What extent do you go to when wanting to land a new good customer?

[Gino]

I don't do anything different. The worst is when the first thing out of a new customer's mouth is bad-mouthing the last sign shop. That customer then gets fired on the spot. It is competition, but I can't tolerate people bad-mouthing other shops!

Sometimes it's just like on here at s101. People need to vent and start b!tching without thinking. You have no idea.... the other shop might be doing all kinds of things wrong, price gouging or just getting too full of themselves. There are lotsa reasons customers change and suddenly becoming dissatisfied with any number of reasons IS a good reason to start looking..... and bitching.

 

[Move In Media]

Now is your opportunity to call her and ask for a meeting of maybe 10 or 15 minutes of her time.

In the meeting you dissect what was bid on and the reasons you didn't get the order. Why did they entertain giving you the job and what went wrong. Tell her.... for your records, you are doing more and more of this work and her input would be greatly appreciated for other quotes. You wanna become more competitive, since your quality and service are already top notch. When she hears this stuff, you'll be surprised how quickly you'll get a.... ya know what, maybe you could quote me on this.


Good luck.............

Ooh, solid advice, I'll file that one, thanks.

 

[CES020]

I don't want to court someone into my shop with a blister-free hand job...

 

[ChicagoGraphics]

What did you end up quoting them on them 50 signs?

 

[Techman]

Everyone's business model should include discounts for volume

Yes,, But how set those discounts and still profit.
Discounts are given...
Only if it fits the model and it falls into the economies of scale.
If the bizz model is operating in such a way that it has room to give a discount for bigger orders then it works.
If giving a discount is not within the economies of scale and does not keep the profit margins then giving a discount does not work.


For example.

Making a one of a kind item takes 4 hours.
Or,
Making 10 items of the same takes 40 hours.

Is there room for an economies of scale discount? No.

 

[Gino]

Yes,, But how set those discounts and still profit.
Discounts are given...
Only if it fits the model and it falls into the economies of scale.
If the bizz model is operating in such a way that it has room to give a discount for bigger orders then it works.
If giving a discount is not within the economies of scale and does not keep the profit margins then giving a discount does not work.


For example.

Making a one of a kind item takes 4 hours.
Or,
Making 10 items of the same takes 40 hours.

Is there room for an economies of scale discount? No.

If we're building an electric sign cabinet one at a time or 10 of them, we'll get much faster by the second and third one, just by handling it like an assembly line structure.
If we're lettering 1 truck or doing 10 of them, by the time we get to the tenth, we'll be far more faster than in the beginning.
Whether we're doing digital, screening, weeding die-cut, flatbed printing or assembling store hanging signs..... volume will always get you a discount because nothing takes the same time to do one as it does 10, 50 or 1,000.

Costs are the same for materials, unless you are buying in volume and receiving discounts, but time will always improve, unless you are purposely milking a job.

Even if we are printing 10 of the same, there is only one setup and rip time required and the machine just goes to town and when you apply them, you'll go like crazy putting them down.
​

In your theory, if someone has given the best price possible and not allowing for any shaving off pennies, then you are working far too tight to begin with. One ups should always carry a high price and multiples should warrant a discount.

 

[Techman]

In your theory, if someone has given the best price possible and not allowing for any shaving off pennies, then you are working far too tight to begin with

If you are posting just to make a discussion its all for fun..

But. It is not theory. It is a basic law of economics.
It has nothing to do with running so close to the edge that shaving a few pennies blah blah...

As I posted above. Discounts are given only if it fits within the economies of scale.
That is an economic law. There is no changing economic laws. Run the business within the PLAN and MODEL.

Furthermore. In your case you are dealing with two different time patterns. Short run and long run.

The first run is doing one vehicle and it takes an amount of time including clean up and set up. After the first two vehicles the time is about the same over the rest of the run. However, that is a false economy. One is dealing with a short term measurement and the end of the run deals with a long term measurement.

The only saving that make any difference is the setup and clean up times. Once set up for production the actual time to complete a job will be mostly the same. Production time will average out to be the same over the long run. Thus no room for a discount.

The economies of scale work only when the long run allows more goods to be produced on a larger scale with lower costs.

Since the fixed costs such as materials, supplies, space and labor are all the same with a very small savings gained out of efficiency there is actually very little room for a discount.

There is always a "what if" variable. The "what if" variable makes for a good discussion but is usually not a genuine factor in pricing our products.

 

[tsgstl]

Techman,
Since you quoted me I will reply to your question. Gino hit a lot of my thoughts and I have many many more. Like I said there is much less time spent per dollar with a steady larger customer that buys larger volume. If we get down time we make some of the signs (decal runs) that we supply for two different customers even if not yet ordered. We get a lot of "I want this this and this on this, just lay it up and make 50 I trust your judgement" Once the relationship is established I never have to have a 30 minute conversation about arrows facing the correct way on a double sided sign. Most of these customers send a email with the info and never even talk to me. Most larger companies have in house design capabilities that send a file that you just print. A lot of these jobs are reprints of previous runs. I could go on and on.
The mental security alone of a steady larger customer is enough to warrant a decent % off the top.

I spend much less on advertizing (if any at all) I get more of this type of business from my connections and referrals from my personal relationships with other customers. (just like the op stated)

Why do we give wholesale pricing to companies that are selling our goods? I don't care if they make a profit. I do it because I know they will keep calling me back with more orders. Why do we pay a salesman a commission? Because the more we pay them the more they are making us. It is similar in many ways.
The point is a larger customer is better than both of these, I make more than wholesale and I don't have to pay commission to a salesman.

I ran a franchise sign shop for 8 years, they preached high end retail location on the busiest of streets. We had to charge so much for our overhead and huge yellow page add that all we did was chase our tail around. Our average customer spent less than $100, our big customers spent that much a day. None of those big customers came from any add and none of them ever stepped one foot into our "pretty lobby"

I just reply here with my best advice with what experience I have had.

 

[Techman]

nope. i didn't quote you.
I quoted Gino..

Anyway.
IF all these ideas were true about running a business.
Then, Lets look at KFC, booger king, Mc D's etc...

They do not give discounts for buying 30 boxes verses one box.

Lets look at Granger.

They do not discount their products and we know how high they are.

The big guys follow a model and a plan. That is how it works best..

 

[tsgstl]

nope. i didn't quote you.
I quoted Gino..

okiedokie

 

[tsgstl]

IF all these ideas were true about running a business.
Then, Lets look at KFC, booger king, Mc D's etc...

They do not give discounts for buying 30 boxes verses one box.

Lets look at Granger.

They do not discount their products and we know how high they are.

The big guys follow a model and a plan. That is how it works best..

Come on you are loosing credibility with that statement. Even KFC gives you discount for quantity. Go buy a fleet of vans right now and see what kind of discount you get. Go to a grocery store and look at just about every item. Look at any supply catalog. I'm going to stop because I know sometimes I come off harsh and I really don't want to and I don't mean to.

 

[John L]

Grainger does discount by the way. They matched a price on an exhaust fan for me two weeks ago.

...and to the OP... just learn when to pull out a little "blister-free" bribe.

 

[Gino]

Not sure on this Tech, but if you go into any of those fast food places and buy a burger or a breakfast sandwich vs. a meal, the prices vary a great deal. Multiply that times getting a bunch for the whole office and I've seen these places give all kinds of extras and added on items.... at no charge. Go to the bar and buy one draft beer or buy a pitcher.... ahh, it's always cheaper.

Go to Home Depot, Lowes, Walmart or any other big guy and buy two bolts and nuts vs. buying a box or whole bag of the same thing and it's far-r-r-r cheaper to buy in quantity.

You said if this was for discussion or fun.... and I think you're taking it too far into fun.

Any grocery store will have a small bottle of dish washing soap or any other item for your house... and if you buy the bigger bottle or box of whatever, it's always gonna be cheaper.

We live in a 'super-size this' world and it happens to hit every part of business in business.

If I could sell 20 individual signs a day, vs. super-sizing everyone's orders, I'd make a bundle on the volume. I like individual signs and put a lot of sweat and tears into making each individual sign, but when someone orders 30 of them or 150 of them, I hear ca-ching all day long.

My old standard was to make something and make it as best I can and get paid dearly for it. Today, that's a lot tougher to do, with all the hacks and wannabes around, so it's far easier to sell what they can't do and that's higher volumes.

 

[Techman]

As I menteioned above.
Short run and long run.
Two completely different mechanisms.
A planned systematic price change for a short run is just that. A short term stimulus.
As I said above there is always a "what if"
You are mentioning a short term " what if"

You may have the last word.

 

[Gino]

I'm sure it won't be the last word. ​

I'm having trouble understanding your idea of short vs. long run.

In my opinion, basically, all of us in the sign industry are operating in a short run type of mode. Our variables change sometimes daily, and then sometimes monthly or weekly. Our costs change, quantities change.... even number of hours change, therefore we're in a very competitive arena. In the long run, we'd be setting up for the long haul and taking advantages of building new buildings, new machinery and probably leading the entire pack until others got on board and then we'd all go back to short run, again.

The saying.... 'in the long run', it's taking into consideration doing everything with complete confidence and making sure every step of the way has been accounted for, while the short run is making it happen with what ya got at the time and making it work with whatever tools you have at hand..... and if giving an extra incentive includes knocking off 5%" or doing a last truck for 1/2 price, then it's still part of the equation.

Your turn. ​