A recent post about hourly pricing generated some real excitement here in Letterville. I really feel this is a subject that we need to really look at. I can tell you from personal experience that many will be shocked at the fiqures you will come up with.
Many talented, dedicated Letterheads are working 7 days a week, yet constantly discouraged by the bottom line each year. We all know in our hearts that something is wrong and a change is in order.
Change is always hard. It takes courage to admit that "our way" is just not working. For some, change will require facing some fear and self-esteem issues. I've learned from our travels and chats with you that I am not the only person who worries about fear of rejection, fear of people and fear of failure. Fear chews away at your guts and sadly prevents many from realizing their true potential. If you are really sick and tired of being sick and tired, let's begin to do something about it together.
The first step is knowledge. We're going to learn what we need to charge per hour in order to reach a financial goal. Our first job is to learn what it costs to run our personal household each year.
Each of us needs to break out a calculator and pencil. The first thing to determine is what you need to bring home each month to support your lifestyle and family. What are your housing costs, groceries, heat, electricity, insurance, clothing, etc, etc, costs? At the end of this exercise you need to know what you need,as well as what you would like to make a year. We'll use this as a starting point to determine what your shop rate HAS to be.
Here's some info you need to read before we get started.
An excellent article on determining your hourly shop rate by Jeff Cahill. Thanks SignCraft.
We'll need is a really good worksheet. Jeff Cahill includes one in his article. We can use this or expand on his and create one of our own that we can each print out. Anyone interested in looking after this chore?
Posted by Dan Sawatzky (Member # 88) on :
I know from experience that even with minimal overhead if I want to earn $20 per hour I need to charge at least double or triple that that.
In our little operation I charge out at $100 per hour if I am billing by the hour. That doesn't mean that I earn $800 per day however. Even if I manage 8 out of 8 hours at my desk - not all my time is billable. I find even on productive days I can't charge all my time to customers, it wouldn't be fair.
On quoted jobs I like to do considerably better than an hourly rate as I am also taking on risk. If something goes wrong I have to make up the difference.
And on what I do bill I personally only get to keep what is left over after ALL the company expenses are paid.
The company needs some money left in reserve to pay the ongoing bills, insurance, tools, new programs, equipment, carry inventory and especially pay taxes. I hope you make enough money to pay taxes. Our company owns and maintains a top quality vehicle, tool trailer and even a travel trailer to use on our out of town worksites, or as an office locally on sites.
The company paid for my new camera, and purchased a new computer and a bunch of other stuff this past year too. The business even paid for our recent trip to Florida.
It will also build me new shop and studio when the time comes... all legitimate and worthy expenses.
When all is said and done I want to be well paid for my creative skills that I have spend decades developing. I'm 49 years old now, and I if I don't start capitalizing on my hard earned skills now, WHEN WILL IT HAPPEN???
My time is valuable to me and to my family too.
And my dreams for the future won't come cheap.
Don't sell yourselves short.
-dan
Posted by Mark Smith (Member # 298) on :
Steve and Dan,
This is exactly what I've been saying for years and is the subject of the seminars I give at the NBM shows. The articles you mention are some of the most important things anyone could possibly read to start a new sign business or improve an exisiting one. They set me on the road to profits and inspired EstiMate directly.
However, you don't need to design a worksheet. I've done one better with ProfitWatch. It's absolutely free software designed to help a shop figure the proper hourly rate for their work. . Download ProfitWatch here
Click the link above and scroll down to the bottom of the page. You can download ProfitWatch and also the course materials from my class "The Key To Profitability: Determining The Proper Hourly Rate."
The course materials include the printed worksheets and explain the necessary math to do this manually.
And by all means, whatever you do, don't think you can charge $20 per hour and make a living - no matter what!
[ February 17, 2003, 08:06 AM: Message edited by: Mark Smith ]
Posted by Bill Dirkes (Member # 1000) on :
Here's what I know. I am a one man shop, I work out of my home where I have built a 1200 sq ft shop attached to my home. I work full time at another sign related job (outdoor advertising). My weekly hours for my business average 20-25 hours. My overhead costs me $30/hr. I set aside $10/hr for capital (read profit) to re-invest in the business. And I estimate a minimum of $25/hr for ME. That totals $65/hr + material. And that is my shop rate. All of my work is pre-priced; in other words I estimate the entire job and that figure is the quote the client receives. If I make an error in my estimate, I eat it. and that will convince anyone to double check time estimates against actual time. If the client requests a change in mid-job he gets an estimate of the cost before we proceed. My dilema is what I've come to refer to as "The Hump". I don't plan to stay at my full time job much longer, but the volume of work I need to bring in to cover that income is well over 100K. And I don't know where that is going to come from. Or if I can manage it when it gets here!
Posted by bronzeo (Member # 1408) on :
No matter how you figure it, you will have to deal with the competition's pricelines. If their prices are less for the same products and the same quality of products, then you must contend with his pricing format. Theirs will eventually win out, if you don't. You say, how can this be. Well, some craftsman are twice as fast and efficient at the same chore. Striving for this is what puts your prices on the bottom and your profits on the top. I agree that a good method should be implemented for searching for that figure to be fair to your customer and yourself, but don't forget the reducing factor...... Your competition.
Posted by Mark Smith (Member # 298) on :
quote:Originally posted by bronzeo: No matter how you figure it, you will have to deal with the competition's pricelines. If their prices are less for the same products and the same quality of products, then you must contend with his pricing format.
No, no, no, no, no!
Salesmanship is what this is all about. Your competition might be lowballing prices, but if you are strong and well-prepared with professional paperwork and a bevy of beautiful photographs of your work, you can land plenty of jobs at your own prices. IMHO you should never let the competition influence your pricing.
That said, there is some value in looking at the overall pricing in your market. If the average price for a 4x8 is $275, you'll have trouble selling one for $400.
Unless you're Glenn Taylor. Then you'll get $750. (True story!) Posted by Neil D. Butler (Member # 661) on :
Mark.. NO NO NO NO! Well sorta... How many 4x8's does Glenn sell for $750.00?
If you think that price is not influenced by competition, well I have some land for sale.
Even when it's influenced by competition, you still have to have great salesmanship. I know that's sad, but it's true. I believe pricing is way out of wack with today's cost of living, I was getting almost the same for 4x8's 20 years ago as I am today. And it is because of computers, like it or not. But we made more money on the signs back then. I know of one guy who used to handletter 2 vans or even 3 vans a day back in the 70's, at around $300.00 each or Higher, but today he does hardly any vans, I just don't see his work anymore, not like I used to anyway.
But what you are saying does have truth to it, We have to try to sell our talents and abilities and give the customer a little more than what average computer shop sells, that's where the salesmanship comes in.
Posted by Stephen Deveau (Member # 1305) on :
I know I will put a thorn in many Peoples Paws.
I don't beleive in the One Stop Shop Rate. I work with the base of Talent Rate.
Here goes!
Flat rate for "Pop It Out" and stick it on (Plain Jane Style) $35.00 per hour Most of this is in house fonts and vinyl colours.
Airbrushing is a talent ordeal with coming up with the Design and transfering it to the medium. Helmets,Leathers,Tanks etc. Design cost is a base price depending on detail. Airbrushing is a rate of a dollar a minute with Clear Coating cost additional.(how many layers?)
Carving is a new animal in itself. We all know what is involved in this! Materials,Style of Carving,Finishes,plus anything that comes along as a surprise!
Handlettering is time comsumption. (one,two,three,colours with additional airbrush work on top of it.)Watching the paint dry!
Protraits Painting works on Size and how many people you want in the picture (Detail still counts on the price as well)Oils,Acrylics,Airbrushing.
I will never say I charge so much an hour but I do charge to the degree of the job needs.
Computer (Vector or Full design Logos) is priced on the base that once it is done, It is now owned by the customer and they have the right to walk and talk to anyone for their signage.
We all hope they come back for the service, but you know the consumer.
We all work on the base of our ablility of talent and it is the most important part of making the income to support the house hold.
Even Digital Prints are based on "So much per inch" or Linear foot plus Design Time,Application and not on hourly rates.
So as I said I rather work with pricing of the PROJECT then Hourly Rates.
Posted by Mark Smith (Member # 298) on :
Neil,
I was definitely trying to be funny with the no,no,no,no,no - please don't take it any other way.
As far as the $750 4x8 goes, naturally he won't make many of them - but let me point out that if he'd charged $300 and made $50 on it, in this case he made $500 - and therefore can skip the next nine $300 4x8s and go fishing.
Posted by bronzeo (Member # 1408) on :
Let me ask this, and anyone can feel free to answer.
If the average going price, in your surrounds using COMPARABLE materials and workmanship was 300.00 for your service or product. Would you charge 500.00, if you could get it? Consider that the 300. would cover your needs. I'm not speaking of an open bidding session, but more on overcharging a customer that stands with checkbook in hand and needs your services.
Posted by Neil D. Butler (Member # 661) on :
I know Mark. I'd love to sell 4x8's at that rate, and I do love fishing...
Posted by Neil D. Butler (Member # 661) on :
If we did that Jack, we would'nt be in business very long. But it's tempting. But if you upsold him on Extras then it would be justified.
[ February 17, 2003, 09:53 AM: Message edited by: Neil D. Butler ]
Posted by Mark Smith (Member # 298) on :
I agree with Neil. What I am after is a fair price, not one that gouges the customer. By that I mean fair to both of us.
Another thing to keep in mind (and you can actually use this argument with a customer, I have, and successfully): your long-term physical and financial health is in your customer's best interest! That way you continue to be around to service them, and don't work to yourself into the ground.
Aside to Steve Shortreed: Thank you for providing such an excellent forum for people to talk about things like this that directly affect their future. We all have so much to learn and it's best done through a community like Letterville!
Like Steve alluded to, that's the dirty little secret of the sign business, and really any small service business - working yourself into the ground and believing cash flow equals profits. Profit is the nest egg that slowly builds up behind you while the cash flow runs in front of you.
[ February 17, 2003, 10:02 AM: Message edited by: Mark Smith ]
Posted by Neil D. Butler (Member # 661) on :
I like that statement Mark...
"Profit is the nest egg that slowly builds up behind you while the cash flow runs in front of you."
Posted by David Wright (Member # 111) on :
I get tired of people like Steve and Mark stirring up the pot about profitability and proper hourly rates.
If I have learned anything from this board,it is that it is most important to be busy and have lots of work. And I sure as hell don't want to be out of line with my competitors pricing, for that is the road to hell with the sin being price gouging.
A recent example is that I went to this restaurant where they charged me and my wife around $16 each for dinner. What an outrage? I have never spent more than four bucks for a meal at McDonalds or Burger King in my life and have gone away quite full too. A class action lawsuit is in the works on that one, I guarantee you.
Posted by Mark Smith (Member # 298) on :
LOL David! I ate at a restaurant like that once too. Never again! Posted by Glenn Taylor (Member # 162) on :
Yes Neil.....$750.00.
I just sold two more last week. Since the customer ordered 2 of the same and it was a repeat order, I discounted it to $715 each.
Posted by Ken Henry (Member # 598) on :
Here's a often-overlooked factor that has some influence in determining an "appropriate" hourly rate: The wants and needs of some of the more "senior" members will vary from those who have recently entered the profession. Example: Someone in their mid to late 50's may very well have their kids grown and moved out, have their mortgage paid off, and have virtually no debt load that has to be serviced through monthly payments. That means it takes substantially LESS to satisfy their needs, and thus they can "get by" comfortably on less income than those carrying the expenses of car/truck payments, mortgage on home/business etc.
In that circumstance, it may be possible to take a lower hourly rate, but that puts the newer shops at a disadvantage. Also, the temptation is there to price things as one remembered them to be, rather than what their actual worth may be in TODAY'S ECONOMY.
Posted by KARYN BUSH (Member # 1948) on :
so mr wright...the meal that was $16 p/p and the $4 micky d's meal were the same?? same crappy hamburg and bun...frozen/fried french fries and a mcdessert? in that case i would be outraged...but if you went to a nice restaurant and had an entre w/ salad, dinner rolls and a little atomsphere then you are not comparing apples to apples. i think what steve was referring to in his post was the different hourly rates for different talents....of course i wouldn't charge the same for typical no brain font vinyl letters on aluminum as i would for a sign that requires a little thought and creative spirit...if you do then that's your poor business sense...i don't like to ripp people off no more than i like to ripp myself off...and i sure in hell have more self respect than that!
Posted by Bill Dirkes (Member # 1000) on :
I have a small sign hanging on my office wall: BETHEL HILL SIGNS PRICING IS FIGURED IN ORDER TO PROVIDE THE BEST POSSIBLE SERVICE TO YOU, THE CUSTOMER AND TO INSURE THE CONTINUED VIABILITY OF BETHEL HILL SIGNS THANK YOU FOR YOUR PATRONAGE I believe that is the most important statement I could possible make to the public concerning how my pricing is structured.
Posted by Mark Smith (Member # 298) on :
Ken,
Those seniors you mention shouldn't take a lower hourly rate because their expenses are lower - they should take a higher one because they are closer to retirement. IMHO.
Pricing based on memory is just another argument for them to fill out an hourly rate worksheet and build in substantial profits!
[ February 17, 2003, 10:46 AM: Message edited by: Mark Smith ]
Posted by Checkers (Member # 63) on :
It boils down to the fact that you're really not selling a product, you're selling your time. The more time you make available to your clients, the less it's worth - supply and demand. How you choose to use that time is up to you. Remember, you're the expert with the experience. The the real point is what is your time worth? Mark's software helps you with that. Personally, I'd rather be known as expensive and good and enjoy the days of fishing & time spent with family. When I first moved out here to PA, I interviewed with quite a few sign companies and I was told that I wanted too much for my time. Nearly double the "going rate" for someone with my experience. After knocking on enough doors, I finally found someone who thought my hourly rate was fair & they hired me. After the sale of my employers business and 9-11, I was pounding pavement again but, now, with the knowledge that more people are willing to pay my price. Rather than work for less, I invested my time wisely and learned more about my career. Within a short period of time, I was back to work and making more money. There's been a few comments made here over the years that really have stuck with me. These are not directed at anyone, so don't take offense if they strike a nerve. If you're not making any money in the sign business, get out, so the rest of us can - charge as much as you can while keeping a straight face - You're only as good as the last sign you make - I'd rather be known as expensive & good rather than cheap & fast And for the record, I think Cam has the record for the highest price for a mdo sign.
Havin' fun, Checkers
Posted by Stephen Deveau (Member # 1305) on :
Thanks Karyn
Do you flip the burger for $4.00 bucks or offer the gourme meal for $16.00
It's still up to the (Customer On What They Want!)
Do you go to a General Practitioner or the Specialize to your needs in life? The G/P says "so much a visit" (with little info) But you have to go to a Specialist!
The Specialist will tell you that! (We don't charge by the hour, But we will service to all your needs!) It still works on Talent of that Person to trust in helping you.
Business is a Hungry Animal theses days and the best avenue is the eye catching pieces..
Zoom!Zoom!......Zoom! Oh sorry that's Television!
Posted by Myra Grozinger (Member # 327) on :
Shhhhh, Karyn! David had me going to, for a minute...... that's what makes for good humor
Posted by Ted Nesbitt (Member # 3292) on :
Here's a term that I'll throw out to y'all---"CONSULTATIVE SELLING". Give the customer more reasons to deal with you than just price. Granted, this won't apply for every job/customer. But how do you know that the price the customer is throwing in your face from your competition is for a comparable product? Do you both use EXACTLY the same materials? Do you both do EXACTLY the same layout? Hardly. Just because you both use One-Shot to coat out your boards doesn't make his the same as yours---do you coat yours twice or 3 times perhaps? Do you take extra time to seal the edge somehow.
Any quote going out my door always had on it "Quoted using Quality High Performance 2-mil vinyl", etc etc. If it was the right customer, I wanted tp give him information (or ammo!) that made him more likely to be trusting and want to do business with me.
This is a very long and extensive topic. Kudos to Steve for brining it up and starting the ball rolling. I don't think the idea is so much that everyone needs to charge the same. I think the point is that everyone needs to charge SIMILAR rates. You/we are all experts in our field. Our talents deserve to be rewarded.
Does anyone feel that they need to do EVERY job that walks in the door?
Posted by Bob Stephens (Member # 858) on :
Karyn you of all people being sucked in by Davids sarcasm? Now we're in deep doo doo folks!
Posted by David Wright (Member # 111) on :
I guess I should have used one of those. Not as much fun though.
Posted by KARYN BUSH (Member # 1948) on :
sooo he's just messin' with my mind???? ...what's left of it that is!....and i thought i was the queen of sarcasm...ok dude...i'll be watchin' you!! LOL
ps...i still want to make more $$! Posted by Neil D. Butler (Member # 661) on :
That's great Glenn! Can we see a photo of them?
Now before you go and think that I'm being skeptical, I'm most certainly am not, cause I know you're work is Fantastic and well worth what you charge, it's just I can't seem to educate people on this type of work.
But what do you charge on Average for a 4x8? Or is that what you get all the time?
The most I ever got for a 4x8 is around $500 and that's Canadian dollars.
[ February 17, 2003, 11:45 AM: Message edited by: Neil D. Butler ]
Posted by Myra Grozinger (Member # 327) on :
People sometimes ask me why my company is called Signs Limited, instead of Signs Unlimited. I look them square in the eye, smile sweetly, and say: I don't want to do them all, only yours
Posted by Glenn Taylor (Member # 162) on :
Neil,
When I get home, I'll post it for you. Its actually very plain. Just a standard 4x8, single-faced with text and a seal. The only thing different is that it is on 1/4" Alumalite; the entire face is Edge printed; and it is laminated with Gerber's UV Guard.
It takes me about 2 hours to do one sign from start to finish if I'm working by myself.
As Mark pointed out, its all about salesmanship. And, a big part of salesmanship is being able to fulfill a client's need. In this case, they have a problem with the signs failing prematurely and with vandals. I'll give you the details when I post the pic tonight.
[ February 17, 2003, 12:11 PM: Message edited by: Glenn Taylor ]
Posted by Rick Chavez (Member # 2146) on :
Since I work at a specialized design firm, they usually have a fixed fee proposal, Signage might be at an estimated hourly rate, or a logo will be priced at a certain amount with only a number of submittals past that, it either goes hourly or gets a negotiated fee. The "template" for a proposal for a graphic design firm is a like like what is described in "Architectural Signing and Graphics" by John Follis and David Hammer. Most projest, we have deal with Identity, wayfinding(lots of planning) multiple signs and sign types (sometimes near a thousand) design, design developement, construction drawings and construction administration. I'm sure a designers hourly rate is 125.00 and goes down to probably 100 for drafting and or construction administration. It is tracked and billed in increments at certain times of the project. I have worked at a few design firms, and it's not unusual to have $500,000.00 design projects at one given moment, though as hard as some beleive this work to exist, it does. If anyone want to know more about this kind of work, you might try www.segd.org there is also a conference and Expo in Las Vegas this year. Though I think the info is still pending on the website, you can call them and they can send it to you. Rick
Posted by Cam Bortz (Member # 55) on :
Thanks, Checkers. You may be right. We did a 4x8, on flat MDO, single-faced, all paint, for a restaurant in spring of '99 for $2,500. That included a rooftop installation, on brackets we designed and built, and involved a one-hour ferry ride each way. Basically installation took two men for half a day, and a helper for another $25.
I've written about it several times, so I've heard all the responses - from price-gouging to being called a liar. Whatever. I cashed the check. Anyone else can believe what they want. I still have the client; they have spent something close to $22000 over several years, including seven carved signs, the 4x8 above, another 2x8 MDO sign for $1850, and any number of small directional or informational signs.
As for the accusations of gouging, the client has the choice to hire anyone they want to do their signs. There's plenty of shops around; I'd bet all of them would offer to do most of these signs for less money. Price gouging can only happen when a client has NO choices and is forced to purchase from a monopoly.
So how did I get a client like this? An employee of this company saw my portfolio at a high-school career day, and had me call his boss. I sold them a $3000 carved sign in 1998. They got the sign they wanted, on time, with good customer service, and since then have called repeatedly with further work. As far as I know they don't call anyone else and shop around, they get premium products and services for premium prices. My last sale to them was for $6400 last October. Oh, BTW, they also pay half down and balance COD. No questions asked, ever.
Reading over this, I probably sound like I'm bragging. Oh well. As Dizzy Dean used to say, "It ain't braggin' if you can do it."
Posted by Glenn Taylor (Member # 162) on :
quote: As for the accusations of gouging, the client has the choice to hire anyone they want to do their signs. ....... Price gouging can only happen when a client has NO choices and is forced to purchase from a monopoly.
Exactly.
Posted by Neil D. Butler (Member # 661) on :
I'm moving to Where Cam lives..lol
Good Going Cam. is there any chance that you might have a Photo of that sign?
You know I was wondering, if it would be proper to display some of the work you Guys do in out Showroom. Along with a description on how it was made and the type of materials, along with the price charged, it may be a great selling tool, and it just might answer some questions when clients question the work and or Price that we are charging. Just a thought.
Posted by Dan Sawatzky (Member # 88) on :
I like Cam's quote
quote:they get premium products and services for premium prices
I believe in this way of doing business TOTALLY.
I carefully protect my reputation of being expensive. But at the same time my customers know that they get full value for what I charge too. Even on my website I clearly state... If you want ordinary DON"T CALL US.
For every 10 enquiries I field I can expect one or 2 to turn into actual jobs. I spend a little time with each prospective client either on the phone or in person. Together we determine their needs and whether we fit. If not we part ways amicably, often with a referal to someone down the road.
The keepers are the clients I really want. They understand that value is not determined by price alone.
-dan
Posted by Mike Pipes (Member # 1573) on :
I posted a new topic along with an Excel overhead worksheet for anyone that wants to see how close they are. Here it is:
The one thing to remember is: Be honest with yourself! Hopefully filling out these worksheets with every detail and expense will force you to see what kinda overhead you *REALLY* have and quit kidding yourself. When you see it all spelled out on paper or on-screen it becomes real.
Posted by Bob Stephens (Member # 858) on :
It's not about moving. It's about believing you can get it and being good enough to get it.
Posted by ScooterX (Member # 2023) on :
for most of us, there is not "apples to apples" comparrison on signs produced for small companies (which is what we're dealing with on this Bullboard). If you're pricing out signs for national accounts (say, McDonalds or Texaco), then you're probably not here.
the sign that _I_ make is going to be different than the rest of you -- because _I_ will have designed it. that doesn't mean i'm a "better" designer (i'm probably not), but it means you can't sell "me" -- you can only sell "you".
in case you want to believe that Glen exists in some magical place where people pay more, i just sold a 4x8 (painted or vinyl, temporary construction sign) for $500 (including layout). the other guy bid $350 (including layout). So, my $500 sign probably includes more time budget for design time than the other guy. well, i'd rather make my money sketcing than by making lots of cheap signs.
i showed up for a meeting, had samples of my work, and i look like somebody who makes $500 signs. (i've only been in business full time for about 16 months).
customers aren't just buying a sign, they are buying a sign from YOU. you can offer: extra service extra design longer warranty faster turn-around more hand-holding great convenience closer location better hours nicer showroom more prestige and the list goes on. none of those factors changes the basic cost of the materials, but any of them can allow you to charge MORE for the "same" sign.
so, if you want to charge what the other guy does, fine. but if you want to charge more, there are plenty of reasons that you can.
Posted by Raymond Chapman (Member # 361) on :
Neil - I would advise against displaying someone else's work, even though you are doing it as a comparison (and as a compliment to the designer). Sell your work and your designs - that is what the customer will be receiving. Use those photos of work you admire for inspiration and sources of ideas, but keep them to yourself.
That's my opinion, and I'm sticking to it.
Posted by TransLab (Member # 470) on :
Great topic ... If you don't know your costs, how can you set a price??
Shop cost is easy to calculate, just look at last years financial statements, add all your expenses (except costs of goods sold (materials)), and divide by the number of billable hours in a year. That's your shop cost. Like anything else you sell, the shopcost must be sold with a profit margin added, otherwise you would be working hard to turn a dollar into four quarters. Based on past experience (and financials) I know my shop costs (all in) to be around $32 per man/hour, thus when I set labour rate at $55 per hour I know I can rely on a 40% margin of profit.
Posted by Glenn Taylor (Member # 162) on :
Neil,
Here is the pic as promised.
Details: 4'x8' 1/4" Alumalite Single-faced. Everything is Edge printed with Gerber 220 vinyl. Face is laminated with Gerber UV Guard.
The client wanted something that wouldn't rot or fail prematurely. Also, they were having a problem with taggers.
I saw my job as being their problem solver. The materials used do just that.
The client has been extremely happy. Three such signs were caught in the flooding caused by Hurricane Floyd. None of them suffered any damage.
The one pictured was done back in 1998 when I got my first Edge. The picture posted was taken today.
And yes, I know the word "Elevated" should be on the third line and the word "Street" spelled out. I was over-ruled by the client. Posted by Kent Smith (Member # 251) on :
Judi and I have taught many seminars on this topic and are always amazed at the number of students who don't even know the price of a loaf of bread. Signs have value for which you are entitled to charge for each of the three main factors: artistic value, intrinsic value and purpose value. We used this base for QuikPrice when we developed it (and it is in final stages of rewrite now). The artistic value is time, effort and knowledge background that is a part of the design and its execution. The instrinsic value is the materials and components and their related costs including installation. The purpose value or job value is that which the sign does once in place. The last one is also related to the value in sales the sign has over its lifespan which the customer realizes.
We tend to do the more custom projects in our area and most of our competitors send many of those to us. What they charge for their work is of little interest to me. While it is necessary to know about the local market place, I tend to believe that what I do is like no one else is doing or could do. My customers come to me because they want me to do their work. Certainly we do what is necessary to please them but we charge accordingly as well. June 30 will be our 75th anniversary so much of what we do has kept us in business quite comfortably. I only work late or weekends by choice and have for many years. Once in a while we get fooled by circumstances but we know our costs and we price our work so that we are profitable. Judi does complete job cost accounting and our work orders and invoices track that with a coding system that allows us to take our own pulse. We can adjust our pricing yearly, monthly, weekly or daily if we need to do so. I have always been amazed and saddened by those who wish to charge strictly by the hour, by the square foot, by the number of letters or some other equally irrelevant system. Every job is custom in this business, at least to some degree, and all the factors of the job must be considered in pricing.
As I get older, I am much less likely to lower my price or charge outdated prices. After all, I must make those premiums for long term care insurance and consider helping the grandkids with college tuition. I also think that those of us who have put in the time, deserve to profit from our experience. That never means gouging a customer but making a good profit keeps me here and available when they need me again.
Posted by Steve Shortreed (Member # 436) on :
I sort of got overwhelmed here yesterday, but I did take a few minutes to investigate Mark's ProfitWatch Program. It's excellant! Download and install it.
I really think we should be addressing 2 issues here. Do you know what it costs to run your household a year?
A few years back, Barb and I reached a point that resulted in a "serious discussion." We were both working long hours at the shop and charging what seemed like a reasonable shop rate. We never took vacations and lived a very simple lifestyle. The truth is we were always had more month than income.
We've all heard our Dads and GrandDads talk about the good old days. You know the drill. "In my day we worked for a dollar a day...blah, blah, blah" In the 70's, I worked in factories where $3 an hour was the top rate. When I left that job in 1983, the rate for the same job was $12. I remember working lots of overtime that last year and making $18,000. Heck! Managers only made $25,000.
Let's jump ahead 10 years. Barb and I are having our "discussion." I'm a bigshot signmaker with my own shop...earning almost as much as those managers I remember. I explain the real problem is Barb's weekly habit of grocery shopping for our growing family of 6. The kids are leaving lights on! That thermostat should never be above 68F! You're spending money like a drunken sailor!
A bookeeper friend sat down with us and introduced us to a budget. When I finally sat down and added up how expenses had grown over the years, I was shocked. I had a hard time dealing with the reality but at least we finally knew what our real challenge was.
I only tell you all this in case there is anyone else out there that is living in the past. You may be single now, but there is a good chance you will have a family to house and feed in the near future.
If you don't know what your personal income needs to be, you might want to consider doing a second worksheet to determine what you need to make a year. Include items like health/life insurance, along with a vacation. These should not be luxuries, work them into your wage.
When you finally know what you need a year, it's time to figure in how much tax you need to pay in order to keep that amount. This is an area someone else will have to jump in on, as rates differ.
We haven't talked about profit. As a business owner, you are making an investment. When you invest in a business, you should be looking for a return on your investment. This is another area I don't feel qualified to talk about. I know some of what we have already talked about here is scaring the hell out of some of you.
The plan here is to come up with a realistic figure of what you need to get by annually. We'll enter this figure as the first item on our determining an hourly rate project. Anyone still with me? If I've omitted anything, please elaborate.
[ February 18, 2003, 11:31 PM: Message edited by: Steve Shortreed ]
Posted by Ken Henry (Member # 598) on :
Steve, The one thing that is a "must" item has to be some sort of retirement fund for the shop owner/operator. Nobody works till they drop, and once they quit working, there has to be some sort of nest egg built up that can generate enough income to live on. Failure to account for that item = living on welfare in your old age. How attractive is that prospect?
Posted by david drane (Member # 507) on :
Good Post!!. Since being in business on my own I worked every weekend because I was paying off a house, 2 cars a motorbike and my workshop. When I got my Gerber 4A in 1985 I was able to put off the bludgers that I employed and Liddy was able to help me apply vinyl. By 1990 I was able to employ a good trustworthy tradesman and a good office girl, and me and Liddy had a 3 month around the world trip. This happened because we charged exactly the same price for signs that we had been and were even cutting vinyl for other signwriters. I remember a rep from Letraset (Where we purchased our computer) saying that most signies were idiots because they paid big money to put in the new technology so they could drop prices, and so the era of the "vinyl jockey" was born very early. Over the years the price structure has eroded slightly but I sell by telling my customers that vinyl does last better than paint and that they are being charged for professionalism from an old tradesman who did the hard yards and they are still better off by having the new way of doing things. I must admit though that Liddy is a better businessperson than myself and she actually keeps an eye on me, because I am a softy and would let a lot of customers pull the wool over my eyes. Posted by Neil D. Butler (Member # 661) on :
That sure is a nice looking sign Glenn, But printing the entire thing on the Edge does explain why you have to charge $750.00 especially with the UV Clear. But if that was handpainted, which I don't do anymore, I know I should do more, but would'nt one be able to do it a little cheaper using that technique? or even just printing the logos? and using paint or vinyl for the rest.
4x8 32ft at 20 dollars a ft $640, yep you wold most certinly have to charge that price.
Nice job, thanks for posting the shot.
By the way Ray, I agree with you, "Totally." End of thought.
[ February 19, 2003, 07:07 AM: Message edited by: Neil D. Butler ]
Posted by John Deaton III (Member # 925) on :
Signcraft used to do a feature called "What did you get for it?" Maybe we could do the same thing here for comparisons on customers and areas of the country. It might possibly help some of us that might not be getting the price needed for a job, based on materials, and difficulty. Id be willing to post some of mine and the prices I received for them and would consider it a great learning experience to see what others get for their work.
Posted by Mike Pipes (Member # 1573) on :
Yep that can be downloaded, modified in Excel if you have it, and printed. As it is it doesnt have spaces for every possible expense, but they can be added easily.
You'll notice the worksheet also has areas for personal and household expenses, as I personally figure all that stuff into my own overhead cause hey, the business has to pay for that stuff eventually one way or another!
Posted by Doug Allan (Member # 2247) on :
For those of us without Excel, how about a screenshot, so we can at least look at it, if not import it, edit it & use it.
Posted by Robert Carney (Member # 2016) on :
Doug
Just import into Corel and you will be able to view it.
It worked for me
Posted by Doug Allan (Member # 2247) on :
Thanks Robert, I'll download it now.
On John's suggestion of posting some comparative pricing info, I just looked at a page on my website. I haven't looked at my site, much less updated it in years, so I'm not completely proud of it anymore, but the price info on my pricing page is still close to representative of my prices. The $400 4x8 was for my landlord & the job included 2 4x8's, but I would ask at least $400 each without installation, although back then I included the install. Also Sam's trucking included an on-site visit & design work (not a source of pride, but even basic designs would add some cost to my $200 price these days.
[ February 19, 2003, 01:12 PM: Message edited by: Doug Allan ]
Posted by Neil D. Butler (Member # 661) on :
Yes John that's a real good Idea, But the only thing I have a problem with is that maybe your competition will see it, go to the customer, and say "See? You paid too much for that Job, I could have done it for such and such. It could happen, it happened to me, but the Customer threw the Guy out... seems he started off with saying that I'm a Rip-off, Man I tell you, I wish the sign Guys around here would smarten up and make some money for themselves.
Posted by TransLab (Member # 470) on :
Just tried Marks program 'profitwatch' and it jived to within .50 per hour of my own calculations ya gotta love it!
Posted by Randy W. Robarge (Member # 2022) on :
I first used the worksheet that Jeff Cahill had on Signcraft. I used it a few years ago. When ProfitWatch came out, I tried it out. I got the same exact hourly rate as the worksheet.
So I keep Profit Watch because it's alot easier than keeping copies of the worksheet. They both do pretty much the same thing.
I think the part that you need to be particularly careful about is the "production hours" you actually are producing. I figured out how many hours I wanted to produce in a week to meet by goals. This produced a nice hourly rate of $60.00 per hour. Now, everything I do is based on time. I don't care if it's shop time with the plotter, artwork time, weeding, masking...everything gets the $60.00 per hour.
That works for me.
Randy
Posted by Mark Smith (Member # 298) on :
Glad it's working out, folks. As you've found, ProfitWatch operates on the same principles Jeff wrote about in that fabulous SignCraft article.
It just makes the whole process a lot easier!
Posted by John Deaton III (Member # 925) on :
Mark,Im still waiting on you to develop an estimate program for macs. Sure would like to see one someday. Posted by Mark Smith (Member # 298) on :
John,
I know it's not a perfect answer, but EstiMate works like a charm under Virtual PC. Virtual PC will run Windows XP in a Mac window, and run any Windows program including EstiMate.
Thanks for your continued interest!
Posted by Lewis Richards (Member # 3641) on :
You get a request from customer for a sign, after collecting all the info and a trip to the site you return to the shop and start working on your idea. Special colors? logos? sizes? etc. and still have yet to make a penny. You make a sample to e-mail or bring to client. Here is my per hour rate. $65.00 plus local travel time per hour with additional 2.00 per mile outside of area. Works for me.
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...what's left of it that is!....and i thought i was the queen of sarcasm...ok dude...i'll be watchin' you!! LOL
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