Welcome To Signs101.com: Largest Forum for Signmaking Professionals

Signs101.com: Largest Forum for Signmaking Professionals is the LARGEST online community & discussion forum for professional sign-makers and graphic designers.

 


  1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Pricing dilema

Discussion in 'Sales, Marketing, Pricing Etc.' started by grampa dan, Nov 24, 2009.

  1. grampa dan

    grampa dan Member

    108
    0
    0
    May 31, 2008
    I get quite a number of emails each week. One of the frequent questions concerns pricing work done on a CNC router. I got an email yesterday morning which asked those same questions. I thought it worth posting here. I have posted my answers under his questions and would love to see a discussion here of other views...

    You asked so I'll answer. Keep in mind these are my opinions based on my way of doing business. Most of the industry thinks differently.

    I believe many in the sign industry are damaging the business severely with their pricing of the work done on the high tech tools they buy. I have found that my CNC router can do in mere hours what previously took me days to accomplish. It can do it all much more accurately too! My question to anyone who asks me is... does that make it worth less if you can do it faster and better? I would argue not.

    Pricing sandblasted sign work used to commonly be done by the square foot. Twenty years ago the selling price was well over a $100 per square foot in our neck of the woods. Now with the advent of the CNC routers we can achieve these same woodgrain patterns in HDU with a machine. It can be done automatically while we do something else. But the question to ask is WHY CHARGE LESS??? The process certainly got easier and faster but the sign is NOT worth less. With the precision the machine is capable of I would argue the sign is worth MORE!

    In our shop I like to do more with our router than just do signs similar to what I could do with a blaster in the old days. I like to add prismatic lettering, dome the face of the sign and add a subtle textured background in keeping with the theme of the sign... hopefully things that my 'competition' is not doing and doesn't want to take the time to learn. These features I can build into my signs give them extra value while not adding to the cost to produce.

    We only do dimensional work in our shop. Our prices START at $200 per square foot although I don't price them by the square foot publicly but rather quote a finished total price to the customer. As you can imagine our prices scare away a bunch of people. But I'd much rather do work for customers who appreciate the value of what we produce than simply buy from us because we are the cheapest. I don't want to do all the signs in town - only the best ones.

    To answer your questions...

    Is it normally priced by how much time the router takes to complete the sign - someone once told me $60/hr


    You just spent many 10's of thousands of dollars buying and installing a CNC router. Add in software and the many hours you will spend learning to operate the machine effectively. Hopefully you are proficient and skillful. Keep in mind the machine can do things up to FIVE TIMES FASTER than you could do them before by hand. If you CNC hourly rate is $60 you then are valuing your personal time at about $12 per hour in my view.

    The router takes up a fair amount of square feet on the floor too which needs to be covered - never mind the electricity it uses plus consumables like bits and general wear and tear on the machine. You'll want to upgrade that software every few years too.

    Is it normally priced by the size of the routered sign - read somewhere $40/sq ft.

    See my writing above... We used to get well over $100 per square foot for our sandblasted signs. I think we should be well over that now. I had less than $10,000 invested in a complete sandblasting rig... I have a LOT more than that into my CNC.

    How do you factor in these variables?

    Routering a 2D sign takes a certain amount of time


    You used to do everything with a jigsaw or bandsaw. Now you use a CNC to do it flawlessly and much faster. Does that make it worth less?? I think not.

    Is it normally priced by how much time the router takes to complete the sign - someone once told me $60/hr

    Considering the speed and precision you can now do the work I believe that you can charge much more per hour if you wish to price using this formula.

    Is it normally priced by the size of the routered sign - read somewhere $40/sq ft.

    This seems extremely low in my mind.

    Routering a 3D sign with 75% stepover takes more time Routering a 3D sign with 90% step over takes a lot more time

    How you build the sign and the detail you intend to incorporate into the finished sign should be figured into the ultimate cost. The way you intend to fabricate the sign effect the price.

    The sign industry and most other industries around us have gotten downright silly in their pricing. As computer programs and machines have come online the ob has gotten easier and faster without a doubt. Modern materials have done the same. But with these improvements have also come huge increases in the COST of doing business. A job that used to take five hours is now possible in one. The trouble is that most shops now only charge for one hour without taking into consideration the increased costs. While I would argue that the value of the product we sell has in fact gone up most shops instead CUT the value based on the time to produce alone.

    One friend of mine likes to do everything by hand. He designs and hand carves a sign. It takes him six hours to carve. Another friend of mine has a small router which can’t work nearly as fast as mine. His has stepper motors - mine has servos. Therefore let’s for the sake of this discussion say a routered three dimensional sign takes his machine two hours to make. On my router I can do that same sign in only an hour. Another sign maker friend buys the latest and greatest router on the market and is able to do this same sign in only forty minutes.

    If we price by the hour and we have the same shop rate the price of this sign is constantly going down - even though each successive sign maker has more money invested in tools and software than the last.

    It should not be that way for the sign is the same in each case and should be worth the same.

    Low pricing has ruined much of the sign industry making it very hard to generate profits except by sheer volume alone... not a business model I want to follow.

    -grampa dan
     
    Tags:
  2. Mosh

    Mosh Major Contributor

    5,809
    41
    48
    Oct 19, 2009
    Nerbaska
    I see your point but, since we started doing large quanity jobs I have made way more money than one-off custom stuff. We still do custom stuff for our regular customers, but big orders are where we are at. Ten years ago our biggest t-shirt order was 144, now 200 shirts is an average order. We have contracts with several national chains to produce banners and posters. Doing stuff on this scale, price is an issue.

    It is great knowing you have work lined up for 2-3 months out. I can turn our printers loose on them and head to the lake!
     
  3. Pat Whatley

    Pat Whatley Major Contributor

    8,592
    86
    48
    Sep 29, 2003
    Wetumpka, AL
    At the same time Dan the type of work you do might command $200 psf and be well worth the money. You are selling people an image. The type of work I see most often is done by people with no capacity for creative thought...the $60 psf prices they charge are about what the finished sign is worth.

    I do, however, fully agree with the ridiculous habit in this industry of buying tens of thousands of dollars in equipment then selling at a lower price.


    (the fact that Mosh was the first person to respond is absolutely hilarious, too!)
     
  4. J Hill Designs

    J Hill Designs Major Contributor

    15,549
    16
    0
    Sep 24, 2004
    :goodpost: Dan - I still try to get $150 psf for sandblasted cedar signs here...usually get talked down to around $125, but still...

    Just learning the 3d router setup, so no profitability there yet...still used as a 2d for shapes, letters, etc...
     
  5. Ponto

    Ponto Active Member

    650
    0
    0
    Nov 24, 2008
    You comments make sense but I thought that any business would incorporate this mentality... IT JUST MAKES SENSE!! However, in my view the industry has become saturated with less than professional businesslike minded individuals who compete to see how deep they are able to slash their own throats...

    JP
     
  6. Vinylman

    Vinylman Very Active Member

    1,057
    6
    38
    Aug 15, 2005
    Berlin Center, Ohio
    This is the type of observable brilliance that far too many of the people in the sign business fail to recognize.

    As a direct result we continue to watch, as our profit margins are eroded. Why are they being eroded? Because so many people in this industry, and many others, fail to take into consideration the continuing costs of their equipment, as well as the ongoing costs of repairs and just plain overhead. If any shop owner does not factor int their daily costs EVERY single cost from insurances to sweeping compound they are doing a disservice to themselves, their families and the industry as a whole.


    GREAT POST Grandpa Dan Thank You!
     
  7. grampa dan

    grampa dan Member

    108
    0
    0
    May 31, 2008
    While I speak of CNC routing above please read and think of the post in the terms that apply to your shop and the work you do.

    Back 35 years ago I painted truck doors by hand with a brush. My patterns were all drawn by hand. (I don't miss those days one bit) Now vehicle doors are done primarily with vinyl or a digital print. Its the same advertising and now it is easier than ever to do far better if we apply good design. But accounting for inflation, the doors of that truck are only worth only a small fraction of what they once were.

    WHY???

    Because modern tools and materials have made the task easier and quicker. Those with little business sense have dropped the price by placing the value of our product on time and materials instead of its value to the customer.

    Investing in modern tools should make us more money not less!

    -grampa dan
     
  8. Ponto

    Ponto Active Member

    650
    0
    0
    Nov 24, 2008
    Your lament is one I have observed for years and I contend that with the advent of the digital age the craftsmenship in our industry has lessened a great degree... the tools are used as a crutch to enable a greater degree of lesser talents to participate!!!

    JP
     
  9. SignManiac

    SignManiac Major Contributor

    8,494
    37
    48
    Mar 25, 2006
    Mars Florida
    Pricing has been a personal crusade of mine for the past twenty five years of the thirty six years I've been in this business. I've finally given up trying to educate and help others realize the value of what they create.

    The vast majority of work being produced today is nothing more than a commodity and low price is what it's all about. It's only going to get worse but......there are still a handful of clients who are intelligent enough to recognize the value in a superior image and are willing to pay for it. They have higher standards and recognize the value of the image they project. I have that same pride in my work. It is a reflection of my reputation I have worked a lifetime creating. I don't mind paying for quality and neither do the majority of my clientele. My price is my price and you get what you pay for in life. That simple.

    I'll continue to specialize in that market and client base and let the rest of the bottom feeders fight it out over the garbage that manifest itself as visual vomit that has plagued the landscapes of what should in theory be a beautiful world. It's fast becoming an ugly world.

    Just imagine if signs could be viewed as a visual enhancement to our communities instead of the pollution that it is? Unfortunately I don't ever see that happening in my lifetime. It would take legislation at the government level to change things now. The sign industry is not regulated in regard to design and until that changes we are doomed to have our eyes bleed at the likes of the **** I see daily everywhere around me.

    Well at least I can smile when I pass one of my signs knowing I did something that would please others when they see one of my creations! I can sleep well at night knowing I'm doing my best. And my best can get even better, at least that's what I strive for every day I go to work.
     
  10. signage

    signage Major Contributor

    9,517
    75
    48
    Oct 5, 2005
    Penn
    If making thing faster and more economical was how everything was priced then everything else that we buy should also be going down! Look the car manufacturer produce more cars per hour now with less man power than they used to but the price isn't going down!
     
  11. BobM

    BobM Very Active Member

    2,146
    44
    48
    May 31, 2008
    Cape Cod
    Eddie McLoud, an old time New England sign painter quoted $1,200 (could have more or less but it was three times what the going rate was at the time)to hand paint a golf ball on a new truck in 1966. He quoted so high because the drawing they supplied was hand drawn and perfect in every way and demension. He didn't get the job.

    He apologized to the truck body manufacturer for being so high thinking that's why he didn't get the job. They told him he didn't get the job because the customer didn't think he could do a very good job for only $1,200 when they paid the advertising company $2,500 for the drawing.

    There's a great lesson there and Grampa Dan is trying to re-teach it (if re-teach is a word).
     
  12. miltondavis

    miltondavis Member

    137
    0
    16
    Aug 24, 2009
    san rafael, ca
    :goodpost:
     
  13. astro8

    astro8 Active Member

    778
    17
    18
    May 23, 2009
    Sydney, Australia
    We don't give an hourly rate for routing. If it's straight out supplying a shopfitter, say with cut letters, folded dibond with push through letters, bulkheads etc, we'll quote a set price but it will work out anywhere from $200 up to $400 an hour depending on complexity.

    Our Tekcel gets used everyday mainly on Dibond, mdf, aluminium and acrylic in our daily sign production...I'd say hourly rate there would work out anywhere from $200 up to $1000.

    I had a job last week to cut a stencil for a tiling company out of 3 sheets of 10 mm polystyrene foam...we we're flat out, i didn't want it, so charged them...$1500...it took 2 hours with set up...and it's not like there aren't any cnc routers in my area, we're in 'SignCity'...there's at least 5 that I know of within a few hundred feet of me right now
     
  14. SignManiac

    SignManiac Major Contributor

    8,494
    37
    48
    Mar 25, 2006
    Mars Florida
    If you don't ask, you will never get it. If they balk at your price, they probably aren't your target market. You can't please everybody, only please the one's that recognize what you offer that others don't.
     
  15. mark in tx

    mark in tx Very Active Member

    2,081
    0
    36
    Oct 25, 2005
    Harker Heights, Texas
    Grampa Dan, you are so right. I can't figure out how a sign shop owner with maybe 1-20 employees figures the Wal-Mart business model is the way to go. But they do it over and over again.

    You know, I guess when they figure they are only selling products and specifications, they only compete on price.

    But the people that have figured out they are selling their knowledge and techniques seem to be the ones that can command the prices they deserve.
     
Loading...

Share This Page

 


Loading...