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What to do with low ball competitors

swannisl

New Member
I know people don't like to talk prices, but there is a comp. low balling and driving us crazy! We have lost 3 jobs in the past 2 wks. based on price. How do we combat this problem or are we priced high and don't realize it? One job, full wrap on a 16 passenger van, windows on all sides and back, we were told someone came in around $2200 we were around $3400. Two 4x8 MDO signs, 2 color vinyl, signs and two 4x4's painted black we were at $618 (went low on this) and still someone came in lower.

What bugs me the most, is I know we have close to the best, if not the best, customer service around, nothing leaves the shop without looking the best (can't say that for other companies), and we get the jobs done quick and on time.

Sorry for the rant, but need advice on how to fight this problem. Thanks!
 

OldPaint

New Member
get used to it.........when you are doing something that anyone else can do with the same equipment.........all each of you got is....... PRICE....i been watchin this "lowballin" since the plotter made anybody a sign maker. printers do the same thing only the PRICE has went even lower.
 

Fred Weiss

Merchant Member
Sorry for the rant, but need advice on how to fight this problem. Thanks!

Here's mine ... originally posted here in 2005:

Let me tell you about Gil Leffler (rest his soul).

Gil was a likeable guy who had been half good enough for Nashville as a musician but he liked the sauce a bit too much. Gil could also letter a bit and had ended up in my area in the mid 1980's. He had three letter styles he could do but he had the ability to hold a piece of artwork in his hand and paint it onto a 4 x 8 usually needing about six hours to complete the lettering and the hammering together of a site sign mounted in the ground.

He would charge $60 for this because that's what he had always charged. From that amount, he could buy the plywood and 4 x 4's and whatever else he needed. With the balance he could pay for his motel room, have some dinner and have a few drinks. Life was good.

It didn't matter to Gil that he occasionally made others look expensive. And it didn't effect others much because his productivity was limited.

One day Gil came in to my shop. We were strictly wholesale to the trade in those days. He had a customer that wanted him to do a couple of truck doors and the job called for being able to letter a passable version of Murray Hill Bold as part of it. The balance of the copy was about as brief as the new testament. Gil wanted to know how much it would cost for us to make the lettering for him.

The two doors priced out to about $60 for the vinyls. Old Gil started gagging and turning red in the face and uttered:

"That's about what I was planning to charge him Fred."

I said, "Gil, do yourself a favor and put this one job at risk and bid it like this." And I suggested that he keystone (double) the materials he would be using and add on for his time, including sales, planning and materials acquisition, as well as installing, at his shop rate.

He replied, "My what rate?"

So I suggested $30 per hour which was the low side average around town at that time and we figured $120 for materials with markup and four hours time $120 for a total of $240.

Gil was looking a bit pale and shaky and I again suggested that he put the job at risk and bid it at $240. He reluctantly agreed to do so.

The next day he was waiting when I arrived. He was all excited. "Fred" he said, "He went for it and even gave me half up front! Now what do I have to do to get my order in with you?"

Gil was active in my area until he died one day, about five years after this took place, in the middle of lettering a board. He became a regular customer for vinyls when he needed them and, while still a bit of a lowballer, had increased his prices, expanded his offerings, rented a shop, put in a telephone, and improved his standard of living.

There's lots that can be drawn from this story. My point is that opportunities arise all the time to help others and, in doing so, you can also help yourself. One doesn't have to be rude. One need simply recognize the opportunity and pass along the right information at the right time.

Gil was adequately talented/skilled/experienced to do okay in the craft. He just didn't have all the information he needed to confidently and successfully earn a decent living at it. He'd have been more of a problem if he had a computer and a plotter, but he was a problem nonetheless in most of the ways being discussed in this thread.

It's awfully hard to cut a man's throat when you broke bread with him yesterday. Take your competitor to lunch.
 
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Craig Sjoquist

New Member
Well you will have the last laugh even your price for the those 4x8s & 4x4s was way low.

Think of it how much you paid for your equipment, how much training you went through, The service you offer, and how much everything really cost.

Now what IS important is design / layout of each ad you do, is that the best ? if so then do not worry about low balling sign shop's at all.

WHY use this as a push for you to make sales better, your job better, your service better. Also when time comes they will be out of business, they will not have the money from the last job to do something needed and will start closing up, poor this or cheap that, customer will see this and stop using them.

I live in Orlando seen so many shop's close that it's like a conveyor belt of low balling shops always open short time, of the few that have survived they are stuck in certain types of work.

Raise the price of your work and be the very best you can be, the customers you will gain are the one's who want to stay in business.
 

Speedsterbeast

New Member
I'm not sure if you're asking a real question or just venting.
If you are venting, let it out. This seems to be the place to do it.
If you are really asking why...

My guesses are: They most likely have less overhead than you. Or they're trying to get into the market and build a clientbase, so they are working on lower margins than you. Or they are not calculating their costs properly and losing money. Or maybe they cut corners on installs to save time. Or maybe they have lower cost suppliers than you.

Or maybe you have too much overhead. Or you are not calculating your costs properly. Or you are spending too much time on installs. Or you are paying yourself better than the competition. Or maybe your suppliers are charging you too much.

Simple economics.
It's most likely one or more of these.
The solution is to pinpoint the reason(s) and remedy it.

I knew that college diploma would come in handy someday.
 

Salmoneye

New Member
Just one of the MDO 4x8's is over $500; What are both of you doing? Quit trying to chase price and relax. Put out great work and customer service and charge for it. This guy will be out of business in two seconds, keep trying to chase his bids and you will be too.
 

swannisl

New Member
Yeah, we know we were low on the 4x8's which is why we're surprised someone was lower. You're right, they are breaking even at best which will not keep the doors open for long. It's just frustrating for the time being. It's also frustrating to see some the products produced around here...type is unreadable, lots of busy backgrounds, etc. Guess the customer is getting what they pay for and our customers understand what they are getting...quality work, that's getting them a good return on their investment.
 

HulkSmash

New Member
Or maybe you have too much overhead. Or you are not calculating your costs properly. Or you are spending too much time on installs. Or you are paying yourself better than the competition. Or maybe your suppliers are charging you too much.

Simple economics.
It's most likely one or more of these.
The solution is to pinpoint the reason(s) and remedy it.

I knew that college diploma would come in handy someday.

How is not calculating his costs properly. Assuming the OP knows what his costs are, is partially how he bases a job. This has nothing to do with why he's getting outbid. You're trying to make something more complicated then it actually is. The guy just making less money. Simple as that. at 2200 on that wrap, you still make an ok profit, not as nice.

Educate your customers. Let them know why you're more expensive, and how you can better serve them.
 

Dave Drane

New Member
One problem I find is that the "customer" does not know poop from clay. If they can't see a comparison then they don't know. I am hesitant to describe how I will be doing the job, because if you explain it to them, they know exactly what to say to the next guy. I will not do artwork hoping to secure the job either because that is just wasting time and resources. I am of the old school where I believe that a properly painted background (car paint) will outlast a print by about 15 years, so that is one way of losing a job fast, because times are tough and the bottom line is all they are interested in, so do you compromise your good name for the sake of getting some cheap work? I will play golf and go broke first before I give my stuff away. I do know that there are some desperate guys here in my state that have put expensive machinery on the "never never" plan and will work for the price of the material to try to keep it running, because they phone me wanting to do my outsourced printing.
 
I think it is necessary to know where your company's prices are in regards to that of your competition, however,i believe it is more important to focus on investing the time to calculate the prices that you need to charge to be profitable & then focus on your sales & marketing efforts to hit those numbers. Versus getting into the game of chasing each other to the bottom, focusing on other's prices without knowing their variables,etc.

there are companies that can charge any price they want (within 'reality') because they create a product that generates
consistent results for their clients (be that brand recognition
traffic, sales, etc.) or those who can command their prices because of unique design, reputation,salesmanship,etc.

but if we are talking about similar products from the perspective of the customer, price is going to be a major factor in their purchasing decision.


you have to identify where you want to participate in the market & if you have the skills to operate successfully should you decide that your place is in the 'unique' design area, or 'strategy' end for lack of a better description @ the moment producing products that generate a desired outcome for your clients.

If you are selling at the high end of the pricing spectrum & your product is no different (or not different in the eyes of your customer) than the lesser priced product...you are most likely going to lose that sale/client.

technology is changing rapidly those trying to produce 4X8 panels cutting vinyl,etc. Are going to be forced to realize that they can not regularly command those high spectrum prices (unless they are following a model such as earlier described) when eventually every town will have flatbed/direct to substrate
 
sorry replying on phone & couldn't see entire message to finish ...

when those with the technology cando the project in a fraction of the time & are focused on keeping their equipment running thought the production day..and the equipment is jusy going to getmore efficient & more prevelant.

those who succeed imo are going to be those who focus on the business of being in business, (negotiating lower material prices,streamlining production, maximizing sales potentials.,etc) as the competition gets more serious or more I'll informed,etc. Or succeed by a combination of increasing your efficiency, etc.,& building a specialized business that does not have to compete with the larger pool of competition .

I think it is necessary to know where your company's prices are in regards to that of your competition, however,i believe it is more important to focus on investing the time to calculate the prices that you need to charge to be profitable & then focus on your sales & marketing efforts to hit those numbers. Versus getting into the game of chasing each other to the bottom, focusing on other's prices without knowing their variables,etc.

there are companies that can charge any price they want (within 'reality') because they create a product that generates
consistent results for their clients (be that brand recognition
traffic, sales, etc.) or those who can command their prices because of unique design, reputation,salesmanship,etc.

but if we are talking about similar products from the perspective of the customer, price is going to be a major factor in their purchasing decision.


you have to identify where you want to participate in the market & if you have the skills to operate successfully should you decide that your place is in the 'unique' design area, or 'strategy' end for lack of a better description @ the moment producing products that generate a desired outcome for your clients.

If you are selling at the high end of the pricing spectrum & your product is no different (or not different in the eyes of your customer) than the lesser priced product...you are most likely going to lose that sale/client.

technology is changing rapidly those trying to produce 4X8 panels cutting vinyl,etc. Are going to be forced to realize that they can not regularly command those high spectrum prices (unless they are following a model such as earlier described) when eventually every town will have flatbed/direct to substrate
 

Dave Drane

New Member
I think it is irrelevant what the competition is charging. One should know what the running costs of their own business is and should charge accordingly. If you start competing then you are going down the same old road to bankruptcy.
 

visual800

Active Member
we got a compnmay here that is pounding all other sin the ground, large jobs small jobs it matters not. Pay never mind to it and keep moving forward. if you fight it you will lose. Eventually all this low ballin will catch up with these idiots and take them out

Every now and then I can turn a quote in and get them on interior signs since we both have to order that and take a job from them.
 

Dave Drane

New Member
I read this recently on the RDGA tweets and think it is relevant?

In this case, the customer chose the $2200 option from our competitor. Doesn’t that figure? Except the story doesn’t end there. It usually never does. Less than 13 months later they arrived back at our facility, (unhappy) with a failed vehicle wrap. So we got the job after all. We designed and installed a new wrap for the H2 for $4,300 along with a fleet of service vehicles. The good guys win!


Yep, that is a good plug fopr Roland, but has nothing to do with running your own business. Would you really go to these extremes proving that you were the right man for the job?? Most small companies don't have that sort of time to waste "selling" themselves. A past history of "quality and service" is what sells, not the price. If not then they are not the customer you really want.
 

ddarlak

Go Bills!
what i got from fred's story -

wait him out, he'll die someday - probably from working too hard for too little....
 

njshorts

New Member
I think it is irrelevant what the competition is charging. One should know what the running costs of their own business is and should charge accordingly. If you start competing then you are going down the same old road to bankruptcy.

that's the truth...

if i had an hour or so laying around to peck at the keyboard, I'd tell you about a local guy... He's been in business for 10 or so years (he's in his mid 30s if I remember right), his parents pay for his overhead, stock, personal bills... He's in it for beer money, and it shows.
 

SignManiac

New Member
There have been Willie the Wino low baller sign guys around since the beginning of time. Most eventually fade away. Run your business right and you will be around to attend their funeral one day.
 

Speedsterbeast

New Member
How is not calculating his costs properly. Assuming the OP knows what his costs are, is partially how he bases a job. This has nothing to do with why he's getting outbid. You're trying to make something more complicated then it actually is. The guy just making less money. Simple as that. at 2200 on that wrap, you still make an ok profit, not as nice.

Educate your customers. Let them know why you're more expensive, and how you can better serve them.



How do you know why he is getting outbid?
I am, quite simply actually, listing reasons for price differences in any market.

If a competitor has 25% less overhead than you, gets his supplies at 10% less than you, does an install in 75% the time it takes you (good quality or not) then they can quite easily be charging much less and still making more money than you.

On the other hand. If your competitor lives in a much more modest home than you, drives a ten year old vehicle instead of a brand new fully loaded Escalade, spends his/her weekends volunteering at a senior home or homeless shelter, and you spend yours in a 40' cigarette boat doing 60 mph while smoking Cohibas and drinking 20 year old scotch, then they may be making less profit than you, but also be running a quite viable business that could be around for a very long time.
 

Mikeifg

New Member
I used to be one of the lowballers. I confess, wanted to offer the world to everyone in town. And it doesn't work I was too good to be like that. My background besides being a designer was from high end shops who stood their ground and worried about quality not price and what it took to run their business. That's what I do today I put in long hours sometimes but it's worth it. All the lowball shops around here have no sense of design just cookie cutter designs and we all are guilty of using them from time to time. But in the end they suck. I had a customer go to another local lowballer the other day because I was too busy and they got a low price on a wrap but it was done in calendered vinyl an aurora fill no design at all and is peeling go figure. That's what they get i guess.
 
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