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Shop Rate

Discussion in 'Sales, Marketing, Pricing Etc.' started by Locals Find!, Oct 24, 2010.

  1. Locals Find!

    Locals Find! Very Active Member

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    Would like to say thank you to some of the Senior sign people on here.

    In all the shops I worked in a Shop Rate was never discussed. We had some formulas for pricing but a shop rate was never discussed.

    I hadn't actually sat down and calculated one for our business. While we have been surviving and growing. I had never realized we were losing money here and there by not having a shop rate till recently.

    So I wanted to give you guys a Sincere Thank You. :U Rock:
     
    Tags:
  2. Mark Smith

    Mark Smith Member

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    High Five! That's the foundation of a solid sign business, IMHO.

    :goodpost:
     
  3. Pat Whatley

    Pat Whatley Major Contributor

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    Completely changed my perspective of this business when I did a really complete job cost analysis and realized that the "standard" $60 an hour shop rate wasn't gonna work.
     
  4. Gino

    Gino Premium Subscriber

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    While shop rate usually refers to a shop producing goods all day long…. how does that fit into your needs being a broker ??

    Do you have a store front…… a fabrication facility…. a staff or full-time employee……. shop trucks or business license….. anything other than a software package and a die-cutting machine ?? I know many others here don’t have these thing, but they haven’t made the statements that they are primarily ‘brokers’ either.

    I could be wrong, but if you were to guess, how much of your stuff is third party…. Honestly ??

    I’ve always had a bad taste in my mouth for someone who takes a wholesale item for the vast majority of their work and passes it off as made–in-house and then competes with other local shops on just about everything. There are a few guys here locally that did that and only one has remained in business, but just barely. Of course, many people today are only barely in business.

    I guess maybe my mind is clouded by the term ‘broker’. I explained that to you before, I think. Just wish you could turn out to be different and prove me wrong… or correct my way of thinking. If you’d li9ke to do it off the boards, I’ll be happy to talk privately. Your call......:toasting:










    :thankyou:

     
  5. binki

    binki Premium Subscriber

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    The PRC
    I think you need more dynamic pricing that a standard per hour or per day rate. Different customers have different price points. Your own volume also may determine your price. If you are fully booked then you can raise your rates on everyone or cut less profitable customers or jobs. At the same time upselling or add ons can help the margin.

    So the simple solution is $500/hr gets you $1 Million/yr. Strive for that but put profit margin into the mix as well.
     
  6. Locals Find!

    Locals Find! Very Active Member

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    Gino, I have licenses just like everyone else. I have to keep my software updated. I don't just use one program. Along, with my professional designations, Trade Memberships, sales staff, overhead, the office doesn't come free.

    Yes, we are primarily a broker. I don't see how that is such a big deal. I realistically am a sales staff for a number of businesses. I am no different then hiring an outside firm to bring in a group of talented salesman to market your product.Since, I have a background in Embroidery, Screen Printing, Promotional Products, Graphic Design, Offset Printing, Signs, and Marketing. I bring a lot to the table.

    We are more than just a simple sign shop. We are a Full Service Marketing Agency. Just because I use the Term Broker on here shouldn't detract from our image.

    No, I don't have the $50,000 printer and $10,000 laminator. I don't need to. There are plenty of people out there with them struggling to get by that don't know jack about sales. However, they do know how to produce a quality product at a honest, fair price.

    We simply fill a need in the Marketplace. We spend the majority of our money in Marketing. Probably close if not more than your overhead for your shop costs to run a year. We bring hundreds of customers to the table for our strategic partners we work with.

    So yes, we do produce a "product" we produce work for a multitude of businesses Large and Small. Who might otherwise not be able to keep there doors open without us bringing 20-50% of there gross sales to them.
     
  7. ova

    ova Member

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    We have a couple of Advertising Companies that deal wholesale with us. Some of their customers have come into our shop to purchase personal items not related to the company they work for. When they see products here that their company bought thru the Advertising Company, they can't beleive the mark up. They're not shy about throwing out pricing.

    We charge retail and wholesale according to our shop rate. Customers have told us their company has paid over 200% higher than what we charge retail. I know it's none of my business what the Advertising company charges the customer, but sometimes I wonder if we aren't charging enough retail.

    I also blame the purchasing department of Companies. We've visited them, showed our product, and they know we exist. But when it comes time to purchase, they take the easy way out. They deal with the Advertising Company so they don't have to go through the leg work of design, proof, pick up and delivery. This is all done through the broker. Seems like they don't care about saving a buck.


    Since we've expanded our business, our next step is to hire a full time sales person to do more of what we couldn't.
     
  8. Craig Sjoquist

    Craig Sjoquist Major Contributor

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    Sees no problem of you being a broker, could use a good salesperson myself, in fact several people do give me strong leads and make money from it, but I do everything by hand so no big volume here.

    Shop hourly rate got destroyed when PCs and cutters hit the market about 1985, it is now starting to take hold again, but a lower rate ....example charging $50 per hour pre 1985 it would take 3 to 4 hours to do a simple 2 truck doors with some colors etc....my rate now is $100 per hour and no I'm not selling truck doors even though I'm better and bit faster with same.
     
  9. Locals Find!

    Locals Find! Very Active Member

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    A big reason I have most of my clients is I and my staff have spent years building relationships with these companies and the people in charge. Its not just about saving a buck. Its about remembering their birthdays, their kids birthdays, their anniversaries etc.. Also, taking them out for Golf or Lunch, and helping them out of Jam with referrals like who will give them the best deal on insurance, toner, new desks etc...

    That is a level that most sign shops can't compete on because, you have to be producing the products. You don't have the time to take off in the middle of a day for a Game of Golf or take a client out to lunch. We make it a habit to do at least 4 lunches with our clients a month along with buying them theater tickets etc...

    If you can find a good loyal salesperson. You will be doing well. One thing to keep in mind though most salespeople worth having are going to want base salaries, plus commission, health insurance, and an expense account.

    Its very hard to convince someone to work off commission only just selling signs. I know because I did it and starved for months. The money was too far between with the commissions most shops could afford to pay. You can't give someone much when you only have $100.00 of profit on a job to work with as a whole. That doesn't divide up too well.
     
  10. ova

    ova Member

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    In the summer I already golf at least two times a week. Sometimes three. Don't think I can get much more squeezed in.

    As far as the lunch and other stuff you mention, I think most of what you're saying is BS. Most Companies frown on employees ( especially purchasing agents) doing this kind of thing. When I was in Mangemnet for a Steel Company, you would get time off taking gratuity from a salesperson. This would also lead to probation with intent to discharge. Some Companies would see it as accepting a bribe. I know it happens everywhere, but doesn't make it right. If you are dealing with big companies or corporations, it will catch up to you.

    The shops you deal with should be putting out a good enough product so you won't have spend your profit sending someone to the Theater just so you can keep their business. Or instead of buying a customer, you should be a better salesperson.

    Dave
     
  11. night eagle

    night eagle Active Member

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    ive never really though about how to calculate a shop rate...anybody have any formulas they would like to share...

    mark galoob
    ps you can pm me privately if you dont want this info on the web
     
  12. Locals Find!

    Locals Find! Very Active Member

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    Dave, we are not buying customers. We are thanking them for being loyal. If a customer spends $20,000 a year with me. I think its only fair I buy him lunch, or a round of Golf or Theater tickets.

    How is this any different then the salesmen that sells you your equipment or service it giving you some free materials, or an extra hour of service at no charge??

    Most companies don't view it as a bride. Its done all the time its called relationship building. I take them out to lunch regardless of whether they are purchasing this month or not.

    Hell, a lot of big CEOs and such expect this kind of treatment. I have been doing this for well over ten years. I really don't think its going to "Catch Up" with me.

    At the end of the day you do what you have to do to keep your clients happy. You let them know you appreciate them and their business. That they are not just another sale for your quota at the end of the day.

    If you view your clients as just figures that is what will catch up with you in the end. No one wants to be treated like a dollar sign. They are people and deserve to be treated as such. If you continue treating them as dollar signs they won't be loyal to you they will come to someone like myself and my team because, we will have treated them better at the end of the day.

    "Price is only one part of making a sale and its the smallest part" - Jason E Jones
     
  13. ova

    ova Member

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    This will be my last post on this subject since you have your views on how to gather clients and I have mine on how to keep customers. This sort of becoming a pi$$ing match and I really don't have to go.

    I don't and have never said that I treat or see my customers as dollar signs. I give a good product for a fair price so I can support my emplooyees and family. When I see my customers on the street, at a store, at a sporting event, etc not one of them hesitate to say hello or How's things going at the shop. We are a small community in the Ohio Valley that knows someone who knows someone else. Our reputation speaks for itself.

    We donate to non profit organizations and help other foundations by giving them our time. Our customers know this. We don't have to give away free bees to make them happy.

    When the few brokers show up here, most of the time they are beating us down on prices even though we give them a ball park price list. They try to shove the wrong art work at us because they paid pennies to someone else to have it done. Even the format ( lanscape vs. portrait) is wrong for the layout. There is a difference between 2x3 and 3x2.

    Good luck at your business. We are doing fine here.

    Dave
     
  14. Gino

    Gino Premium Subscriber

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    Adtec………

    You ask questions that sound like someone is in the business about three weeks, then you come back with you’re wining and dining your clientele once a week. How in the world can you afford this if you have several good customers ?? I mean time-wise ?? If you have five top clients, you’re out 5 times a week, plus the opera and amusement parks. No wonder you don’t produce in-house… there’s no time….. :ROFLMAO:


    You might find it a neat little touch sending cards and gifts to all these people, but it’s like a large family…. when do you know when to stop sending Christmas presents ??

    I would consider myself imposing if I sent my top customers some of the things you just spoke about.

    Your database must be busting at the seams if you’re really doing this.

    Unfortunately, you’re out in the ‘Open Forums’ and I can’t go into the things I’d like to, but suffice it to say, we have means of doing these things, but not being as intrusive as you’re doing.

    If some salesperson sent me golfing or to the theater, I’d be hesitant to use his/her company. I for one… don’t like those tactics. As ova said…. many people view that as bribing or kickbacks and are frowned upon. There are actually laws against this sort of business and rules among various companies. Like I said, there are many other ways of showing your appreciation, but I don’t intend to let it slip out on the ‘open forums’. More often than not, a good employee of the company you’re giving kissing up to would rather look good to his company president as getting deals for the company than out partying…. especially in this economy.
    So………. you can’t compute a shop rate for 10 years, but you can find the money to go party with some of your customers round the clock. I’d say you don’t need to change a thing. If it ain’t broke, don’t fix it.

    Actually, you sound like one of the big pharmaceutical companies out there pounding the streets for sales buying lunches and all the free giveaways with their little prancing salesgirls. I see this everyday next door at the doctor's office. Most of the crap gets thrown right into the dumpster, but you're right.... everyday there's a different salesperson giving free samples, lunches and novelty chit to them. Some days it happens twice a day. :doh:



    Guess you'll have to rely on giveaways rather than quality, service or price. Sure glad I don't have your problem. :thumb:
     
  15. J Hill Designs

    J Hill Designs Major Contributor

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    Gino - once again, you have to be a logged member to view this forum section...it's not completely open
     
  16. Gino

    Gino Premium Subscriber

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    Yes, I'm starting to get the drift of that concept. However, there are still quite a few eyes that are here 100% free that I might not care to have see this. I guess I'm just practicing for that day when we're all professionals here and I know it. Until then, I guess I just have to be hard-headed and do it the way I know best. Right or wrong..... I'm doing it this way for now.

    But thanks for the remainder and headsup :thumb:
     
  17. Locals Find!

    Locals Find! Very Active Member

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    Gino, you need to learn to read. I said I take out 4 people a month for lunches. I have been doing that for 10 years. I have done that in every company I have ever done sales. Mine and others.

    I am sorry in my Market its not frowned upon to send someone a nice thank you for your business gift after a sale, or take them out to lunch and being friends with them.

    I don't know of any company here that considers that a bribe. I don't talk business during lunch unless, its a formal meeting. Then usually its a power lunch at there desk or with a group from the office squeezing in our meeting during the day, or a Chamber of Commerce Lunch.

    I have told you before, its public knowledge that I haven't been doing the sign business for 10 years. I have been doing it about 5 years total. I have been working for myself for 10 months.

    Onto the cards and gifts. You don't have to send a card or give a gift to send someone a nice Email or Facebook post on their Birthday wishing them a Happy Birthday.

    So, I don't see how anyone anywhere could frown on that. If they do they really need to rethink there people skills.

    I don't bring strangers swag. I bring clients gifts every now and again as a way of saying Thank You. No strings attached. Many of these people are now my friends. We Golf, we fish, we bowl, we have dinner with our wives.

    Sometimes, I might just throw them a discount or some free product in with their order, or rush a job at no extra cost.

    My reputation in my Market speaks for itself.
     
  18. Locals Find!

    Locals Find! Very Active Member

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    Just wanted to point out one last thing and then I am done with this Thread.

    How can saying Thanks to someone like Gino and others for assistance, get twisted around and somehow put me and others down for our business practices? Which are neither immoral or illegal anywhere, or damaging to any industry.

    Just, take the Gratitude in the spirit it was given next time. As Gratitude.
     
  19. weaselboogie

    weaselboogie Very Active Member

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    I like to buy my clients with steak dinners and hookers.
     
  20. SignManiac

    SignManiac Major Contributor

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    Hey Weasel, I need some business cards printed. You wanna hook me up with some of your gratitude :))))
     
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