts and proofs. Any knucklehead can order faces off the internet; what you are selling are your experience (and specialized equipment) for measuring and determining the correct size and type of sign face, and your ability to provide an effective layout.

Pricing example from recent job:

2x 2.5' x 8' .177 polycarbonate pan faces, 2-color painted decoration (per art), 1.5" depth, 2.5" flange: $560
Crating: $40
shipping: $150
Use tax: $49

Total cost: $799
Sale price: $1332 (40% margin)

In addition, I would charge for measuring and layout (prices will vary depending on the scope of the job, this is just an example of a job I completed recently):

Field survey (in town with 45' bucket truck): $105
Basic layout and proofs: $85

Total price to customer: $1522

My total cost: $799 + 3 hours time @ $40.00 (burdened labor cost) + share of overhead ($304.40 @ 20%/gross) = $1223.40
Net profit: $298.60 (19.6%)

Note: I would also take the opportunity to offer installation services and re-lamping, LED conversion or repair services based on the survey report.

Thanks for the good example which illustrates how much 'gross margin is needed to keep a sustainable profit. I normally shoot for 45% GM or more , perhaps 30-35% on a rare deal that is strategically important and where I can achieve some type of economy of scale. I noticed you add margin to shipping which I do on inbound but not outbound as I tend to itemize that at cost to the customer. And 'Use Tax'; I thought for a moment you were in Europe because as far as I know we don't have that hidden money grab (thankfully) in the U.S. ?

 

[Christian @ 2CT Media]

Thanks for the good example which illustrates how much 'gross margin is needed to keep a sustainable profit. I normally shoot for 45% GM or more , perhaps 30-35% on a rare deal that is strategically important and where I can achieve some type of economy of scale. I noticed you add margin to shipping which I do on inbound but not outbound as I tend to itemize that at cost to the customer. And 'Use Tax'; I thought for a moment you were in Europe because as far as I know we don't have that hidden money grab (thankfully) in the U.S. ?

Nearly every state has a "use tax" most states call them sales tax or transactional tax.

 

[Jeremiah]

I am always careful not to price myself out if the market. There is a lot if competition out there, ready willing and able to do the job. I never let anyone other than an employee or myself pick up product from my source. But thats just my policy.

 

[Christian @ 2CT Media]

I am always careful not to price myself out if the market. There is a lot if competition out there, ready willing and able to do the job. I never let anyone other than an employee or myself pick up product from my source. But thats just my policy.

I don't know how long you have been in business so there is no assumption on my part, but if the only way to win a job is by final price you will have alot of client turnover. The most cost conscious clients are the least loyal and there is always someone cheaper than you. Find a niche, service, value add, etc and build your business and clientele based on that... Not price!

Lowest price is a race to the bottom and a recipe for business failure.

 

[Jeremiah]

I Agree.. lowest price is not the way to run a business ! But what I said was I dont want to price " myself" out of the market . Good quality product at a fair price = enough for us to handle. I do not negotiate on price. Also I will not use trash materials that won't last. (Even if the customer requests it)

 

[LED Signs & Designs Texas]

Anyone can find a “cheaper” price if you look long enough. Don’t burn a bridge, be nice and professional if they do decide to go elsewhere. 95% of customers of mine that decide to use someone else because of price, always come back.

 

[Reveal1]

Nearly every state has a "use tax" most states call them sales tax or transactional tax.

Right - I was thinking VAT tax.

 

[kcollinsdesign]

Nearly every state has a "use tax" most states call them sales tax or transactional tax.

The crating and shipping would be inbound. I rarely ship out, but when I do it is just a seperate line item that is at cost. I had "handling costs", usually around $25.00, depending on who I am shipping to and why.

Shipping and the time it takes can managed profitably. It is important to remember that it takes a lot of time if you are not set up. A friend of mine with a large online sign business has loading docks, fork lifts, a staging area, a crating station stocked with materials, and a workstation with saws, pneumatic staplers, and strapping supplies. For smaller items he has ready made boxes, worktables, an overhead funnel with packing peanuts, etc. He has a calibrated scale registered with the shippers and connected to the internet so he can create his own shipping lables and bills of lading. UPS, FedEX, etc. pickup is on a regular basis. It takes me half a day to find a pallet, go to the hardware store and buy packaging supplies, clear out an area, engineer and build a shipment to the carriers specs, call up and arrange pickup, and hang around to catch the driver. There is no way on God's Green Earth I can compete with my friend, who could do the job in 15 minutes (and he has workers in his warehouse all day, and they all know how to do this).

Incoming shipping is an issue for me. At present, a number of my suppliers charge either no shipping or unsustainable low rates. In most cases they have worked out deals with shippers and are set up like my friend with an efficient shipping operation, but in many cases I know they are losing their butt, and that things will eventually change. This will become more of a factor as outsourcing becomes more predominant.

I am currently able to mark up my incoming shipping cost (I include it as part of the purchase cost and it is subject to the same margin). But I can foresee a day when that strategy will price me out of range, and I may have to lower my margin on incoming shipping to remain competitive. Currently I am mostly competing with large shops with a lot of overhead, but smaller, more agile shops are opening and leveraging their lack of overhead and reliance on outsourcing to seek a competitive advantage. Installation (and maintenance) will continue to be a major profit center, but fabrication, creative, and customer accessible ordering (internet) and inexpensive delivery will increasingly be dominated by efficiently run internet based operations.

I am currently out-sourcing everything I can. I know this is controversial in this forum. It has been real controversial in my market, as a lot of my local competition see me as just taking the cream from the top and leaving them to maintain a service fleet, pay for a shop, and send crews out to put signs up 80' in the air. At first, they would not even consider putting my signs up (If you can't run with the big dogs, you'd better stay on the porch). But the business climate has changed for them, and I have stategic partnerships with local sign companies that have managed to hang on.

Use tax? Yes, that is state and local sales tax. I have to pay use tax on everything I buy (self assessing when I buy stuff out-of-state where they do not charge me sales tax). I got busted twice for not paying sales tax on out-of-state purchases; the first time because I didn't know any better, the second time because nobody else was paying, so I thought why the hell should I. Busted.