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Volume discount?

Discussion in 'Sales, Marketing, Pricing Etc.' started by Mattc, Mar 4, 2011.

  1. Mattc

    Mattc Member

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    I have a client asked me for a quote for banners.
    I would charge it as usual if it is just one or two.
    However, the quantity is 200.
    It is pretty simple banner about 4'x6' size, pole pockets with paper tube both side, and no hemming. Just logo in the center without any background.
    So, for example, if I charge $100 for one, how much I should charge for 200?

    Thanks!
    Matt

    P.s. By the way does anyone know where I can buy those 1" dia. paper tube for pole pocket?
     
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  2. john1

    john1 Guest

    I haven't had any orders for that many, but you have to remember even though your going down in price per banner since it's alot your costs don't go down. So watch out for that as you don't want to lose money on them.

    I would do first one $100, each additional $80 or whatever. That's how sign craft does their volume discounts it seems so that's a thought.

    You might want to outsource this job beings it's so many and alot of company can print for cents a square foot.
     
  3. Fred Weiss

    Fred Weiss Merchant Member

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    There are two reasons for a volume discount.

    • Economies of scale.
    • Staying competitive to avoid losing a good client.
    In the first case, you should examine what costs make up that $100 you charge for the banner. You are saving at least the design time for 199 of the 200 banners. You're also saving something on each banner in production since it's the same setup sent each time and you can probably run multiple banners at a time. And since it evidently isn't a high coverage print, you will be saving a fair amount of ink and machine time.

    The second case isn't so much a matter of meeting the competition. Rather it's recognition of the fact that 200 banners is an exceptional order. Your client is exceptional if he or she isn't looking for some kind of discount so it's just good business to examine your costs and make an adjustment based on what the economy of scale will save you. My best guess is that something in the neighborhood of 20% off is a good number for all concerned.

    Congratulations on landing such a good order.
     
  4. Mattc

    Mattc Member

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    Thank you for good advise, John and Fred.
    I think 20% off sounds good. Maybe I can offer even more discount since this client has a huge potential. He also asked me about other things and if I can get the job for all those things, revenue from this client only could be over 80k.
    I can't believe he is giving such opportunity to a small guy like me.

    Now I am afraid...:omg:
     
  5. Trimline20

    Trimline20 New Member

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    The order did not come by way of an email did it?

    Many of us regularly receive email requests for high volumes of basic, one colour banners, usually with some religious message, from some Church Minister.

    Beware! These emails are scams, intended to take your money.



    If the order is legitimate, you could offer a sliding scale discount based on quantity. For example: 1-5 items = No discount, 5-10 = 5%, 10-20 = 7%, etc. You will need to sit down and determine your costs and what you can afford to give-up. Don't just pick a number from the sky and say, "that sounds fair".

    As already mentioned, you do not usually receive discounts from you suppliers so be cautious on how much of your profit you give away. Your time to make each one is the same and the only potential savings you may realize is in the initial design being used 200 times and any efficiency in material use as various items may be sized to cut/print with little waste.

    For high quantity orders of the same design, it is sometimes beneficial to have such jobs screen printed. For small orders, the setup costs are usually prohibitive but for larger quantities, the setup costs are spread over the entire order. On larger orders, the total cost to sub the work is often less than producing the items in-house.

    You might want to contact a local screen printer that does trade work. While the 200 banners are being screen printed which you will mark-up, you can be completing other profitable projects.
     
  6. Pat Whatley

    Pat Whatley Major Contributor

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    20-25% discount for the banners.

    For the tubes you may want to look at using PVC instead. The last time we needed a bunch of tubes we priced dowels and cardboard and PVC was still cheaper. Find a big plumbing supply house (I'm sure Dallas has more than one), their prices are usually half of what Lowe's and Home Depot want. It's easier to cut than wood or cardboard, too.

    Uline and Papermart have cardboard tubes but 1.5" is as small as they go.
    http://www.uline.com/BL_3653/Kraft-Tubes
    http://www.papermart.com/Product Pa...1189&SubGroupID=1190&ParentGroupID=18891#1190
     
  7. Mattc

    Mattc Member

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    Thank you for your advise Timeline, It is not email scam. The client is real and got to know by someone's referral. He is head of small company who dealing with hundred some dealerships around country. That's why he need big number of everything.
    I think you also made very interesting point. I never thought of screen printing. I will take a look at that option positively!

     
  8. Mattc

    Mattc Member

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    That's good idea Pat! PVC will work perfectly!
    He showed me existing sample with paper tube. That's why I couldn't think outside paper tube!
    Thank you for great money saving idea!

     
  9. Trimline20

    Trimline20 New Member

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    Mattc said:

    It appears that you picked a discount number from the sky without really considering your costs.

    Why are you so eager to give away your profit and put yourself out of business? (Maybe I can offer even more discount ...)

    You can't count on a client's potential business. Did this client demand a discount as a condition of dealing with you? I think we all want to be fair but always remember that we're in business to make money. Your costs are far more than the cost of materials.

    If a product is worth $100, then sell it at what it's worth. If you're overly quick to discount an item, you're really saying that it isn't worth what you normally charge.

    Please consider that there is always someone out there willing to undercut everyone else's price, just to get the job at any cost.

    To some clients, the dependability of the vendor (you), the quality of your product and a reasonable delivery time is more important than the absolute lowest price.

    Mark
     
  10. RJ California

    RJ California Active Member

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    So you would price 1 custom banner for the same price as 200 production banners and really expect to get the job? Never gonna happen in the real world.
     
  11. iSign

    iSign Major Contributor

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    I agree that there needs to be a discount, but I sure hope the $100 figure for a 4'x 6' was a random example, and not the actual price for one 4' x 6' banner with pole pockets custom sewn in...
     
  12. MikePro

    MikePro Major Contributor

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    we discount on volume, as we don't need repeat our setup costs
     
  13. JR's

    JR's Very Active Member

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    he dint say that.
     
  14. Billct2

    Billct2 Major Contributor

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    I would definately be discounting an order like that and my price would be based on what the large wholesaler (like Merritt) would be charging me.
     
  15. Gino

    Gino Premium Subscriber

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    Since it's a simple logo only on the 4' x 6' banner.... first

    • Is it two sided ??
    • Being pole pockets, I would think so, but your $100 a pop threw me.
    • How many colors ??
    • What is your discount from your banner supply house ??
    • You can either get a digital print and apply them to ready made banners.
    • Screen print them directly.
    • Digitally produced both sides and pole pocket them.

    Or just farm the entire job out and sit back and collect the profits.

    There's no way you can do them all in-house, make a decent profit and still be competitive. Study your numbers carefully and then get some wholesale prices and you'll see what I mean. They could easily be had for about $55. from the right supplier.

    You could conceivably make about $3,500 on this job and literally do nothing, while making money on another job while someone else is doing this one for you. Think smart. :thumb:
     
  16. rushworks graphics

    rushworks graphics Very Active Member

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    +1 for what gino said. use one of the mm on here and sit back and collect the profits!
     
  17. SurfaceSigns

    SurfaceSigns Member

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    Seriously? That might be easy to say as a national chain that doesn't see such an order as a must win. It's also a very Canadian attitude, which is why we as a country are losing competitive ground to the likes of US businesses. :Canada 2:

    For this shop, such an order has the potential of paying his costs for the month, and losing it can hurt big. He needs to put his best foot forward.

    Can't count on a client's potential business? Are you kidding? That might work for one-off clients, but not clients that have on going signage needs. Sometimes you need to give a little up front to gain in the long term.

    The bottom line is that the cost of producing 200 of the same banners is lower than producing 1, and it doesn't hurt to pass on the savings to the client. Or, as Gino said, you could use a Trade Printer to produce them for you, and you just collect the profit.

    In some ways we can be a bit hypocritical. We'll shop around for the best price on our consumables and equipment but as soon as a client asks for a discount, we scoff at the client for even asking.
     
  18. royster13

    royster13 Very Active Member

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    What the job is worth has no bearing on the price.....This order will likely be "shopped" and the seller must compete....I have no idea what the job is worth, however, if I could make some good cash on it, I would do what ever I need to get the sale....
     
  19. TheSnowman

    TheSnowman Major Contributor

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    Oh, geez Doug, the guy up the street here does them for $55 all day long. It's unreal what people give this stuff away for.
     
  20. Fred Weiss

    Fred Weiss Merchant Member

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    [​IMG] Golly gee, yippee! ... I spent $25K for this rig so I could make banners cheap or even free.
     
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