Price Beatdown

[rjssigns]

It's nice that some people have the financial independence to be able to go fishing instead of working. But a lot of good shops will go under waiting for the customers to realize they're getting poor quality.

It is not so much financial independence as knowing your clientele. Wraps are an extremely hard sell in our area. If i remember correctly there are only 6 or 7 full wraps and 3 of them are on sign shop work vehicles! And the low ball internet prices makes these "potentials" a PITA to work with. It boils down to realizing you will never get them as a client so the 45 minutes to an hour wasted with them you could be doing other things.
We have also changed our business model and are doing more sub work for local shops and getting into industrial labeling.
Our shop is also looking at the potential of becoming what we call a service bureau (wholesale to the trade only). I have talked with our freelancer and he said he would love to run a 3 to 5 meter printer and not have to deal with design.
And before you laugh, our freelancer has a bachelors in packaging design and 20 years experience with any type of layout and set-up you can think of. Offset, digital press, flexo, gravure, wide format etc.. He is also an adjunct professor for design and I had the distinct pleasure of being one of his students.
I also weld for hire and paint motorcycles if the sign side is slow.

You need to be adaptable in this ever changing economy and that is what we are doing.

Sorry for the long post.

 

[Kentucky Wraps]

2100 isn't that far fetched to be honest. That's around 9 bucks a sf. Which is what is seeming to be the norm recently....

15 pass van WITH roof for $2100 is NOT $9 a sq.ft.

 

[Kentucky Wraps]

we do standard cargo vans for $1995. no roof. its the way the business is. either get with it and evolve or get run over.

I've got to say it ProWraps...
With the large amount of business you always say you have, why the HECK don't you charge $500 more per van?
Even "IF" you lost 4 potential vans a month due to that price difference in spite of being the "Faster" "Higher Quality" with a portfolio to prove it,

A• you would be making the same amount of money at the end of the month but working less...

OR if you didn't lose those 4 potential vans per month due to the increase,

B• You'd be making MORE each month doing the SAME amount of work...

either way...Explain how bringing your prices up to $2500 per van wouldn't Help your business.
I truly am interested in your business model and explanation of the above which is why I'm asking. Am I missing some fundamental business concept?
This can look like a "mean" post..but it's actually an honest question. You are obviously doing a lot of work. Just wondering if maybe you could make more $ by just raising your price for a van...or Same $ working way less.
Thanks.

 

[headfirst]

Nope. It isn't.

All those in any type of association get together and discuss prices. Then set the rates.

You're right, it's not price fixing, but it is collusion and it's a criminal offense.

 

[HulkSmash]

15 pass van WITH roof for $2100 is NOT $9 a sq.ft.

i'm talking without the roof. and yeah, that's about 9 bucks a sqft. I don't charge that..at all. A lot of times that type of pricing gets held for fleets. that's about it. Right now i'm working on 30 box trucks. Try to sell that at over 9 bucks a sqft, you won't get it. Doing 1? No problem.


Pro wraps can charge that.. Because i can promise you his overhead is probably much lower than most.
And in his area.. i can imagine the market is fierce.. just like here in Denver..

 

[Christian @ 2CT Media]

We just did (2) 2012 Ford E350 XL Passenger vans including windows no roof $2782.50ea, Same client flip flopped colors per van. We were $325ea less than the closest competitor (out of 15) from a 3 state area.

 

[Locals Find!]

You're right, it's not price fixing, but it is collusion and it's a criminal offense.

Where did you get your information?? It's not illegal unless everyone has to agree to abide by that set price structure.

Realtors do this with their commissions they have an industry standard 6% they all agreed to. Now any Agent can lower or raise above that. Its not set in stone but, most agents will stay at or above 6% very few ever go less.

So, why as an industry have we not set some minimum industry standards?? Signs101 seems like a great place to start hashing out some minimum standards for pricing. So we are all more competitive and making more profit.

 

[skyhigh]

auto repair shops use a standard rate of charges. Why not us?

I agree.

Could be wrong but I think that's regarded as price fixing.

If you've ever gotten a quote from an "auto body" shop, then had the insurance adjuster come out.....the adjuster plugs in the same parts needed, ALONG with a standardized time it should take to replace the part & paint. The price they come up with is nearly identical across their industry. The nice part, the auto body shop can always add for hidden problems, and its usually never a problem.

You make it sound like there will be no differences in the number of jobs sold at a higher price versus at a lower price.....I think that is so wrong.....In my mind it will be easier to sell more jobs at a lower price....

Sticking with the "auto body" shops..... It doesn't matter if its a high volume shop, or a smaller shop. The job is WORTH XXX AMOUNT OF MONEY, and that's what they all charge.

Funny thing is...... some shops feel they are worth more, but I've never found one that charges LESS than the industry standard.

We are the only professional industry to cut each others throats. Reminds me of the pizza wars, and who can sell it for less....PHut, Domino's or PaPa Johns.
Pizza is a volume industry....... not the advertising value of a vehicle wrap.

 

[tsgstl]

We are the only professional industry to cut each others throats.

your not honestly trying to pass that off as truth are you?


look there are union sign shops, and most of them do quite well, become one if you wish.

 

[anotherdog]

Standard pricing across the industry?

Herding Kittens.

First you have to create a professional association, then accredit it in all the states, then make it illegal to practice sign making without a licence...(hanging offence)

Once you do that you can set price guidelines.

Then our chinese overlords will steal all the business at 1$ per foot, design included.

 

[Techman]

Higher volume and lower overhead allows a shop to make the same gross profit on their lower price job versus your higher price job..

mistaken idea.
\Higher volume never means more profit. All higher volume does is increase the flow of cash through the check book. Higher volume always has an increased cost. a company can increase volume of sales to the point where it costs so much more there is no profit at all. That is the law of diminishing returns.

The only way to make more profit is to decrease costs or increase price. A bizz cannot decrease costs simply by adding more jobs in the queu. Every job has the same basic costs involved.

Profit is the amount left over above the costs. A company can reduce costs using economy of scale. That is using technology to increase production via efficient usage of the time. Howver there still comes a point where diminishing returns takes over.
So, lowering price to increase volume is not profitable.

 

[skyhigh]

your not honestly trying to pass that off as truth are you?


look there are union sign shops, and most of them do quite well, become one if you wish.

I didn't see you offering others as an example.

Patiently waiting.


Let me guess..... your business model is "cut throat" your competition out of business?
:Oops:

 

[tsgstl]

mistaken idea.
\Higher volume never means more profit. All higher volume does is increase the flow of cash through the check book. Higher volume always has an increased cost. a company can increase volume of sales to the point where it costs so much more there is no profit at all. That is the law of diminishing returns.

The only way to make more profit is to decrease costs or increase price. A bizz cannot decrease costs simply by adding more jobs in the queu. Every job has the same basic costs involved.

Profit is the amount left over above the costs. A company can reduce costs using economy of scale. That is using technology to increase production via efficient usage of the time. Howver there still comes a point where diminishing returns takes over.
So, lowering price to increase volume is not profitable.

your talking about a company that is already working at full capacity. Take Friday for example: we always work a heck of a lot harder on Friday because we always have more work to do (everyone needs their stuff for the weekend)
Another factor is streamlining your workflow/employees
employee A might slap together 50 signs in a hour where employee B might only put together 30
As well as a digital printer can make 50 signs in a hour when a plotter would only make 20.

I work in the same building as a Heating and Cooling Co. When the weather is room temp they play basketball out back on the clock. When it is hot or cold they work all day. This formula could be adjusted with lowering price of services when the temp is closer to room temperature. Therefore making a exception to your theory.

I am not saying I don't agree with what you are saying, but it is not always black and white either.

 

[Locals Find!]

Standard pricing across the industry?

Herding Kittens.

First you have to create a professional association, then accredit it in all the states, then make it illegal to practice sign making without a licence...(hanging offence)

Once you do that you can set price guidelines.

Then our chinese overlords will steal all the business at 1$ per foot, design included.

Actually, this could be accomplished through a trade association. Not all will join however, if you can get significant numbers of shops to join you can then affect the industry as a whole. Prime Examples are ASI (promotional products) & the NAR (National Association of Realtors, which is the Countries largest trade association.)

It is doable it takes a group of individuals willing to lead the way. Some of the members on here would be great candidates to get it started and make it viable based on the size of their companies and the respect they have earned in our field.

 

[Christian @ 2CT Media]

Does this price standardization come with negotiated pricing for all accredited members? So that wither we do 1 million sqft/month or 100 we pay the same for our materials? Do it come with negotiated building contracts so we pay the same for our facilities contracts? What about labor?

Those price standards are all just a bunch of B.S. if you actually deal with those places there is always differentials, added "services", etc. making up the difference. Also there are many places in those industries where they don't follow the standards at all and pricing is all over the place. I believe we should design a standard minimum but to follow an across the board standard pricing will kill some companies.

 

[tsgstl]

I didn't see you offering others as an example.

Patiently waiting.


Let me guess..... your business model is "cut throat" your competition out of business?
:Oops:

Shallow are we?

you said "We are the only professional industry to cut each others throats."

Do I really need a example? I thought that would be enough for you to correct yourself. What professional industry isn't out to cut each others throats? Do you think billionaire business owners are not out to cut each others throats?

To be honest I could give a rats @$$ about my competition. I base every avenue I take on my costs + how much I want that business. I might be higher on things I just don't want to do and lower on things that appeal to me. I have never once guaged any of my pricing on what someone else is doing. If I leave money on the table I don't care. As long as my profit is at a point that I am comfortable with then that is fine with me. I'm not preaching my business model for others to follow.

I'm not calling out you personally, just calling out a quote from you that I feel could not be further from the truth.

 

[HulkSmash]

+1. I can care less what people around me charge. I rarely lose business. I promise we're not the cheapest.

 

[Techman]

You're right, it's not price fixing, but it is collusion and it's a criminal offense.

Nope... It is not collusion.. ..
Collusion is a secret agreement intended for FRAUD or treachery..
You may wish to study just a little more.

N=There is nothing wrong with anyone or any group getting together to discuss costs and prices.. Business associations do it every day all the time. Every been to a convention or a seminar of any kind? I have attended dozens of trade conferences, training seminars and business association meetings all over the country. All of them legally discuss costs and prices all the time..

 

[Techman]

your talking about a company that is already working at full capacity. Take Friday for example: we always work a heck of a lot harder on Friday because we always have more work to do (everyone needs their stuff for the weekend)
Another factor is streamlining your workflow/employees
employee A might slap together 50 signs in a hour where employee B might only put together 30
As well as a digital printer can make 50 signs in a hour when a plotter would only make 20.

No, I am not talking about a company at full capacity,
I am talking about volume work and lower prices and profit.
I said lower prices and higher volume is not more profitable..

 

[Locals Find!]

Does this price standardization come with negotiated pricing for all accredited members? So that wither we do 1 million sqft/month or 100 we pay the same for our materials? Do it come with negotiated building contracts so we pay the same for our facilities contracts? What about labor?

Those price standards are all just a bunch of B.S. if you actually deal with those places there is always differentials, added "services", etc. making up the difference. Also there are many places in those industries where they don't follow the standards at all and pricing is all over the place. I believe we should design a standard minimum but to follow an across the board standard pricing will kill some companies.

With a large enough trade association and concentrated purchasing/marketing power you can negotiate a lot as vendors will be lined up to do business with your members. They will also know that if they screw up they can lose a lot of business.

Think about Signs101 how much information is freely passed between members when a company screws up (Avery) and doesn't stand by its product. Its all on how you structure your association and its desires. Nothing is impossible just different levels of difficulty.