Shop Rate and how to apply it

[ThePrinter]

So I understand the idea of the hourly shop rate, but where I don't is when your shop is diversified in the services you offer ex. (Signs, Screen Printing, Embroidery, Engraving, ETC.)

So if you offer 5 different services would you divide your hourly shop rate by 5, then use that in your pricing model or do you just use the hourly shop rate straight up?

I hope this question makes sense.

 

[AKwrapguy]

So each thing or process take a different amount of time, resources, money and experience.
For example lets say a customer comes in and wants his US DOT numbers in non serif font, black gerber 220 at 2" copy. Now lets say a client comes in and wants window graphics for his office window, white gerber 220 serif font 1" copy multiple lines. By happenstance both jobs take up the exact same amount of material. Do you charge the same for both jobs? The answer is no, you charge more for the 1" job because it's harder to produce.

When I'm wrapping a vehicle it's $95 and hour. Let me fix that....If I have to touch a vehicle it's $95 and hour.

So you have to do a cost breakdown of the different services that you offer and find out how much it's costing you in time and materials. Look at your market and find out what other people are charging and try to be at a similar price if you can, you could be really underestimating and not just hurting yourself but also the industry.

 

[bannertime]

Just to kind of add on to what AK said. If there's a service that requires you to put a majority of your shop effort into it, then that service needs to be bringing in enough money to cover that hourly shop rate. If I can knock out 10 small orders in an hour, the total income needs to be equal to or greater than the shop rate. Obviously, if you've got multiple production workers, each person doesn't have to be bringing in the full shop rate, but all their combined labor should be bringing in equal to or greater than the rate. Same applies to different services.

If a service takes longer than another service, even if the materials may be cheaper, that service should technically be more expensive. Human labor shouldn't be cheap.

Your shop should be making that much per hour, or it should even out to that amount per hour if you have some slow periods.

 

[Gino]

 

[2B]

like the others have stated, each product has its own time / cost calculation and has to be treated differently and separately

Moreover, you have to take into account the possibility of an error and the cost for replacing the material.

example; running a CNC project on HDU has a higher replacement cost than plotter vinyl stuck to Cor-Plast, by default the CNC project will cost more
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[Gino]

Good grief, you guys are making this into a science. You're supposed to be professionals, so there's no need to add replacement costs of goofed up projects. It's on you if you screw something up. That's why you charge the prices you charge..... for professional craftsmanship, not do it til ya get it right.

You basically figure out what all your overhead like insurances, utilities, mortgages/rent, a percentage of mistakes (not replacement costs), supplies, salaries, and miscellaneous & unseen possibilities and that becomes what you need an hour. Whether you are running a job that takes 4 hours on a screen press or 1/2 hour on the flatbed or 6 hours on the electric table, you charge out your hourly rate. Some things will yield better results than others and that's when you decide to keep certain areas in your shop or not. If you farm-out things, then that goes into your cost(s) of doing that particular project.

Now, if you find yourself doing a little of this and a little of that, then you need to either insert a shop minimum or drop that kinda work.

You wanna strive to become an assembly line and constantly banging this out or that, be it channel letters or digital prints.... and have multiple jobs going at once. When you hear all of your printers running and all your people are busy and your installer is begging for some time off, then you know that humming means you are making money.

If you get everything that comes in the door or over the internet, then your prices are too cheap. Time to raise them and trim off some more dead weight.

Work smart.