How to price your signage work
This post is directed more towards fellow sign makers, and the wider sign making community, rather than towards end customers.
If you’re not one for reading, you can skip to the useful video we found on YouTube at the end of this blog post.
How much do you charge?
On social media groups, and online forums it’s a common, recurring question “how much would you charge for….?”
Stop this immediately! This blog post isn’t going divulge what our prices are. What we charge, what your local competition charges is in the main irrelevant to YOUR business. We’re sorry to say there is no “going rate”. There is no ‘easy way’ and whilst this may sound boring, and pointless, over a decade in the signage industry this technique has served us well.
Know your costs –
A fellow sign maker, similar to us was undertaking ‘trade work’, using a local, much larger, supplier as their pricing benchmark. As an example the larger supplier are currently selling 8x4ft printed correx sheets for less than £50 to end users.
I suspect there will be two types of people reading this.
- How on earth are they doing it for less than £50? What’s the point? They can’t be making any money
- Well, if a sheet of correx is £x, the vinyl is £y, the ink is £z, then they must be making ££.
I can assure you that the company selling £50 correx sheets is making a profit – It may only be a small amount of profit, but the speed and volume they can produce these at, and the volume of material they purchase, with enough volume it can be profitable – Provided they have a good handle on their operating costs.
This is why basing your prices on another competitors is foolish.
If they can make £10 profit on each board, and with their machinery produce 100 boards a day, that’s £1000 a day profit.
Where as you and I, may struggle to produce 10 boards a day, making much less profit – if any at all.
Material Costs
We’re probably all aware that the material costs sometimes aren’t vast. It’s the £1000’s in machinery, the experience and knowledge we’ve built up, and the hours of work taking these raw, uncut materials and turning them into the finished product.
It is this aspect, many sign makers overlook.
Buying something for £10, and selling it for £20, doesn’t always mean you’ve made £10 profit. Especially if you’ve invested time in producing the item, even if it’s just artwork. There are costs that need to be incorporated into your pricing.
Overheads
You may be running your sign business from home, or like us have premises. You might work alone, or have staff. You may have vehicles, and machinery. Every business is different, and this is another reason to understand your own costs. If you’re trying to compete with Bob, who sells his wares from the pub, does it from his shed after work, using his non branded cutter and vinyl from Ebay, you’re probably not going to last too long.
You may need to account for
- Rent
- Utilities
- Internet
- Phone
- Vehicles/Leases
- Fuel
- Machinery/Leases
- Loans
- Accountancy Fees
- Tax
- Pension Contributions
- Security & Alarms
- Insurance
- Wages/Salary
- Holidays
- Sick Pay
Of course, when you give a customer their price, you’re not going to itemise every aspect of you overheads, but it needs to be accounted for within the price you provide.
Billable & Un-Billable hours
Regardless of what days, and hours you choose to work, it’s inevitable there’s going to be quiet days. Days where you find you’re doing essential tasks that don’t contribute to your turnover. We split these tasks into billable and unbillable hours.
The titles are self explanatory. Billable hours, are hours worked that you can bill the customer for, where are unbillable hours are the hours you’re still working but can’t be attributed to a customer, or invoice. Below are a couple of examples of each.
Billable Hours
- Artwork/Design*
- Production
- Installations
- Surveys*
Un-Billable Hours
- Quoting & administration
- Social Media & Marketing
- Accounts & chasing debts
- Maintenance, cleaning
Both billable, and unbillable hours, are equally as important to the function of your business, but you can’t be adding £10 onto a customers invoice because you swept the floor whilst waiting for them to collect their van.
Whilst you may choose to work 8 hours a day, or 18 hours a day, a proportion of those hours will fall into the unbillable category. If you’re producing “free designs”, or” “free surveys”, this time will need to be accounted for.
Once you’ve got a good handle on your costs, and your split between billable and unbillable hours, and a realistic estimation on how many hours/days you actually do billable work, you can then start to make informed decisions. Remember realistic, it’s always best to air on the side of caution!
Hourly & daily rates
Taking your fixed monthly costs, including any wages, you can then use your estimated ‘billable hours’ to determine a cost per hour, day or week. This is the golden number!
If you estimate a job will take 2 hours to fit, use this golden number in the pricing, along with your standard material markup.
When you’re asked to match a low price, use the golden number to determine if it’s worth undertaking, or you’re better off declining. Spending several hours on a design, to produce a low value job doesn’t appear so appealing. Even if you’re outsourcing work, making small profits that barely contribute to the running costs don’t seem so appealing.
It can also be used to aid selling products or items. By identifying your costs, and what it costs per day, week, or month, you can take a simplistic look at the profit on your items or products and determine how many you need to sell in that period to generate sufficient income.
This isn’t signage specific!
This isn’t unique to the Signage industry – This is how many businesses operate, particularly the trades people, some of whom operate on a ‘day rate’ basis.
If you’re still not convinced, or the ramblings above don’t make sense, check out this video on YouTube that explains with practical, real world examples how to calculate costs and price accordingly.
Here’s a useful video we stumbled across a while ago, and below that is a less interesting but equally useful video that demonstrates the numbers behind operating a business.
