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Phill Fenton

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Post Wed Apr 02, 2003 11:36 pm

Pricing Work

I was wondering how everyone goes about pricing their work. I'd be interested to know what methods are used by others for pricing their signs.

Do you use spreadsheets or manual methods. Pluck figures out if thin air, count up individual letters, or use look up tables.

Personaly I use a spreadsheet - but this is a bit mechanical - and does not take into account whether a design is brilliant or poor.

What's your approach to this problem?
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fluidedge

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Post Thu Apr 03, 2003 12:26 am

Pricing Signs? Wish there was a magic method.

With two teenage daughters in the house, the price of our signs has been known to vary according to the cost of the latest pair of Rockports or the cost of the return busfare to this weeks boyfriend's house.

We use our own Filemaker Pro database suite that has records of clients, suppliers, products, quotes etc. It gives an accurate enough price to prevent you working for nothing or charging like a wounded bull.

Quite a bit of time goes into setting up something like the above, so not ideal for everyone. We use it because 2 of us do quotes, stops us coming up with different prices! Plus you can also refer to the last few quotes you gave the client, always helps.

Not found a way to make it decide how good a design we've done though! Mind you, on one or two of our jobs it would probably have told us to pay the client!

Essentially everyone needs to work out the actual material cost of producing a sign, say £100. Then estimate the time in man hours to make it. If you know those two things you are well on the way. Work out a margin that you are happy with and stick with it. There was something on a while ago about working out your hourly rate. Think it is on the Signcraft site. Bit of a plod but well worth the effort, even if the result shocks you!

QUESTION FOR EVERYONE - WHICH SIGNMAKER MAKES THE MOST?
Signmaker 1 and Signmaker 2 make the same sign. Signmaker 1 takes an hour to make it (because he's got the latest widgety-doo) and it costs him £30. He charges £100
Signmaker 2 takes 2.5 hours but it costs him £20 (because he's a UKSG member!). He charges £150

So who has made the most money?
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Lorraine Buchan

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Post Thu Apr 03, 2003 10:53 am

Does the cost price include the labour time??? - depends how much they charge for their time.

Phill, I use an excel spreadsheet, which i'm continually trying to improve. All the prices of my most used supplies are in there, with a markup, they way its linked allows me to change the mark up for doing trade work at the touch of a button with out having to alter everything. I have a section with artwork charge which is charged per half hour and then a labour charge per minute, the labour time is normally guestimated. But it all seams to work out well.
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Alan

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Post Thu Apr 03, 2003 12:48 pm

Manual, material cost + mark-up + estimated/guessed time at my charging out rate.

One of the most important things is to be realistic about the number of hours you can productively work in a week. It’s no good deciding you deserve to make £XXX.00 per week as a salary, and then dividing that by a full 40 hours of productive time in order to reach a charging out rate.
I find, working on my own, that a great deal of my time is spent on all those chores that can’t be laid at the door of any one particular job.

So how many hours out of 40 can you actually be productive, 35, 30, less!
And don’t forget holidays, sick time, fishing, golf :lol:

This is a hard question, but one that must be answered honestly to reach that true cost per hour.

Now if only I would listen to my own advice :(


As for the case of the widgety-doos, it depends on whether the time saved by using the widget is sufficient to pay for the said widget plus a healthy profit on the investment.
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Texcat

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Post Thu Apr 03, 2003 3:09 pm

One of the first things is have you calculated your hourly rate for labour hours and machine hours correctly. I just tried to write an article about costing for the last half an hour, but it gets very complicated ( trying to remember those 4 years i spent at Uni doing this).

I was going to post it but it is already 3 pages long and only covered about 2% of it.

Briefly have you considered all the indirect labour costs and indirect materials costs Ie Secretary or accounts person and sand paper, scalpels, squegees etc. And the overheads of the business, rent, rates, electric and Employers NI contributions etc

Basically the easy way is as follows.

Direct Materials
Direct Labour
Direct Expenses

=Prime cost

+ Indirect labour
+Indirect materials
+Indirect Expenses

=Cost

+Mark up

=Selling price

Getting to the hourly rates is the harder part which i will try and give an easy example at another time

Andy
BA Accounting
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Jaybee

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Post Thu Apr 03, 2003 10:00 pm

fluidedge wrote:Pricing Signs? Wish there was a magic method.


QUESTION FOR EVERYONE - WHICH SIGNMAKER MAKES THE MOST?
Signmaker 1 and Signmaker 2 make the same sign. Signmaker 1 takes an hour to make it (because he's got the latest widgety-doo) and it costs him £30. He charges £100
Signmaker 2 takes 2.5 hours but it costs him £20 (because he's a UKSG member!). He charges £150

So who has made the most money?


To answer your question, I'd be inclined to say Signmaker 2 HAS made the most money of the pair...over the course of their time in business. No.1 is probably starting out, and hungry for work. No. 2 has likely established a wide client base and no longer needs to price aggressively.

JayBee.
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Kevin.Beck

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Post Thu Apr 03, 2003 10:04 pm

Obtaining the correct price for a job is crucial to survial.

I phoned about some printing and embroidery equipment today. The seller was a competitor of mine. He decided to get out of the "business" because there was "no money" in it.

The said person, was always selling his products too cheap. He would work for nothing.

I have learnt to charge the "proper" price for a job. If there is no money in the job, I say so, and either set a minimum job cost or refuse the job.

Let someone else work for pocket money. I work for a decent wage.
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Simon Clayton

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Post Thu Apr 03, 2003 11:28 pm

Many of the prices i see being charged, are far too low,
You have people buying a vinyl plotter and calling them selfs signmakers.

I have worked for sign companys doing all types of jobs from Drawing office manger, production manager, surveyor to freelance graphics installer for exhibition companys, I have done quotations the lot.

I agree with Becky, However a lot of customers will spend thousands of pounds having their shop completely refitted and then have 10mm thick foamex panels screw fixed to the wall with white plastidome caps to hide them with applied vinyl. It might look *hair* but its cheap.
Example: I ve seen an advert for 3'X2 foamex builders board £12.00 plus VAT.
Going on UKsign groups prices, foamex £11.67: Vinyl 3m X 1260 £5.04
5 boards out of 1 sheet = £3.34+VAT for material that leaves £8.66+VAT for cutting, weeding, laying and packing plus all the costs of running a factory electric etc. I would estimate 30 mins per board cutting and laying, that makes a profit of around £8.66 =VAT per hour as half must go on wages and factory
Most companys i've ever worked for, charge their staff out at 25.00 PER HOUR.
I have just start lower my prices, to match what other are doing in the area.
I blame the local councils, as they let any old rubbish go up. If they took a firmer view and only allowed quality to be used, things would look a lot more attractive.
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Robert Lambie

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Post Fri Apr 04, 2003 12:05 am

i, as many of you know around here, am "not" the guy that does the pricing in our place. but do have my odd arguement when i think a job is under charged :lol:

we had software made a few years ago based on what we do manualy.. to be honest we do it in on paper most often than start the program..
anyway..

we made a list of letter hieghts... 1 inch 2 inch 3 inch etc .. gave each one a fair price. taking into account weeding, taping & time.
if somone needs ten 4" letters we simply multiply the amount based on the hieght price...

we do this also for perspex and any other sheet material.. all at per square foot..

then all trims per foot and so on.. when it comes to a quote we just keep to it and multiply each material used by the amount used.. same with text etc..

if there is a logo on the sign we charge the height of it to a letter at same height and double it.. if its 2-3 colours we just do the same. if its just small bits here and there of colour we dont really add much if anything.

fitting is always per hour... and somtimes stick more on it if its a touph one.. signs up high.. same again.. i dont think there can be a set rule of thumb for fitting signs.. other than vehicles. :roll:
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Martin C

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Post Fri Apr 04, 2003 1:11 am

I don't get the time to fill in spreadsheets!! I'm a one man band so my pricing methods may be a little obscure?

First off I know what I need to make each week to keep running, and have a target for what I want to achieve on a monthly basis to attain greater 'success'. My daily rate allows for a few days off here and there, annual holidays etc., but a months sickness would scupper me!

For each job, I take the cost of the material, estimate what I think the value of the job is (to me and the customer) and put a mark up on sufficient to make a very good daily profit/wage. I simply cost jobs as a half day or a full day, nothing in between, take it or leave it. It's an easy way for me to keep a grasp of where I am financially at any one time and if my daily rate is ok, then it follows that my weekly, monthly profits will be in line also. Odds and ends jobs are just bunce. Lost orders on price are not worth having. Any 'down time' is sales time and I get on the knocker.

Sometimes my lack of experience means I get it wrong, too many hours spent on one job but I can balance that by pulling my finger out the next day and as I don't have massive overheads and work from a unit at home I can be time flexible.

My main problem is production time set against answering the telephone! What I need is a voluptuous mini skirted secretary to take my calls but there's little chance of that happening...............that's how I met the wife!! :oops:
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Phill Fenton

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Post Fri Apr 04, 2003 1:16 am

Thanks guys and gal (Lorraine) for all your input on this. I think we're all agreed that an hourly rate is a not just useful but a "must" starting point for any business. However, we've all experienced the phonecalls where the customers first question is - "how much does a sign cost". I do think we need to be able to react to this by offering knowledgable suggestions and indicate what sort of prices the customer can expect to pay.

I know of a few "ex signmakers" who have moved on from signmaking as in their view "there are no longer any profits to be made in signmaking". I disagree entirely with this opinion. There are fantastic profits to be made in signmaking. It's all down to us professional to educate the public about the value of their signs. Only yesterday I had a customer who had bought a new van and explained that he had very little money left to pay for the signage :roll:

I asked him how he was intending to promote his business and he explained how he would be advertising in local papers. I then asked him to consider the value of his van as an advert for his business. I also explained that for a "one off" cost he would be advertising his business all year round. Within 5 minutes he was "eating out of my hand" :cool: and in full agreement with me as to the value of signs to his business.

Those that move out of this fully creative and satisfying industry are giving in far too easily - but are leaving the rest of us to run worthy and lucrative businesses that not only provide us with a good income - but provide a very valuable service to business in general. :D

Don't underestimate your customer - they are not fools, but will recognise rubbish when they see it. Offer them a first class service at prices you need to charge to run a viable business and they will gladly pay it - and come back again.

Sorry to digress :oops:

So anyway - how do you go about pricing your work?

I suppose the point I am trying to make here is how do you go about putting a value on a well thought out design that promotes someones business as opposed to a simple sign that says "no entry". Both can be similarly sized and cost the same to make - but one can be mass produced whereas the other is tailored specifically to a customers needs
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That Sign Shop

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Post Fri Apr 04, 2003 5:11 am

I agree that knowing what your true hourly rate is critical. I found this free program from a vendor that helped me quite a lot.

Even if you don't like the vendor's program, this freebie is worth a look!

http://www.estimatesoftware.com/estimate/download/download_profit_watch.php?PHPSESSID=43a2fd55560a15c4662480883c619c25

Scott Daniels
That Sign Shop
Illinois, USA
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Lee Attewell

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Post Fri Apr 04, 2003 5:32 am

I've tried the estimate software demo version. It blew me away . I was really impressed with it but can't afford the $1200.00 Aus to pay for a full version. So I use the Australian pricing guide and fo from there.

Lee
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Kevin.Beck

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Post Fri Apr 04, 2003 7:46 am

No matter what methoid we use to price up a job, wether it be via a computer software system or the more simplified guesstimate methoid.

As long as the job is priced both fairly to the customer and the supplier. both partys will be happy.

As phil said, the customer is no fool. He now knows he can barter with some suppliers of goods.

It`s a pitty the self employed aren`t protected by the "minimum mark up" law.
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Martin C

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Post Fri Apr 04, 2003 9:07 am

How many jobs do you lose on price? I'll put my hands up and say that I'm extremely competitive......no one ever made a profit on a job they didn't get...........but as I consolidate my business the fear of losing orders on price has diminished and my prices have hardened considerably. For some while if I didn't get an order I'd phone the guy up to find out why and in nearly every case it wasn't MY price that was wrong it was THE price, i.e. they thought a Banner would be £20 not £80, that a Menu board would be £10 not £100! They hadn't got a clue.

My frequent stomach churning worst case scenario (particularly on clothing) is when they say...........'is that all?' I quoted someone a total of £20 to put a simple two letter, one colour breast logo onto half a dozen customer supplied T's.Took me about 5 minutes. 'That's good they said, only £20 a shirt.......aaaaaarrrrgh!!' (hot)
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Simon Clayton

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Post Fri Apr 04, 2003 10:13 am

Here is a good example that martin has posted,
Half a dozen tee shirts 5 minutes work, £20.00. However if you timed yourself, it would have been nearer half hour to an hour, set up, design, packing, time spent on client stripping off backing etc.
I not trying to put anybody down, but this is how thing go down hill.
Now the next time this client wants work doing, he has your price as a guide line and wouldn't want to pay more.
So he goes up the road to Joe Bloggs who has just bought a machine. Who says i do it for £18.00.
I bet if people were to do time sheets (as i have done in the past) they would see the true time taken to do the simplest of jobs.
This is why so many sign companys have gone bust. We all do skilled work, including designs, colour visuals and fitting etc, but don't charge properly for it.
Yet if we call a plumber, we would pay £50.00 call out and then £60.00 an hour there after?
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Martin C

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Post Fri Apr 04, 2003 10:59 am

If it took me half an hour to print 6 T's with two letters I'd be out of business at any rate!

Unfortunately every man and his dog knows the price of a T-shirt and the perceived value depends on what use it will be put to. Quality workwear Polo or cheap Stagnight T, there's a limit to what one can charge. Comparisons with Plumbers are all very well but I'd like to see you 'sell' that idea to the lady who comes in for a picture of a cat on a T for her grandaughter! In the instance referred to it was a bunch of tarmaccers who were mid pub crawl, had grabbed some T's and thought it would be a good idea to wind up a mate with said initials. I'll concede it probably took me 10 minutes, 50p worth of materials £19.50 labour and that works out at £120 per hour!

The point I was trying to make was that yes, sometimes we can overprice and lose work but this can be balanced with underpricing too. (:)
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Simon Clayton

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Post Fri Apr 04, 2003 12:13 pm

Sorry :oops: i don't know what i talking about (as i don't know what method you were using). i miss read your post, i thought it was sceen printed.
However The tarmacers were surprised at how cheap it was.
The point i was trying to make about the plumber, is they keep their prices all around the same.
As for the lady that wanted a cat on a t shirt, she would have to pay the going rate, if it cost £15.00; i wouldn't sell it for £10.00 because she may go elsewhere.
what happerns is a price war "he" can do it for £15.00 so i will do it for £10.00 and so on, however if she went to joe bloggs up the road and he gave the same price as you then it down to service and quality, thats how i would sell it to her.... :wink:
We all under and over price work, I recently did a quote for a jumbo transit two sides and back door in black vinyl (very simple plain text etc); price £190.00
this was still too much and he went elsewhere. i could have done that job and made money at £50.00 ( £10.00 vinyl 2 hours work £40.00) should i have done it? The going rate should have been more £190.00
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Texcat

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Post Fri Apr 04, 2003 12:47 pm

With regards to people under cutting or charging cheaper we seem to be lucky as we have only lost one job in the last 14months due to a competitor in the market. And we are not cheap

The job was for a fascia sign and window vinyls for an accounting practice. We were £220 more expensive than the others so he went with them. Fine i am not dropping my price.

I reworked the price just to see and i cannot understand how the other company can do it at their price, unless they are using inferior products. They are travelling 100 miles, round trip to do the job. (Ours is 4miles)

When job was finished we had a look. 5mm foam board in two pieces and screwed through front of panel. Its bowing already after 3 weeks. Had to laugh, client scrimping on money and gets crap job.

To let you know our hourly figures that i worked out are as follows.

Design time (senior) £50ph
Design Time (Junior) £35ph
Workshop £35per man hour
Routing £48ph +Set up
Fitting £40ph one man. £65 2 men
Vinyl cutting £22.50 phour to cut, weed apply

What do you charge???

I am currently working on a small program that will help you work out the correct hourly rate for men (and women) and machine times taking into consideration cost, running times, depreciation etc

Andy
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Simon Clayton

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Post Fri Apr 04, 2003 1:49 pm

Texcat'
Your prices look to be fair. Where i live there are a few others like my-self working from home workshops, I know we don't have high over heads like larger companys, but i do wonder if they cost in any factors at all (heating, light, telephone and the like)
My workshop is 8mtrs long and 6mtrs wide and if i had to rent one, it would set me back at least £400 a month,
What i do is to source the needed materials add on around 20%-40% markup; add the cost of a fitter (half a day £160) and then calculate the number of hours needed to do the job (£23.00 per hour for my time), then if it looks too low add a bit for luck.
I also do colour visuals,artwork and neon drawings for another company for set type prices; colour visual £35.00-45.00. complete neon drawings for anything upto £270.00 depending on amount of neon and tcp drawings for around £50.00
This works quite well for me as i don't have to earn that much...long story.!
I do also like to time the work i'm doing whenever possible, to keep it realistic, as some things you think only took one hour in fact took two.
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Martin C

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Post Fri Apr 04, 2003 3:54 pm

Truth is Simon, the tarmaccers were xxxxxx! (Drunk!) I used the widest margin of error to highlight the story...........so perhaps not the best example.

My only problem with Hourly rates is working it out when the phone keeps ringing all the time!
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Simon Clayton

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Post Fri Apr 04, 2003 4:43 pm

I'm lucky... my phone don't ring :cry:

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