How Do You Find Out What Your Area Competitors Are Charging?

[player]

This has turned into a different discussion, which is all good and welcomed. I am still wondering about the original question, which is how do you guys do your market research? So far: Getting others to call; ask your clients; seeing other bids.

 

[Bigdawg]

Yes and no.

I've always been firm on charging what you need to get to keep your doors open, feed yur employees and have a nice well oiled machine running. We're all in it, to make money and put some away, too.

However, if the shop next door is fabricating everything in-house, has a much higher overhead and set of costs to do business and charges out at $2,500.00 while for you to do the same item is $950.00..... and you have everything figured in and might have one or two middlemen in there helping you, but you were willing to accept $950.00 Why go all the way up to $21,120.00 when you don't need to at all ??

Because your overhead doesn't exist..... how does that equate to more than doubling your needs ?? I could see adding an extra hundred or two, but not 200%. However, if that's how you like it, then more power to ya. It just doesn't sound like a very fair way to play.

It's called perceived value. If the sign is worth $2,500 dollars and your overhead is such that you can produce it for $1,000, then the value of the sign is more than the actual parts and pieces that make it up. We see that everyday in a wide range of products besides signs. If everyone else - apples to apples - charges $2,500 or so for the sign, then you would be devaluing the market to sell that sign for $1,000 and doing a disservice to the industry as a whole. Just my opinion...

 

[rjssigns]

I no longer check other shops pricing. I've been told by more than one client that I'm towards the higher end. So I started asking why they keep coming back. All said the same thing, which is delivering high quality work on time and at the quoted price.
No lies to get the job. No BS excuses. No sub-par work.

I do business the same way I like to get treated.

 

[TimToad]

For those that think it is best to only worry about what they will charge and ignore the current market, I disagree. Everything is down to price price price these days, so if I want to compete, I need to know what the market is currently bearing, and charging. It is very important IMO that I know about my competitors' current price structures. If not, I will learn about it when my business dries up, then I will be reacting to a sudden loss of orders, that could take months to climb out of... If everyone else is quoting lower grade materials and cheap cheap prices, with no art charges, then it is going to be a tough go if I quote the best materials with art charges. I need to know this. I am not saying I should work for free, or whatever, but I should have a product that is comparable or else not bother quoting, or have a strategy that deals with what is going on. To put my head in the sand about the market is not smart IMO.

The other side of this is I also do not want to be way lower than everyone else, leaving money on the table.

I wasn't suggesting that we all completely ignore what others are charging or not be as informed about our local market rates and pricing, just that we need to see the forest for the trees and not ignore our own well researched financial picture to the detriment of our bottom line.

Sure, my closest competitor may be giving his work away and doing schlocky work and receives lots of negative reviews or complaints but if i've built my business on quality, great design and service, his pricing becomes hard to compare to ours. That reality is pretty close to ours and frankly when the regular line of customers jump ship to us because of the way a poorly done job was handled or reacted to down the road, folks will tell us that it isn't just price that drives their decision and as long as our work is done right, in a prompt and professional way, etc. they EXPECT it to cost a little more. And don't mind paying it for the peace of mind connected to those qualities.

 

[Gino]

Alright, we'll play your way.

• Get a long piece of paper and write down just about every conceivable substrate YOU use.
• Next column, write down all the various methods of lettering these substrates you have in the first column.
• Now, write down in a new column all the things you letter with customers bringing the substrate to you or you going to them for lettering, like vehicles, boats airplanes, motorcycles, windows, walls, doors, trailers, etc.
• Next, figure out your costs to do this and what you pay yourself of any of your employees, including fica, workman's comp, taxes and then figure your overhead and last to this list... figure your cost of loss factor.
• Once you have all those down, start figuring out all the different scenarios you can possibly muster up and try to figure an hourly cost.
• Once you have it figured out, at least you know what YOU need to do the job. Now, just go into your competition's place of business and ask them for 2 or 3 similar items and then go home and see how close or far you are from them and figure out if you wanna charge differently.

Know ALL of YOUR costs inside and out and compare, don't just go by what some numbskull tells ya over the phone. That would be dumb. Otherwise get some friend you don't like and have them do it, cause if you like the person off the bat, they're not gonna like you afterwards if you have them doing the work. Besides, they'll probably be so bad at it with questions unexpected, that they'll let the cat outta the bag, anyway.

 

[ColorCrest]

I am still wondering about the original question, which is how do you guys do your market research?

Call or visit a new sign holder and ask how much he paid for it and how long he waited. I think this is at least another answer and the least costly.

Please reply with how you propose to handle your pricing once you learn the price of any competing product / service.

 

[rossmosh]

Market value matters. Anyone that argues that it doesn't has a poor understanding of how capitalism works. That's not to say you can't buck trends and add value in other places (service, quality, design and marketing) but generally speaking, market value matters. If you think Walmart doesn't do market research into their competitors, you're kidding yourself. Walmart is about as big as anyone in retail but they still monitor the market.

Just going by your expenses is not a good way to price. You could run a very expensive shop but put out middle of the road work. To charge the "right" prices you either need to improve your product or lower your costs. Just like you could run an inexpensive operation cranking out top quality work. Does this mean I should charge less than my competition? Just looking at expenses in either of these situations means you're going to be priced poorly in a competitive industry. This idea of my expenses dictate the market is flawed because you can adjust your expenses. Not all of them are fixed costs with absolutely no wiggle room. In fact, few of them will fall into that category.

I have a distinct feeling that those suggesting that market value means nothing and just go based on your expenses say that because they don't necessarily understand their role in the market. A bunch of these posters are likely longer established shops and have been in the industry long enough that they either know the right price based on working at or with other shops or have enough of an impact on the market where they are helping set the market price.

 

[WildWestDesigns]

Market value matters. Anyone that argues that it doesn't has a poor understanding of how capitalism works. That's not to say you can't buck trends and add value in other places (service, quality, design and marketing) but generally speaking, market value matters. If you think Walmart doesn't do market research into their competitors, you're kidding yourself. Walmart is about as big as anyone in retail but they still monitor the market.

The local market does matter. You don't want to try to do haute couture in a Wal-Mart area. However, I question the 1:1 parity that people think that it has. Mindful be you, but be aware that it's not 1:1.

I would also say Wal-Mart does quite a bit of their own dictating in whatever market they are in.

Just going by your expenses is not a good way to price. You could run a very expensive shop but put out middle of the road work. To charge the "right" prices you either need to improve your product or lower your costs. Just like you could run an inexpensive operation cranking out top quality work. Does this mean I should charge less than my competition? Just looking at expenses in either of these situations means you're going to be priced poorly in a competitive industry. This idea of my expenses dictate the market is flawed because you can adjust your expenses. Not all of them are fixed costs with absolutely no wiggle room. In fact, few of them will fall into that category.

I don't think that's what was meant. The price that you want to sell at combines a lot of other factors then just expenses, otherwise, no livable income for you. A lot of people lose sight about efficiency. Quite a bit of margin can be picked up just on efficiency alone.

Now as far as fixing variable expenses, that's a lot more inefficient to do then fixed costs. Usually because that decision has to be done every single time the bill comes due. Trying to be frugal on a variable expense has to be done every week, month etc. Usually it's a combination of both, but efficiency is usually the first place to attack. At least in my mind.

The 2 examples of the shops, actually just show how much a lack of parity could be going on. The middle of the road shop could be inefficient. The top quality shop could be very efficient and make good margins and still come under the prices of others. There is just a lot more that goes into this and it's not going to be strictly 1:1. There could be other scenarios as to why they are what they are, but that's actually the point. It's hard for an outsider looking in to see exactly what all is going on and to make sure that it affects their shop the same way.

 

[Gino]

Just because 'Shop A' makes this particular sign for $2,500..... how does that mean it's worth $2,500 ??

Perceived Value or Market Value are just buzz words these days. They've long lost their true meanings.

You can go into Walmart and buy a huge television for $XX amount of dollars and see the exact same one at a small mom & pop store for a lot more money. Who has the larger overhead, numbers of employees, possibilities for things to go wrong ?? However, who can buy things in bulk and not worry about profits ?? Same item. If the Walmart was to go up to the mom & pop's price, they'd lose out everytime, mostly due to the service afterwards.

When someone sells in high volume, that it very different from someone selling craftsmanship and a good reputation.

So here ya go.......... you'll buy a burger at Burger King, Wendy's or McDonalds for around $4.50 to $5.00 ( i just looked it up) but you can go to a better place and get one for $8.50. Why pay more ?? Uhh.... less preservatives ?? Less fat ?? Better grade of meat ?? Made to order ?? Relaxing atmosphere ?? Just better all around. Why not pay for the goodness ??

So, with these signs, if your sign is exactly like the other guy's why take your price up to theirs ?? What makes it that much better ?? Like 200% better ??

 

[player]

Please reply with how you propose to handle your pricing once you learn the price of any competing product / service.

I am not sure what I will do once I learn the prices. I have many options, and the moves I make will depend on the info I gain. I could offer lesser cost products using lesser materials, I could charge more for my product if I am way low... I need the info and will take action (or not) based on the market.

 

[Texas_Signmaker]

So, with these signs, if your sign is exactly like the other guy's why take your price up to theirs ??

Ummm, to make more $$$$? Do I win the prize?

 

[ColorCrest]

I am not sure what I will do once I learn the prices. I have many options, and the moves I make will depend on the info I gain. I could offer lesser cost products using lesser materials, I could charge more for my product if I am way low... I need the info and will take action (or not) based on the market.

Gotcha. Thanks for the prompt reply.

It will interesting to get feedback from what you find out there; higher, lower, mixed, sensible, not, etc.

 

[TimToad]

What do you do when you regular client doesn't want to wait a couple of weeks and they call around and find someone that can do it sooner? I get these type of calls from clients that (used) to use my local competitors that are running 2-3 weeks on simple signs... all the while I'm charging more then them and making the customer happy... Win-win.

So anytime someone needs to raise a price it's slimy? No one likes paying more but it's a fact of life that stuff increases in cost... a fact most people understand.


I have 2 BIG repeat customers that order sometimes weekly and I am SLOWER at raising their price... but if I can't control the amount of work coming in and the big customers keep hitting me up then eventually they go up too... those two I deal with on a separate basis.

I can appreciate you making it work for you, but I think it can present some organizational and consistency challenges in cases like repeats and how to justify the different pricing to somebody who you did something for $500 one month and then in a lean month its only $350 and in a heavy month its $750.

 

[Texas_Signmaker]

I can appreciate you making it work for you, but I think it can present some organizational and consistency challenges in cases like repeats and how to justify the different pricing to somebody who you did something for $500 one month and then in a lean month its only $350 and in a heavy month its $750.

I don't do that

 

[TimToad]

I no longer check other shops pricing. I've been told by more than one client that I'm towards the higher end. So I started asking why they keep coming back. All said the same thing, which is delivering high quality work on time and at the quoted price.
No lies to get the job. No BS excuses. No sub-par work.

I do business the same way I like to get treated.

Bingo! We just got an order today for ANOTHER vehicle graphics project from the same disgruntled former client of our primary competitor because the unlaminated wrap they printed and used faded in a little over a year despite being told that it would last 7 years and that the competitors down the street, meaning us did lousy, overpriced work.

 

[TimToad]

I don't do that

I'm sincerely interested in how you make it work and keep it all straight in both your head and the client's heads on a daily basis. Or does it not apply to frequent customers?

 

[equippaint]

I often take what pissed off customers that come in here say with a grain of salt. Too often they dictate what they want, despite being told what is proper, and when it goes south, they badmouth the person who did it and conveniently leave off the "I told you so" detail.

 

[Texas_Signmaker]

I'm sincerely interested in how you make it work and keep it all straight in both your head and the client's heads on a daily basis. Or does it not apply to frequent customers?

My client's head on a daily basis ..... What????

 

[equippaint]

Dynamic pricing for installation is pretty simple since most every job is different. You never have to change your labor rate so when someone calls its $100/hr... it's just that today this job will take 4 hours but maybe next week its 2 hours. The customer doesn't know the math, just the total. Its different with T&M but it's hard to get people to go for that except in service work.

 

[TimToad]

I often take what pissed off customers that come in here say with a grain of salt. Too often they dictate what they want, despite being told what is proper, and when it goes south, they badmouth the person who did it and conveniently leave off the "I told you so" detail.

When a 1.5 year old wrap comes pulling in and what was supposed to be a nice medium blue and tomato red is now a light, washed out grey, there isn't a whole lot of grains of salt to worry about. We're talking about one of the longest running tow companies in our area with a fleet of trucks in varying degrees of failure. The owner is totally old school on keeping their fleet in great condition and wants them to look the same. They didn't need to badmouth anybody, the work spoke for itself.

For 4+ years, we've faithfully and diligently provided what we consider more than fair enough quotes on vehicle wraps using the proper materials and techniques only to drive past the vendor in question and see wrap after wrap we've bid on sitting in their lot sometimes for weeks until they are completed. Now we understand why.

Our shop provides much better design, service and prioritizes vehicle graphics installations because we know that without their rig, most contractors are dead in the water or have to make special arrangements to work their normal routine.

Is it fair for people to not take everything about a vendor into consideration, no.

But that's the American way these days. We just go about our business, make sure we're responsive to those who put their trust in us and make sure we're proud of what rolls out of here every day.