Price Increase Continuation........................

[Gino]

In another thread, there are discussions about price increases and how it's affecting customers.

No one likes a price increase, but for whatever reason, it happens. Some businesses profit on this while others take advantage of it. I've seen businesses which needed to increase delivery costs or handling costs, but it always seems to be since some other cost has gone up unexpectedly. Matters not, what someone or some company has for reasons for raising their prices, but that they do it. It's the manner in which they go about it.

Therefore, if they increase, then you will also increase, thus no real lose to you. No matter how much or how little you use the 3M product, it will enable you to maintain top quality. The other side of the coin is this...... in your overall pricing of your products, you should probably have a built-in buffer for when things go up here and there. If you are working that close, that a 2% or 5% or even a 10% increase on one of your key ingredients is gonna hurt you, then you are working entirely too close. When you're finished making a sign, the cost of the vinyl in that project should be so minute, you wouldn't notice if the costs went up 50% on the vinyl alone.

Let's say for instance, you made a job and at the end, found out you did it wrong and had to do it completely over. How would you recoup your costs ?? Thank God, this hardly happens, but it does. Why should you rob your profits and overhead to pay for a mistake.... or an employees mistake ?? You need to raise your prices to include waste and nasty sh!t. Price increases work much the same. Once they go up enough, you will raise your prices, but while 3M can do it..... I'm sure it's a mere pittance of the overall scheme of making a sign. A 2 sided 4' x 8' with full color digital print is only about $22 or $25 of the over all $450 sign. You can't afford if the vinyl goes up 7% or 10% ??

 

[threeputt]

Well put Gino.

I find in talking to other business owners, (not always sign shops) that they don't have a good handle on their costs. Note to all forum readers, you should have a business model in play that tells you these things.

That model should be such that when you're not fully busy, say 80% of capacity, you're still making a tidy profit. Then if you get slammed and things are super good all summer, hey, you've got a well earned bonus.

Motels do this. They know they won't rent out every room every nite, but that their maids, front desk, security people, and other salaries have to be paid regardless. Other intangibles such as insurances, taxes, debt service on underlying loans, etc. all don't go away because you didn't get overnite stays.

Back on point, in the sign business, you should know your costs as a portion of your sales. Is your total material bill, exceeding 20% of sales price? Is labor over 22%? Operations? Owner's salaries, business profits, etc.

Put differently, that sign you sell for $100, should have, on average, a certain percentage of materials and labor costs tied to it. Maybe it's 20 bucks materials (20%), maybe it's 22 bucks labor (22%) etc.

I'm not saying those are the percentages for your shop, but they serve to illustrate a point.

 

[gnemmas]

This related to my pet peeves, $15 minimum wage movement.

My shop entry level, no experience, $10. Next levels, $15, then $20/hr.

Now I have raise the entry level to $15, a 50% increase. Push next levels up accordingly.

Labor cost: 30% of sales. So I have to increase prices 20% just to keep the same profit.

That goes for all businesses, their sign cost more, supplies cost more, labor cost more, insurance, payroll tax, workers comp.....

When all said and done, are minimum wage earners will be better off? NOOOOOOO! $15 will have the same buying power of $10 today.

Only people had run a business should qualify to be politicians!

 

[player]

Then $15 will become $17 to $20.

Everything else has gone up so much that $10 won't get you very far in life. $15 won't really either.

 

[threeputt]

This related to my pet peeves, $15 minimum wage movement.

My shop entry level, no experience, $10. Next levels, $15, then $20/hr.

Now I have raise the entry level to $15, a 50% increase. Push next levels up accordingly.

Labor cost: 30% of sales. So I have to increase prices 20% just to keep the same profit.

That goes for all businesses, their sign cost more, supplies cost more, labor cost more, insurance, payroll tax, workers comp.....

When all said and done, are minimum wage earners will be better off? NOOOOOOO! $15 will have the same buying power of $10 today.

Only people had run a business should qualify to be politicians!

Yep, wage creep. Your $15.00 people are going to want more than the just-hired newbie. All the way up the line, everyone gets a raise. ie: "the rising tide floats all boats", etc.

 

[binki]

We are in the IE also and we just let all of our employees go at the end of last year and reworked our business model.

Plain and simple, if your margin is 50% and you double your price then you only have to do 33% of your previous sales to get the same profit. We did just that with our lower end products.

 

[rjssigns]

Better question is if 3M materials are worth the premium price they charge.

I've been shorted material, and had substrate/laminate issues with 3M.

Point is I was paying $300 more for 3M kits than the material I now use.

Paying that kind of a premium should negate those issues.

Flame suit on.

 

[eahicks]

We are in the IE also and we just let all of our employees go at the end of last year and reworked our business model.

Plain and simple, if your margin is 50% and you double your price then you only have to do 33% of your previous sales to get the same profit. We did just that with our lower end products.

If your margin is only 50%, you need to go back rework your business model again.

 

[binki]

If your margin is only 50%, you need to go back rework your business model again.

It was a simple example of economics.