Did I make any money?

[PGSigns]

Not sure if this is the right section for this but we will start here. With all the new folks that have joined I thought this would be a good question to pose after someone asked me the question "If the materials only cost you $10 why do I have to pay $40 for this?". In one of the newbee post they mentioned doing magnetics as a way of making money so I am going to use them as an example and pic a random price for a pair of 12" X 24" one color simple layout and one graphic for $39.95 a pair. Total time to produce is one hour including all time spent working with the customer, production, billing and handing them over. You have fixed expences like power, insurance and taxes and pay your self $15 an hour. What do you think and how did you figure the true amount of profit? Hope this helps those that are new to the biz and any one else that is looking in.
Thanks
Jimmy

 

[J Hill Designs]

um if it takes an hour and you charge $40, you are LOSING OUT

 

[Circleville Signs]

At an hour of time, you LOST money on this job at our shop rate. That price for mags is ridiculously low unless you are selling them in quantities of 50+

Also, this discussion should be happening on the PREMIUM side of the board, IMO.


Gary

 

[gabagoo]

who told the customer that the material only cost $10.00? Why is this even have any relevance to a custom made magnetic sign? Fire his azz!!!

 

[zmatalucci]

$15/ per hour? I can make that at home depot

 

[DOGraphics]

 

[Techman]

LAws of economics.
Opportunity costs comes to mind.

What is the total possible income one can make with certain resources?

If he is not making close to his total opportunity cost then he should be doing something else. For example.. If I sometimes make over $200 / hour then my mission is to make sure all work earns 200/hour. Anything less is losing money and a waste of resources.

IF someone takes an hour to gross $39 bux,, they are wasting their time and resoruces and in reality should find something else to do.

However, if they are only worth $39 bux then that is all they should be doing.

All of us could be setting a goal to run a bizz that will gross around $500 bux an hour. That's 20k a month. That is my goal.

 

[royster13]

I would not look at how much you made on that sale but rather how much you lost......If you hit the streets and dug up some more profitable work you should be able to net far more for that hour....

 

[luggnut]

You have to figure in the cost of doing business not just material and your pay and then add enough to make a profit. i have been using $85 per hour that covers rent, insurance, vehicle expenses, utilities, advertising ,etc,....

and i still am only breaking even or a little profit, now by profit i mean money left after paying myself , employees, and all other bills. so as of right now i really just own a job.... i hope to grow and start turning a profit (i have been at it 2 years on my own now)

 

[Bigdawg]

Jimmy - correct me if I'm wrong...

but you posted that to show the newbies that they AREN'T making any money in that scenerio... so they can see what actually goes into producing the product and what kind of time you spend on it... kind of a "be cheap - lose money" kind of thing...

which I think is something that OUGHT to be discussed out here in the open... I want newcomers to understand what goes into doing a job as opposed to material costs... but that's just my opinion...

 

[Just Another Sign Guy]

great post Luggnut. why anyone would be self employed to earn 'wages' is beyond me. there is a huge difference between creating a profitable business and buying yourself a low paying job.

BigD i have no idea what the OP's point was and think that he should try to articulate his point(s) more clearly...I think you (BigD) are right in that he was trying to make a point...but he failed

 

[Bigdawg]

You are right Dan... that's why I tried to translate a lil - but I could be wrong been known to happen...

 

[scarface]

I'll put it this way, I literally just got off the phone with a customer who needs his last 4 digits on a set of mags and 3 sides of his truck updated.

I told him $50 (hourly charge) and he said YIKES, that's high. I said well i don't think so at all. He said alright can you have it done at 4:00 lol

Note, this was a drawback since hes a good repeat customer

A set of simple mags should go easily for $65/pair minimum from what i've seen.

 

[mrmoto95]

$15/ per hour? I can make that at home depot

Yeah without any hassles.

 

[scarface]

Gotta charge for your time, If your getting every quote your probably too cheap

 

[Vicg]

A lot has to do with internet based companies like vistaprint and some others somehow they can charge peanuts and people expect the same from a local shop aswell , we have a machine shop and a sign shop and see all aspects of people from military to the guy who wants some graphics on his honda.
The way the economy is right now everyone is wheeling and dealing costs its tough to stay in biz unless you have contract work.

I just pruchased some software the other week i called the company for a price and i wasnt looking for any discounts the cost of the software was around 399. the guy said since business sucks buy it today and you can have it for 150. so things seem bad all around .

 

[mark in tx]

If I might expand on the points made above,

material cost 10.00
sale price $39.00

profit $29.00

But what is your cost for that 1 hour of time spent?

Monthly rent
Monthly electric bill
Monthly water
Monthly garbage pick up
Cost of equipment amortized monthly
any other costs

Divided by hours open for business

Did $29.00 really make you money?

Calculate it backwards and forwards,

$29.00 per hour profit, 1 magnet set per hour, 8 hours a day = $232.00 a day

21 business days this month, = $4872.00 for the month.

Assuming you sold a pair of magnets, every hour of every day you are open.

Assuming you are paid in cash, now remove any sales tax, what is your number?

Assume all were paid by credit or debit card, now remove processing fees, and remove sales tax, what is your number?

Also, don't forget to take out your personal taxes you will pay on whatever amount is left over.

I haven't even started with the nickel and dime costs of doing business yet. Things that only pop up occasionally.
Also, have you factored in your own marketing costs?
etc....

Is $29.00 bucks going to be enough?

 

[imagep]

You have to figure in the cost of doing business not just material and your pay and then add enough to make a profit. i have been using $85 per hour that covers rent, insurance, vehicle expenses, utilities, advertising ,etc,....

and i still am only breaking even or a little profit, now by profit i mean money left after paying myself , employees, and all other bills. so as of right now i really just own a job.... i hope to grow and start turning a profit (i have been at it 2 years on my own now)

Exactly. If one is only earning a typical wage for what one does, he/she aint making no profit.

 

[Gino]

A lot has to do with internet based companies like vistaprint and some others somehow they can charge peanuts and people expect the same from a local shop aswell , we have a machine shop and a sign shop and see all aspects of people from military to the guy who wants some graphics on his honda.
The way the economy is right now everyone is wheeling and dealing costs its tough to stay in biz unless you have contract work.

I just pruchased some software the other week i called the company for a price and i wasnt looking for any discounts the cost of the software was around 399. the guy said since business sucks buy it today and you can have it for 150. so things seem bad all around .

You're right about a lot there. Many are doing anything to make a buck. Although a buck doesn't get you squat anymore.

There are just way too many people offering services that they really can't even supply. There's a lot of BS going around and the older shops or more professional people seem to be the ones getting work, because people are tired of getting hammered and deciding to pay a little more, unless someone gets a call about Joe Gabip who does this stuff on the side and will beat anyone's price....... Have I goit a deel fo youa....... !!

 

[Jillbeans]

I think his original post was a way of saying that anyone charging $39/set of mags needs their head examined.
I am not one for discussing actual pricing in the open forum but I will say that even the first set of mags I ever made in 1985 was $50 and that was 25 years ago.
People need to realize that what we are doing is selling advertising to the business.
Someone will pay $600/month for a cruddy YP ad but balk at spending $$ on a set of mags. We need to teach these prospective clients just how valuable our services are.
And also steer them away from magnetics into something more upscale if we can.
Love....Jill