Cost Plus vs. Area (Sq. Ft) Pricing Scenarios

[TrustMoore_TN]

Ok guys here is my dilema.
I run large Large Format department for a commercial print finishing company. We are considered a separate division but we all use the same estimating/invoicing software. Currently everything is setup on a cost plus basis. I am trying to be competitive in this market and for many of our larger run projects we are competitive, but when it comes to smaller jobs we get blown out of the water because we take into consideration all of the costs/labor involved and mark it up accordingly. This puts our pricing well above other local shops as a result and I feel that we are missing opportunities with smaller clients for on-going work that could be profitable.

Question... what would be the best approach here? Would it be better to do area based pricing on the smaller jobs to be able to win them and keep costs plus pricing for the larger projects?

 

[gnemmas]

If you are set up for large large format jobs, inherently you are at disadvantage competing with smaller shops. Vise versa, small shops can not compete with you for larger quantity jobs.

 

[luggnut]

a lot of these people pricing the smaller jobs so low aren't figuring in all the cost and as a result aren't making much money... i wouldn't compete with them if that is the case. if you can do the math and still make a profit then thats OK . i don't get a lot of the smaller coro and such because i have to charge a little more , but i can't drop price or i would lose money or make very little. if i do it by their price i would have plenty of work but no profit... might as well work at mcdonalds at least i would get paid.

 

[Gene@mpls]

It seems to me that the sqft pricing would also have to take into account
your costs plus what ever profit you expect- so I don't see how that could
be cheaper unless you are going to sell as a 'loss leader'.

 

[Checkers]

... but when it comes to smaller jobs we get blown out of the water because we take into consideration all of the costs/labor involved and mark it up accordingly...

If you won't make money on them, don't bid or take the smaller jobs.

The problem with competing with the locals is many are just too stupid to realize they're loosing money. You have a pricing system that works. Don't mess with it.

Checkers

 

[mark in tx]

Don't change your pricing method, but you could institute a minimum charge for small jobs.

Here is an example of why Sq/ft pricing can suck.

Let's say you decide to price cut vinyl, weeded and taped, at $5.00 a sq/ft.

Well, a 4"x5" inch weeded and taped decal would be 65 cents.

Not worth the time.

But if you had a $35.00 minimum order, you would make money.