Project Management - Pricing

[Texas_Signmaker]

I posted a more detailed thread in the premium category because I didn't want to share everything with the whole internet. But I'm curious as to what you charge, or what is standard for project management?

What I'm doing is reaching out to local sign companies, providing design proofs, getting insurance docs, and following up on them manufacturing and installing the signs.

If they are doing manufacturing and installation do you mark their finial bill up a certain percent? What percent do you charge? Are you charging hourly?

Feel free to PM if you'd rather not post publicly.

 

[Christian @ 2CT Media]

We always mark up, if not you just paid to do their job. All cash that flows is taxable so it's not smart to not mark up.

The markup ranges based on other needs and services required.

 

[equippaint]

Im lost here Tex. Wouldn't the sign company generally be the whole deal including being the PM? It sounds more like brokering but Im a big loser and cant see premium stuff.

 

[Texas_Signmaker]

I work with a national company that needs signs. They give me 20 or 30 locations all around the U.S. and say get em done.

I research sign companies in the local area, I do the designs, send them a scope of work layout and they bid on the job. I pick someone to do the job, get insurance docs and make sure the job is done right. I deal with any issues that come up.

The national company is buying the signs from me and paying me for the signs. I'm subbing out the physical work to a local sign shop. The national company does not have interaction with local sign shops, just me.

What I'm asking is what percent do you markup the other sign shop's invoice? Normally I'm at 100% on things but on this it seems to steep. And I'm talking about decent size jobs, each location knocks on the door of 5 figures.

 

[Evan Gillette]

I would venture to say this is going to take some dialing in. You are (from what I have seen on here) a very systematic person, so I would suggest treating the situation accordingly with a fact based approach.
1) Sit down and write out the process map as you see it happening in your head.
2) Put an estimated time on every step that involve your (or your employees in the future) involvement.
3) Add em' up and use your shop rate or an adjusted rate to see what you need to get out of the job to break even.
4) Add as much on top as you feel is suitable for the type of work
5) Compare your "costs and fees" (3 and 4) to the average total job cost and see how it compares in a "percent markup"
6) For the first three jobs, keep detailed records and analyze as much as you can to adjust your "process map" to actual conditions

After that its just a matter of making every job a challenge to put time in only where it counts, just like your box truck wraps, you can always shave minutes off here and there. With the extra margin you can keep the change, offer lower prices for a competitive edge, or build your shop and clients but that s up to you.

I don't personally sub much out, and its usually a different discipline, but when I do I try to have my markup directly reflect how much time, effort, and overhead I have into the product being produced. There is no such thing as "totally hands off" and if you think so you are only cheating yourself.

 

[CanuckSigns]

I work with a national company that needs signs. They give me 20 or 30 locations all around the U.S. and say get em done.

I research sign companies in the local area, I do the designs, send them a scope of work layout and they bid on the job. I pick someone to do the job, get insurance docs and make sure the job is done right. I deal with any issues that come up.

The national company is buying the signs from me and paying me for the signs. I'm subbing out the physical work to a local sign shop. The national company does not have interaction with local sign shops, just me.

What I'm asking is what percent do you markup the other sign shop's invoice? Normally I'm at 100% on things but on this it seems to steep. And I'm talking about decent size jobs, each location knocks on the door of 5 figures.

Sounds like you are taking on 100% of the liability in the event something goes wrong, Plus you are spending a lot of time finding the appropriate vendor etc. I don't think 100% is out of line

 

[Texas_Signmaker]

Yes, I am taking responsibility if something goes wrong. (To an extent)

The client has had trouble if they ordered something from a sign company and they needed to button something up at the end they would never do it and stop responding. I told them if I pick a company that doesn't finish something or something needs attention that I will handle it. (Be that finding someone else to finish or going personally and taking care of whatever they are concerned about)

So I do need to factor those the variables in and charge for the added exposure.

That said it's not blanket coverage and I discussed with them what I'll cover and what I'd have to pass on to them

 

[Gino]

You do realize, most of the chance taking is..... if something goes wrong ?? Should something go wrong, you now need to get new permits and licensing for wherever something went wrong and hopefully there won't be too many at a time. You'll also hafta replace whatever materials went bad or got fouled up. If something goes drastically wrong, it could cost you dearly, so you should be prepared.

Therefore, there are two ways to deal with this possibility.

• You add a SF item to each and every quote or just hope nothing goes wrong.

It's sorta like the person who either calculates each and every bolt, paper towels used or the person who just wings it.​

 

[Texas_Signmaker]

You do realize, most of the chance taking is..... if something goes wrong ?? Should something go wrong, you now need to get new permits and licensing for wherever something went wrong and hopefully there won't be too many at a time. You'll also hafta replace whatever materials went bad or got fouled up. If something goes drastically wrong, it could cost you dearly, so you should be prepared.

Therefore, there are two ways to deal with this possibility.

• You add a SF item to each and every quote or just hope nothing goes wrong.

It's sorta like the person who either calculates each and every bolt, paper towels used or the person who just wings it.​

Yes I understand. I know there is going to be a time that something is going to go wrong, and I will plan for that with my pricing.

I'm not the one that prices nuts and bolt and paper towel sheets, my pricing is mid to upper tier and I don't have to worry about things that small.

I had a boss that worried about every tiny little thing and making sure he charged everything accordingly. It was annoying as hell and I would just get a number quickly. 9 times out of 10 I would be higher and get the job and everything was fine. MAYBE 1 of out 10 there would be something I forgot to consider and 'could of' got more $$. My 9 of 10 more than made up for that one I might of missed.

 

[rossmosh]

Typically it's a 60/40 markup on these types of projects. Higher cost projects, the split can favor the mfg more than the broker and shift to something like 70/30.

Almost every time I lower my margin thinking I'm charging an unfair amount, I run into a problem which results in aggravation.

 

[unclebun]

All I can say is make sure you pay your subs. We did a perforated window wrap on a regular basis for a large optical chain, typically an ad for a major brand of sunglasses. Then one time the request for the job came from a different broker. We did the job, submitted the bill. No response. Resubmitted. They called during the night, left a message on the voicemail with a credit card number. Tried to run the number and it was declined. Now I get no response at all and the number is disconnected.

 

[TimToad]

Im lost here Tex. Wouldn't the sign company generally be the whole deal including being the PM? It sounds more like brokering but Im a big loser and cant see premium stuff.

Sure sounds like brokering to me as well. National Company A asks Company B to produce signs and install them across the country. Company B hires Companies C, D, E, F, G, H, I, etc. to actually produce the signs, assume liability for the signs, install the signs, etc...

Who ultimately is accountable to who?

What if the national company isn't happy with the end product? Who has to eat it and redo the work until its accepted?

Sounds like the Uberization of the sign industry.

Big national company gets to just sit back behind the cloak of distancing itself from the physical requirements of doing the work so it can focus on sales and locking up corporate chains, then find smaller fish to do all their localized leg work, production, installation, etc... What happens when a sub-vendor fails on a project, whose neck is in the wringer for the results?

When I see "national company" mentioned with that many locations, I'm struggling with how they don't already have either an inhouse design department, or ad agency providing most the branding materials for consistency and quality sake.

 

[equippaint]

and lien releases from all contractors.... personally, I wouldn't want to mess with it. If you had a couple of subs with past experience that could do it all or if it was close to home where you could check up on things and take over if needed than maybe. It will probably work out fine but the risk isn't worth it when there's plenty of other business to be had. It takes 1 lawsuit to wipe away the profits plus you have to contend with various zoning/permitting issues. It's a lot to contend with and there are numerous jackleg contractors out there.
I still think you should keep it time and materials rather than a lump sum markup. Markup the materials/install then charge whatever for all of the time you will put into each project.

 

[Texas_Signmaker]

Typically it's a 60/40 markup on these types of projects. Higher cost projects, the split can favor the mfg more than the broker and shift to something like 70/30.

Almost every time I lower my margin thinking I'm charging an unfair amount, I run into a problem which results in aggravation.

Thank you. I was leaning towards this.


Side note: I mostly do installs for other sign companies as a sub so I'm familiar with this end of the business (just not the pricing). One time I installed a storefront wrap and the sign company included the customer's bill (accidentally I guess). They charged retail for the vinyl and exactly doubled my install fee.

 

[Gino]

You say you do lotsa installs for other sign companies.

• How many do you turn down ??
• How many do you land ??
• How many do you not hear back from ??
• How many just yank your chain ??
• how many are hard to deal with ??

 

[Johnny Best]

Are you the one who has to do the site surveys on the locations so you know what has to be made and by city codes?
I think you could make some good money with this endeavor. Are you getting the signs fabricated and then shipping them to the sign companies to install? Or having them fabricate them?
The 100% markup on the sign and then 60/40 for install seems to be the way to go because it is going to be a lot of work and coordination on your part Good luck and be optimistic.

 

[shoresigns]

As others have implied, I think the biggest factor is that you're fully managing the project and taking on all the risk. Think of it like betting, where you get to estimate the risk and choose the odds via your markup.

If we're finding new vendors for the job, that's high risk and 100% markup (cost x 2) is justified and typical, so we don't lose our shirts if the whole job goes sideways. If we're using a vendor we know is reliable, we might feel comfortable with 70% (cost x 1.7). If we're in a long-term relationship with the client and the vendor and we're pretty confident it'll be smooth sailing, we sometimes go as low as 50% (cost x 1.5).

 

[Texas_Signmaker]

As others have implied, I think the biggest factor is that you're fully managing the project and taking on all the risk. Think of it like betting, where you get to estimate the risk and choose the odds via your markup.

If we're finding new vendors for the job, that's high risk and 100% markup (cost x 2) is justified and typical, so we don't lose our shirts if the whole job goes sideways. If we're using a vendor we know is reliable, we might feel comfortable with 70% (cost x 1.7). If we're in a long-term relationship with the client and the vendor and we're pretty confident it'll be smooth sailing, we sometimes go as low as 50% (cost x 1.5).

Thanks, I appreciate the insight. Yes it's a bit of a gamble. The projects I'm working on are rather large, and really only the larger full-service sign shops could handle it... so I'm hoping my risk will be tolerable but I'm pricing it so I can feel comfortable.

I am doing a lot of the work. I want to make this process as easy and as seamless for the client as possible. I setup a system last night so they can track the various stages that each project is in (with a colored progress bar) that includes notes, links to each location's design layouts and bid/invoices, and all the jobs are visible on one screen. Everything is synced in real-time online and anyone who needs access on their end can see where all the jobs are at from a computer or smartphone and leave comments or notes.