how to price efficiently?

[whgjettdesigns]

just wondering how to price jobs. I have not been pricing my jobs well i dont guess at certain times and dont really have a method to go by. can someone please tell me how to price print and cut jobs. i generally use 3651 vinyl 30 in, 30 in oraguard 210, with a mutoh falcon outdoor jr and graphtec fc-7000 cutter. examples or and help would be great i just need something to go by so every job i do will be priced the same.

 

[luggnut]

most people will only give pricing info in the premium section... but remember your time is most valuble i use a shop rate of $85 per hr and then mark up substrates and supplies. also keep in mind perceived value, i can sell a car tag for more than a one color 18x24 coro.

you can only make good money with high volume or very profitable price and most sign shops are not setup for high volume... so shoot for a good profit.

 

[Mosh]

For standard stuff we go off the SignCraft pricing guide, pretty much.

 

[Nash Signs]

There is a wide variety of posts that discuss this topic on 101 already. In addition to the replies you will receive here, you may find it beneficial to use the search feature for more examples.

My recommendation is to start by calculating your shop rate. Adding up your annual operating cost (Rent, Utilities, Insurance, Equipment lease payment etc). Divide this annual cost down to a weekly number and divide by 40 hours. This will give you your hourly operating cost. I add 15% margin to my operating cost but go with what makes sense to you and keeps you both competitive and profitable. I think you'll find your shop rate to be in the $50 to $80 per hour range when your calculation is complete (unless you work out of your home). Remember this is your shop rate and does not include your material costs and accompanying margins. This is where things get interesting and you'll hear many variations that work as other members chime in. But to continue with my example of a basic costing, I mark up materials X amount and add in my shop rate x's the hours I apply to the job to reach my retail price.

This is a pretty down and dirty example, hope it helps. This could get interesting so I'll sit back and watch the post.

 

[Mosh]

Have you shopped around other sign shops in the area to see what they charge?
Good place to start, they adjust to how much you need to make.

 

[imagep]

A nice round per squar foot charge regardless of material with no setup or minimim or art or base fee is nice and efficent. Like $1 per sq ft or $10 per sq ft. That what your customers want to hear anyway.

But in reality, it has to be a little more complicated. You need to have a base charge to cover customer service, invoicing, management and administrative costs, plus an art charge, plus a per sq ft charge, plus a material charge (like actual cost times a markup), plus an installation charge etc (whatever that particular job calls for).

We do a lot more than just signs, but in my shop, the most dreaded question is "how much do you charge to print shirts". The answer that our customers are hopining to hear is "$x per shirt". But the answer I give them is "it depends on the job specifications, like how many shirts, what type of shirt, what color of shirt, how many print locations, how many colors in each print location, and how long the artwork is going to take to create.

I usually tick them off, but I HAVE to know the answers to ALL those questions before I can give an accurate quote. They have to understand that we custom produce goods, and we dont happen to have their custom made job sitting on our shelf.

 

[Gino]

You pose a very good question.

It's almost as good as.... what do you need to know to be in business, especially your own business ??

 

[Checkers]

Nash pointed you in the right direction, but dropped the ball when he qualified his hourly rate statement with "unless you work out of your home". Well, I am home based and I need to charge more than $70 an hour to make a profit.

And don't listen to Mosh. Although he appears to know what he's doing, setting your hourly rate based upon what the competition is charging can lead to your business' failure.

IMHO, the best and most reliable reliable way to price your work properly is to invest in estimating and/or accounting software and take the time to set it up for your business.

Make sure all of your expenses are covered. Plan, budget and save for vacations and retirement. Don't lower your prices because the other guy is cheaper. Sure, there are ways to save your client money, but not at the expense of your company.

And, yes, do a search, this has been discussed many times.

Checkers

 

[weaselboogie]

Adding up your annual operating cost (Rent, Utilities, Insurance, Equipment lease payment etc).

That etc would probably include YOUR time also/ Figure up what you would like to be making yearly and divide that up along with the other expenses.

 

[Nash Signs]

Nash pointed you in the right direction, but dropped the ball when he qualified his hourly rate statement with "unless you work out of your home". Well, I am home based and I need to charge more than $70 an hour to make a profit.

Checkers

Checkers makes an interesting point.
As I mentioned in my opening reply, you will hear a wide variety of examples as members start chiming in with what works for them. In this particular case his shop is required to set shop rate at $70 to be profitable. This is sounds like his business plan includes vacations and retirement funding, in addition to the obvious monthly operation costs. Don't forget health coverage which these days could make you want to go work for someone else. Add on a building with utilities and insurance and you might be pricing yourself out of business in my neck of the woods.
In the big picture you do have to ask yourself what does the business need to provide you with? Only a week to week paycheck? or something beyond that? My suggestion of being able to maintain a lower shop rate out of your home was purely based on not having additional rent, utilities and insurance burdening your overhead.
One last note. It is well worth the little bit of cost to become a member of signs101. You will have access to more information, searches and helpful replies from members will increase.

 

[whgjettdesigns]

What about just while your printer is printing? If you are doing nothing else should you still charge 70$ an hr?

 

[kustomguy]

Nash pointed you in the right direction, but dropped the ball when he qualified his hourly rate statement with "unless you work out of your home". Well, I am home based and I need to charge more than $70 an hour to make a profit.

I must admit, I have always had a bit of a chip on my shoulder toward home run sign businesses, perhaps because I am a little jealous. It is hard to imagine why a home based business would cost $70 an hour to operate when it is after all your home. You must be paying yourself very well. In our area we have many people trying to start sign related business out of their home and trying to undercut those who have the overhead of a reputable brick and mortar operation. Seems unfair. So much of our hourly rate goes into staying in business there isn't much left for pay raises and vacations.

 

[imagep]

What about just while your printer is printing? If you are doing nothing else should you still charge 70$ an hr?

Thats why you need to charge by the square foot for printing and not by the hour. I typically have set fees for every thing we do, and when evaluating those fees, we do look at how long each task takes just to double check that we are actually being paid enough for our time.

Typically I find that I am working on other jobs while the printer is printing, like seting up artwork for the next print, and weeding/taping/hemming/applying for the last print job. So if you can work very efficeintly, you can actually gross a heck of a lot more than $70/hr.

 

[Wags]

I am new to the sign business but have been in printing for years and more recently T-shirts. I agree with most ideas listed here especially the square foot pricing model. At least it is a starting point. With any job there can be many factors that affect the final price. As with conventional print, the kinds of material used will change your cost factor as will time needed to set up the job. We constantly have people come in or call and ask for a price to be pulled out of your butt on the spot. They will never understand that you are not a retail store where you pick up an item and pay the sticker price. $70 per hour from your home??? Wow, we don't even charge that much. I guess that shows how where one lives affects pricing. Living in a rural area in the midwest does not allow us to charge these kinds of fees. We have people upset over a ten cent charge for making a copy.

My best suggestion is to look around your area and charge accordingly. If you can't compete at those prices then you are not in the right business. If you can, then your service before and after the sale will be what sets you apart from the rest.

 

[Fred Weiss]

What about just while your printer is printing? If you are doing nothing else should you still charge 70$ an hr?

Of course. You made an investment in your printer in order to receive the return on the time and materials it consumes when it is running. You also pay to house it and maintain it. If you have actually sat down and calculated your overhead in order to then calculate an appropriate shop rate, you will have figured these costs.

It costs you x dollars per hour for the printer to be sitting there, running or not ... just like an employee would be costing you. Since the printer is producing revenue for you when it runs and doesn't when it doesn't, it's time is valuable. That revenue is a substantial part of your total revenue upon which your shop rate has been calculated. If your printer is in such high demand that there aren't enough hours in the day to get the work out, your hourly rate should, in fact, go up so you can afford the cost, a second operator and the floor space for a second printer.

It can be argued that the printer's time can be charged at a different rate than your time or that of a lower skilled worker. Similar differences exist, for example, with a lift truck. What cannot be argued though is that your $20K printer's time has no value.