SignCraft Pricing Guide...Accurate?

[TimToad]

I guess you missed my follow-up post addressing that price but how am I losing money? Leaving money on the table? Probably. Losing money? I thought I was making $84.

I thought about my pricing some more and decided to keep it the same for now.

You may not be "losing" money on your outsourced banners on a strict cost/expense basis, but if that's the same price you charge for banners done in house on your own equipment with overhead factored in, you probably are. It's also passing the savings you receive along to the customers while undermining the intrinsic value of the advertising being provided argument, which is the entire point of the direction the discussion has taken.

I also don't subscribe to the idea of lower than market pricing for "beginning" businesses. If a five star restaurant opens in your neighborhood, is the menu half price for the first couple years?

If you've got some experience in the trade and you've made the investment in either buying an existing business, started from scratch, invested in equipment, help and workspace, from day one your pricing should reflect the results of your overhead calculations and the local variables in place, which were hopefully researched and quantified in your business plan. If you are a true beginner with literally no experience and the work quality reflects that status, then maybe one's prices should reflect that inexperience.

Here's an example of the risk of undervaluing our pricing regardless of when we start our business. When my wife and I started our B&B in 2004 another new one was opening about the same time in the area with a similar approach and size. We both became members of our statewide bed and breakfast association and befriended each other. The other B&B didn't have as solid of a business plan as we did and of their six rooms, two were under priced by a good 20-25% on the rates. Her belief was that she needed to do that to build her business. We and others questioned it and hoped to convince her that it would do a couple things.

First, it would give the impression to those considering her place that those two rooms were inferior to her other rooms, which they weren't and everyone got the same excellent breakfast and amenities she offered everyone else. Another major effect was that once something was under priced to begin with, it becomes very difficult to play "catch up" and raise the pricing quickly without guests noticing it. The other major effect was that it artificially suppressed the rates the rest of us could charge for similar experiences.

 

[Texas_Signmaker]

You may not be "losing" money on your outsourced banners on a strict cost/expense basis, but if that's the same price you charge for banners done in house on your own equipment with overhead factored in, you probably are. It's also passing the savings you receive along to the customers while undermining the intrinsic value of the advertising being provided argument, which is the entire point of the direction the discussion has taken.

I also don't subscribe to the idea of lower than market pricing for "beginning" businesses. If a five star restaurant opens in your neighborhood, is the menu half price for the first couple years?

If you've got some experience in the trade and you've made the investment in either buying an existing business, started from scratch, invested in equipment, help and workspace, from day one your pricing should reflect the results of your overhead calculations and the local variables in place, which were hopefully researched and quantified in your business plan. If you are a true beginner with literally no experience and the work quality reflects that status, then maybe one's prices should reflect that inexperience.

Here's an example of the risk of undervaluing our pricing regardless of when we start our business. When my wife and I started our B&B in 2004 another new one was opening about the same time in the area with a similar approach and size. We both became members of our statewide bed and breakfast association and befriended each other. The other B&B didn't have as solid of a business plan as we did and of their six rooms, two were under priced by a good 20-25% on the rates. Her belief was that she needed to do that to build her business. We and others questioned it and hoped to convince her that it would do a couple things.

First, it would give the impression to those considering her place that those two rooms were inferior to her other rooms, which they weren't and everyone got the same excellent breakfast and amenities she offered everyone else. Another major effect was that once something was under priced to begin with, it becomes very difficult to play "catch up" and raise the pricing quickly without guests noticing it. The other major effect was that it artificially suppressed the rates the rest of us could charge for similar experiences.

Your right.. if I made these in house I would be loosing $$. Not worth the time and labor and equipment to do it. I don't have a printer and keep differing purchasing one because of Signs365 and me not having enough time myself to run a printer...or enough demand to hire someone to use the printer... I don't think my situation is average in the sign world...but I'm not the only one in town selling banners at $4/sq ft.

 

[CanuckSigns]

Your right.. if I made these in house I would be loosing $$. Not worth the time and labor and equipment to do it. I don't have a printer and keep differing purchasing one because of Signs365 and me not having enough time myself to run a printer...or enough demand to hire someone to use the printer... I don't think my situation is average in the sign world...but I'm not the only one in town selling banners at $4/sq ft.

So if you ever do decide to buy a printer and make banners in house how are you going to explain to a client who has gotten a banner from you before that the price just doubled for the same product?

 

[Texas_Signmaker]

So if you ever do decide to buy a printer and make banners in house how are you going to explain to a client who has gotten a banner from you before that the price just doubled for the same product?

I only have time for so many "what ifs" to worry about... Customer reaction to a possible change in future banner pricing isn't one of them.

 

[TimToad]

I only have time for so many "what ifs" to worry about... Customer reaction to a possible change in future banner pricing isn't one of them.

That's a perfectly self-centered (I don't mean that in a bad way) response for YOUR given circumstances, but it ignores the point about our products having an intrinsic advertising value of their own that supersedes what you pay for them through a third party and the need for some consistency among you and your local colleagues. Or what effect your approach has on the other sign companies in your area and the perception it can create for them if your prices are compared to theirs by customers. Its like a gigantic thumb in the eye of your fellow signmakers to have you be that far below the average going rate for the area.

Let's say there are 10 sign companies in your market area and 7 or 8 of them charge $7-8 per square foot for banners because they have invested in a shop, equipment and labor to do things inhouse and that's been the going rate for many years and is adjusted upward with inflation, etc.

Along comes the outlier in the bunch and if enough customers call around and see that most are at a higher level than you, a couple things can happen. First, you could be viewed as offering inferior products or service which could create some unintended consequences for your strategy. Second, it could cause distrust of our trade because there isn't much consistency between the various shops who most would assume test or research the going rates for what they do.

Call a licensed plumber, electrician, auto repair, etc. and you'll find not nearly as much variation in their pricing structures or hourly rates as in our craft.

 

[Texas_Signmaker]

That's a perfectly self-centered (I don't mean that in a bad way) response for YOUR given circumstances, but it ignores the point about our products having an intrinsic advertising value of their own that supersedes what you pay for them through a third party and the need for some consistency among you and your local colleagues. Or what effect your approach has on the other sign companies in your area and the perception it can create for them if your prices are compared to theirs by customers. Its like a gigantic thumb in the eye of your fellow signmakers to have you be that far below the average going rate for the area.

Let's say there are 10 sign companies in your market area and 7 or 8 of them charge $7-8 per square foot for banners because they have invested in a shop, equipment and labor to do things inhouse and that's been the going rate for many years and is adjusted upward with inflation, etc.

Along comes the outlier in the bunch and if enough customers call around and see that most are at a higher level than you, a couple things can happen. First, you could be viewed as offering inferior products or service which could create some unintended consequences for your strategy. Second, it could cause distrust of our trade because there isn't much consistency between the various shops who most would assume test or research the going rates for what they do.

Call a licensed plumber, electrician, auto repair, etc. and you'll find not nearly as much variation in their pricing structures or hourly rates as in our craft.

They are cheap banners that I'm not putting my talent, heart and soul in... I view them as cheap disposable advertising. If a big shop with lots of overhead loses money at anything less than $8 a square foot, maybe they shouldn't be wasting their time with banners.

 

[TimToad]

They are cheap banners that I'm not putting my talent, heart and soul in... I view them as cheap disposable advertising. If a big shop with lots of overhead loses money at anything less than $8 a square foot, maybe they shouldn't be wasting their time with banners.

Keeping in line with the direction of the conversation, I don't remember qualifying the size of shop being a factor as much as the true value of the work. What if I had said that the 9 other shops were one or two person shops like yours but weren't working from home and without employees or equipment expenses to factor in?

Its not how YOU perceive the work or its worth, its what is the value of it in the eyes of the marketplace you are offering it in.

 

[TimToad]

Keeping in line with the direction of the conversation, I don't remember qualifying the size of shop being a factor as much as the true value of the work. What if I had said that the 9 other shops were one or two person shops like yours but weren't working from home and without employees or equipment expenses to factor in?

Its not how YOU perceive the work or its worth, its what is the value of it in the eyes of the marketplace you are offering it in.

 

[unclebun]

That didnt sound right. On my price list I sell a 4x8 for $126 and can buy it for $42..so I timesed it by 3... is that a 200% markup?

Try making a 4x8 yourself. Figure out what it really takes. Then think about what the sign actually does for the customer. Does it make it possible for them to sell a $1.5 million commercial property? What is the value of the sign to the customer. THAT is what the price of the sign should take into consideration. Back when I started making signs, we bought a 4x8 of MDO for about $15, used about $3 of paint on it, and spent maybe two hours of shop time on it, and the labor rate was $7/hr. So we had $32 in it. But the selling price started at $150 for a No Dumping sign and went up from there.

At the same time, gas was 75 cents a gallon or less, minimum wage was about $3.75 or thereabouts, and you could buy a new pickup truck for less than $4000.

Tell me that even tripling the price from Signs365 is the right price.

 

[Texas_Signmaker]

I think I'm just going to call around next week and survey the market.... See what the going rate is.

 

[unclebun]

I think I'm just going to call around next week and survey the market.... See what the going rate is.

While you're at it call a few car dealers and see if the price for a new F150 is less than it was in 1990.

 

[Texas_Signmaker]

While you're at it call a few car dealers and see if the price for a new F150 is less than it was in 1990.

And how does this relate to banners?

 

[signbrad]

Tim Toad makes some good points. And this is not meant as a slap in the face to Texas Signmaker or a comment on his particular situation, or that of anyone else.

The fact is, the single greatest problem in the sign industry today is depressed pricing. Closely followed by design work produced by people who may know their software well but are unschooled in basic layout principles.
It's true that sign hacks and snappers have always been in our midst. Sign artists who worked for peanuts. People who had no concept of and little interest in gaining business expertise. They did not want to bother with learning how to figure overhead or profit or arrive at a realistic hourly rate. And while many were untalented 'daubers,' some were good artists, but they were content to work for nothing more than a wage (often cash only) since they were doing something they loved. Many priced jobs based solely on what others charged. If they survived, it was often because they worked out of their garage, or out of their kit, and so had "no expenses." They undervalued their work and often made it appear, though not intentionally, that other shops were gouging. Luckily for the majority, they were few in number.

Today, the price peddlers appear to be in the majority, or so it seems sometimes. Sign work has become so undervalued it's practically sold by the pound.
Add to this the ease with which it is possible to enter the sign business—anybody with the cash for the equipment can open a "sign shop." The result is that large numbers of people with little business sense are selling signs. Many are not only unschooled in business matters but are untrained in design, consistently turning out sign work that is amateurish-looking and ineffective.

The real losers are those who buy sign work. When you flood the market with a product that is cheap but doesn't do its job very well, it undermines the value of signs as effective advertising.
The shop that shoots itself in the foot by peddling low price causes the entire industry to bleed.

....................

SignCraft's price guide is not meant to be "accurate" or "inaccurate." It is probably based on averages compiled from feedback and surveys of what shops are charging in various parts of the country. It is for comparison. It is FYI. But if your prices are consistently lower across the board, could this be a red flag?
The real question to ask is: are MY prices accurate? Are they based on a realistic assessment of my overhead & expenses plus profit, or am I pulling prices out of my you-know-what? I have worked at both types of shops. Guess which type always seemed to struggle financially.

I worked for one company that carefully tracked costs on all time and materials. For every job we filled out a form that listed everything, all the way down to the number of sheet metal screws and the half pints of paint thinner. All our hours for the day were divvied up for each job in quarter hour increments. A waste of time? Some employees thought so. But it was the fattest sign company I ever worked for. Each month, in the lunch room, a one-page newsletter was posted listing all the jobs done that month and profit percentages for each. The trucks were all in good shape. We always had tools we needed. The shop locations were kept clean. They even had an employee at my location that worked half days and his only job was cleaning—he swept floors, cleaned offices and even damp mopped the shop floor. When I left the company, it had accumulated locations in six cities and had 100 employees. The owner was not the original owner but had worked for the company's founder—as the accountant.

If you are guessing that this shop does not do yard sale signs and birthday banners, you're right. They pursued higher-dollar jobs. Not a model every tiny shop can follow.
Still, working for this company impressed me with the value of an accountant and the benefit of job-costing. And the importance of not peddling price as the product.

Brad in Kansas City

A book that helped me more than anything when I worked for myself was On the Business of Signs, by Bert Rosencrantz. I wish it was still in print. It was a basic primer on how to figure overhead and arrive at an hourly shop rate.

 

[Johnny Best]

Sign artists who worked for peanuts. People who had no concept of and little interest in gaining business expertise. They did not want to bother with learning how to figure overhead or profit or arrive at a realistic hourly rate. And while many were untalented 'daubers,' some were good artists, but they were content to work for nothing more than a wage (often cash only) since they were doing something they loved.

When I was young, guilty as charged. Great post signbrad, lot of memories.
Also worked at a shop like you did where they had a full time employee sweeping and cleaning up. The owner was a former accountant who knew how many screws went into cabinet retainers. Safety came first.

 

[Texas_Signmaker]

Well, when I call around next week if everyone is $6-$8 then I'll be at $5.99... no reason now to be way under market... but if market is $4 then I have no issue with it. BTW, banners represent about 1% of my yearly sales.

I tend to price larger jobs right in the middle most of the time. Based on feedback I get, sometimes I'm way high, sometimes way low.. but I like to be right in the middle. I think it's harder for people to shop larger order that require site visits (vs calling around for banner pricing) so I tend to price those higher and rely on my portfolio, reviews, turn-around time and charm to win those.

I stopped doing small order yard signs and magnetics because I had a high price on them. I hated the way people would sound disgusted when I told them my price on them and felt better just telling them we don't do those orders.

 

[Gino]

You get what you can get. If you demand high prices, you will get them. If you settle for pennies, that's what you get. How many people have bought a beer at a football or baseball game ?? Ever see those prices. It's a captive audience and they can get it. Go to a neighborhood bar and see what you pay. When I started drinking, a 20oz beer was 15 cents. Price of cigarettes, gasoline, fast food, whatever, was always reasonable. More computerized methods for making this stuff and the prices go up, but you people who settle for pennies are just in a race to the bottom.

Tex says he has no printing or finishing capabilities, so he has no investment. His goal is for maybe double or triple his investment. Ttoo shabby, but it's a hit ot miss, so going for volume, he lowballs and gets it. He therefore stays busy.

Me, I'd rather letter one truck for $2,000.00 then 10 trucks for $200.00...... or 5 for $400.00.

It's a business plan, which you stick to or go without one, and just race and round like a chicken with your head cut off.

 

[TimToad]

Tim Toad makes some good points. And this is not meant as a slap in the face to Texas Signmaker or a comment on his particular situation, or that of anyone else.

The fact is, the single greatest problem in the sign industry today is depressed pricing. Closely followed by design work produced by people who may know their software well but are unschooled in basic layout principles.
It's true that sign hacks and snappers have always been in our midst. Sign artists who worked for peanuts. People who had no concept of and little interest in gaining business expertise. They did not want to bother with learning how to figure overhead or profit or arrive at a realistic hourly rate. And while many were untalented 'daubers,' some were good artists, but they were content to work for nothing more than a wage (often cash only) since they were doing something they loved. Many priced jobs based solely on what others charged. If they survived, it was often because they worked out of their garage, or out of their kit, and so had "no expenses." They undervalued their work and often made it appear, though not intentionally, that other shops were gouging. Luckily for the majority, they were few in number.

Today, the price peddlers appear to be in the majority, or so it seems sometimes. Sign work has become so undervalued it's practically sold by the pound.
Add to this the ease with which it is possible to enter the sign business—anybody with the cash for the equipment can open a "sign shop." The result is that large numbers of people with little business sense are selling signs. Many are not only unschooled in business matters but are untrained in design, consistently turning out sign work that is amateurish-looking and ineffective.

The real losers are those who buy sign work. When you flood the market with a product that is cheap but doesn't do its job very well, it undermines the value of signs as effective advertising.
The shop that shoots itself in the foot by peddling low price causes the entire industry to bleed.

....................

SignCraft's price guide is not meant to be "accurate" or "inaccurate." It is probably based on averages compiled from feedback and surveys of what shops are charging in various parts of the country. It is for comparison. It is FYI. But if your prices are consistently lower across the board, could this be a red flag?
The real question to ask is: are MY prices accurate? Are they based on a realistic assessment of my overhead & expenses plus profit, or am I pulling prices out of my you-know-what? I have worked at both types of shops. Guess which type always seemed to struggle financially.

I worked for one company that carefully tracked costs on all time and materials. For every job we filled out a form that listed everything, all the way down to the number of sheet metal screws and the half pints of paint thinner. All our hours for the day were divvied up for each job in quarter hour increments. A waste of time? Some employees thought so. But it was the fattest sign company I ever worked for. Each month, in the lunch room, a one-page newsletter was posted listing all the jobs done that month and profit percentages for each. The trucks were all in good shape. We always had tools we needed. The shop locations were kept clean. They even had an employee at my location that worked half days and his only job was cleaning—he swept floors, cleaned offices and even damp mopped the shop floor. When I left the company, it had accumulated locations in six cities and had 100 employees. The owner was not the original owner but had worked for the company's founder—as the accountant.

If you are guessing that this shop does not do yard sale signs and birthday banners, you're right. They pursued higher-dollar jobs. Not a model every tiny shop can follow.
Still, working for this company impressed me with the value of an accountant and the benefit of job-costing. And the importance of not peddling price as the product.

Brad in Kansas City

A book that helped me more than anything when I worked for myself was On the Business of Signs, by Bert Rosencrantz. I wish it was still in print. It was a basic primer on how to figure overhead and arrive at an hourly shop rate.

Damn! Its folks like you that should be major influences on this site and throughout our industry. Experienced. Wise. Intelligent. Bravo my friend. Thanks for your dedication to the craft.

 

[HDvinyl]

People with middle school educations are too heavily involved. The shoe shiners and ditch diggers need to "stay in yo' lane".

Education is valued (in the business world) but any SMUCK can think they're educated.

Work out of your backyard or parents basement, but have all the answers.

"STAY IN YO' LANE"

 

[Active Sign]

This is great stuff! We are all much stronger together.

My shop is on the very edge of the sprawling Los Angeles County, a very saturated market. We have some of the most expensive real estate on earth and some of the worst poverty. The divide is huge but so close together. A very pretentious society.

Many small shops have killed sign pricing in this area. Quality products made the right way mean nothing to most here. It’s all about the price. $4.25sqft for banners is a struggle to get on the best of days. Would love to get $7-$8sqft. We have some migrant shops close by that sell for $2.50sqft. The old saying rings true “location, location, location”. It’s a struggle pay my guys a living wage.

We’ve been looking at moving to a better state where the people and businesses operate/think differently.

Would be nice to find a way to band together and bring up the area standard. Anybody have a convenient spreadsheet to enter overhead and come up with reasonable pricing?


Sent from my iPhone using Tapatalk

 

[HandsomeBob]

so the prices in the "official guide" are high.

you quote a lower price and when the clients say... wait for it..."give me a discount" you can pull out the guide and say "see, here is what i should be charging.. i have already given you a discount." and the sale is made