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Materials price increases?

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Post Sat Feb 14, 2004 9:36 am

Materials price increases?

With the recent price increases from Europoint and today having recieved notification from Victory of their 5% increase is this something that is happening across the suppliers market? and if it is will you carry across increases to the customer?, I have increased my prices this year due to generally increases in every aspect of business, materials, fuel, insurance etc. etc. is this something the rest of you consider?
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signdevil

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Post Sat Feb 14, 2004 11:02 am

I find that price increases do not count for a lot really.

I personally have not raised my prices in the whole eight years of being in this business. What we do like most is look for other markets to explore and possible market newer ranges with a higher price attached and as you know in the sign business, rarely two jobs are the same. We simply try and work out what kind of budget the customer has and give them the amount of work we think is suitable to that budget. It's not like we're selling apples for 50p per lb so we put the price up to 52p per lb, as you are well aware, our business just aint' like that.

As for our suppliers, well that is another thing altogether. It simply depends on how they value you as a customer. If they want to, they can absorb any price increase to a certain extent if they value your business enough. I do not like to increase my prices and do prefer to look at cutting costs in other area's. Unproductive staff and poor advertising are the two big ones to watch. Those two can sink a business faster than that big block of ice that hit the Titanic.

My advice - If you're not happy then switch supplier but at the same time don't forget, good service and loyality have a higher value than a few pence per metre. :wink:
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Phill Fenton

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Post Sat Feb 14, 2004 11:20 am

When materials prices go up I shall be passing this on to my customers. I have also increased my prices over time to reflect the fact that my overheads have gone up over the years.

The materials cost of the signs we produce represent a very low percentage of the overall selling price, but I think it is important to pass these costs onto the customer, otherwise your profit margins will gradually erode away.
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Kevin.Beck

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Post Sat Feb 14, 2004 2:22 pm

I`m the first to moan when prices go up.

But how often when we quote for a job, do we knock off £20 or what ever, when the customer takes a sharp intake of breath when he sees the quote.

We all must be guilty of that.
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signdevil

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Post Sat Feb 14, 2004 4:06 pm

becky wrote:I`m the first to moan when prices go up.

But how often when we quote for a job, do we knock off £20 or what ever, when the customer takes a sharp intake of breath when he sees the quote.

We all must be guilty of that.


Thats dead right. When it comes to winning work, companies will price accordingly as some profit is better than no profit. As you say, we will all mark up and then knock the price in an effort to win the job. Every business does it so price increases really do count for nothing. It's all about what somebody is prepared to do something for and not the 'fixed price'.
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Graham Scanlan

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Post Sat Mar 13, 2004 4:19 pm

price increase

we have fewer price increases than we do price reductions in the substrates market so my advice is to look at passing the increase on, and as for the saying little profit is better than no profit, i wonder how long your business would last based on that?

as for suppliers absorbing increases, im pretty crap at maths but lets say a supplier turning over 15 million pounds a year obsorbes a 5% prince increase how much does he loose anyone?

hehehe

have fun
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John Childs

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Post Sat Mar 13, 2004 5:17 pm

Ah, you youngsters. Don't know you're alive. :D

When I started in this industry I had to pay £1.99 a metre for 5-7 year calendered vinyl but now, fifteen years later, I can get better stuff for £1.30. That can't be bad.

The thing is that a supplier will also go out of business if he does increase his prices and loses all his clients because of that. They are caught in the same conundrum as the rest of us, a balancing act between keeping the business rolling in and an adequate profit margin.

Looking at it from our angle, but it applies to any business, as more and more folks come into the trade (and you only have to look at the growing number of people joining this board to get an idea of what is going on) we have more competition and must therefore work for lower margins to stop the hungry newcomers from stealing our clients. Of course this can only go on for so long before some of our number will be bankrupt, or go out of business for other reasons, and a balance will be found. On that day our industry will have matured.

The two ways to protect yourself are:- Firstly to find yourself a niche where competition is limited, for reasons of skill, entry cost or whatever, or secondly to start your business at the beginning of the technology and sell it as the market gets saturated. For us that would have meant buying a Graphix 4B in 1983 and selling up anytime about now.

Twenty years ago there was tons of money to be made from renting out videos but how many video shops do you see around now? They've mostly gone and the market is split between the likes of Blockbuster and a pathetic little rack in the corner of your local convenience store. The smart cookies started up in about 1975 and had sold out by 1990 and had made one fortune by running the business and another in capital gains by selling it at a good price to the muppets who came along just that little bit too late.

That scenario is as old as business itself, and will happen in our industry, if it hasn't already started. You heard it here first. :D

On that cheerful note, and having wandered off course a bit, I'm off to polish my bike.
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Phill Fenton

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Post Sat Mar 13, 2004 6:17 pm

I don't entirely agree with your argument there John :D

You're absolutely right that it is now easier and cheaper than ever before to start a signmaking business. And the market is becoming saturated. :( However, just because there is more competition that's no reason to respond by cutting profit margins. Look at the building trade - it costs little or nothing to set up as a builder, and yet established and profitable companies continue to be suscessful year after year even against intense competition.

I believe that the skill levels required to become a decent signmaker should not be underestimated. A good signmaker needs to be computer literate, have good design skills, good handyman and technical skills, and have good business acumen as well as the social skills required to win trust and keep existing customers. In other words - Not just any Tom (oh i swore !) or Harry could run a successful sign business - it takes a certain amount of intelligence and skill to become good at making signs or to have the admin skills required to manage others in providing a good quality service. The comparison with video rental shops is un-realistic as there are much fewer technical skills and abilities needed to run a video rental business

There will always be those that offer a cheaper service - possibly even a better service, but once a signmaker becomes reasonably established he will want to make a reasonable enough profit to justify his time and effort in running his company and will therefore eventually price his services accordingly or go out of business.

My advice for the newcomer is "go for it" but don't think it's going to be easy. You will need the atributes I have described above. If you don't have them already don't be despondent because with determination and effort you will obtain the skills you need.

Existing sign companies will continue to thrive for as long as they continue to offer a good service to their customers. :D

Sigm makers will also continue to evolve and offer newer services such as digital printing. Whole new skills and abilities need to be learned to be good at this emerging market. Buying a digital printer is only half the story. You then need to learn to use it properly.

Now I've been rambling on a bit :oops:
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John Childs

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Post Sun Mar 14, 2004 12:15 am

You're not rambling Phill. Interesting discussion, although perhaps a bit deep for a Saturday night. :D

Ok, if you don't like video shops, although I still think that the general business principles are the same, how about the motor trade? The technical skills are far above anything we need and to those attributes you mention you can also add money management due to the ridiculously high cost of stock required.

I have seen literally thousands of retail motor outlets fall by the wayside in my time. For example, when I left school there were 2,400 Austin and Morris dealerships in the country. Today, after mergers and rationalisations there are less than two hundred Rover dealers. Where have they, and all the people employed by them, gone? Making signs probably. :D

Digital printing? I don't think so. It's too late. I was thinking about buying one myself but I see so many out there now (the floor at Sign UK last year was an obstacle course of pretty images falling out of wide format printers) that I have decided against it. Not too long ago an image cost £11 per square foot but can now be bought for what, £5 ish per square metre. OK, costs have come down, but not on that scale. I have made the decision to sub out any printing we need and let all the printer owners compete for my business. Fight amongst yourselves boys. :D

How often do we read on here about cowboys stealing customers? I agree that good companies will survive as long as they continue to offer good service but customers that are prepared to pay for good service are not inexhaustible and we will have to fight harder to keep them. On the other hand, SOME good companies WILL fall by the wayside.
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Lorraine Buchan

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Post Mon Mar 15, 2004 1:22 pm

For me the time is coming to go back in time, we are having an increasing number of enquiries relating to traditional methods of signwritting, soon i feel this will be a sort after ability which will demand a good price. In something like signmaking we can always evolve but as with fashion traditional methods will come back into fashion again

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