How to run a sign shop
1.1 Using signquoting.com.au to improve your quoting output
Creating sign quotes is exciting as well as challenging and we have developed an approach to help the sign maker be aware of covering all areas. Sign Quoting prices are based on the most popular and common types of signage, evolved from research on overhead and production charges as well as what other sign companies are charging. Prices can be broken up into three levels: Simple, Average and Detailed. Whilst Sign Quoting is a huge help you still need to know your overheads i.e. the indirect costs of running your business, prior to buying any materials to manufacture your signage. See item 1.5 Know your Overhead and Hourly Costs to work out these prices.
Description of levels:
Simple level of Sign Manufacture: Minimal amount of copy, simple layout, usually in one colour on a white background. Normally signs manufactured for customers on a budget, produced efficiently as possible in the least amount of time frame with minimal amount of materials.
Average level of Sign Manufacture: Using approximately 50% more production time than a simple sign with an average amount of copy. Usually two colours and may also include a panel, border and/or modest graphic. More time is allocated for layout and the result is a more appealing and effective sign.
Detailed level of Sign Manufacture: Using approximately twice the production time of a simple version of the same sign and allows more time for layout and production. Usually three or more colours with outlines and/or shades plus panels, borders or graphics, possibly on a different coloured background. Detailed signs use more materials than the average and result in a more effective and appealing sign.
As each job gets more complex, the time taken to sell and set up also increases accordingly. Detailed sign work is more challenging to price and remember to add any extra design time and manual operations. Materials used to manufacture a sign may be easy to quote but it’s easy to give away time if you’re not careful. If Detailed signs are a common occurrence why not track the time and materials used, this will enable you to learn the true cost to you, of manufacturing these types of signs.
Every sign shop has it’s own preference of manufacture and although digital print is now the preferred method some sign shops use a combination of techniques including computer cut vinyl film, therefore most pricing would be applicable to the Average and Detailed price guides, Simple is more attuned to a quick one colour job.
Knowing what to charge
To effectively provide an estimated selling price you need a thorough knowledge of your overheads, costs and an accurate evaluation of production times for sign manufacture. If you know all of these costs you will be able to quote a price with confidence.
Selling is an art
As most signs are custom made they are valuable only to the client, if they don’t pick the sign up it is virtually useless to anyone else, however if signage increases sales the purchaser will consider it priceless advertising. Know how to sell a sign, build a relationship with your customer, help them solve problems and realise what you have to offer.
The value of work created should reflect the skills required to produce the signage. Sign manufacturers who have worked at developing their layout skills will undoubtedly produce a more appealing layout and in less time than someone unskilled, therefore this skill should be reflected in your costs. Having price guides/lists and selling skills are a big help in running a successful business.
1.2 Some discussion on why pricing methods are so important - How much is a sign or digital print worth?
Well, more importantly: How, Why and What is any sign worth? It’s probably the most talked about topic in general sign business. Sign prices and estimating signs is, in our view, the singular hottest sign industry topic of all time.
How can some get pricing signs so wrong and some so right? There is a great quote "The winner is the chef who takes the same ingredients as everyone else and produces the best results." - Edward de Bono
Here are some unique approaches to pricing signs, sit down, grab a coffee or cup of tea and have an open mind. Our aim is to give you some easy to use options, and I accept in advance not all approaches will suit all sign makers. Maybe these sign quoting concepts will open your mind about the way other sign companies perform the task of sign estimating, maybe not?
How much is a sign or print worth?
Download this article or continue reading.
Considerations may include:
- Relationship and trust with the sign or digital print client
- Your sign business’s proven track record and delivery of your sign products
- Ability to meet deadlines mutually set on the sign project
- Quality of the signs and prints for the intended purpose
- Demographics and market size of your regional sign area
We suggest some common sign quoting strategies, and many can lead you on a road to success or disaster!
1. Cost Plus (or 1+1 = 1)
When the pressure is on, work is short and often companies think this method will help them. You think of using a quote at a rate based on costs plus + small margin and even if you cover your costs, you will end up in profit often, however the opposite is true. Cost Plus assumes: your costs are under control, you are buying your sign product competitively, you have reasonable sign labour rates and altogether when combined with the skills for your estimators will always win business.
Perhaps, however what happens if - your costs are out of control, you don’t have everything in your sign business as fine tuned as you should and your costs and prices are higher than your competitors’ costs?
The net result could well be = you lose the whole sign business anyway.
Cost Plus = generally creates a culture internally that it’s about you and your business
Fact is = your customers are generally only interested in their needs and don’t have any idea what the sign is worth anyway. So, why risk your sign business’s future?
2. Win the Sale (or 1+3 = 4 less 30% = 2.8)
Everybody wants a deal, our culture is changing and if your sales team are taught to win the business at any cost, I propose you are on the start of a very slippery slope. If you start discounting – you’re training your clients to do business with you that way.
It proves to the sign client they should always negotiate with you and screw you down. If you adjust upwards, no one knows where your sign prices are. In the long term it will devalue your market confidence and business relationship with your sign clients.
3. Kill off a competitor (or 1+1 =-1.5)
One of my favourites of self-destruction in the sign business! You develop a need to wipe out a competitor by assuming you and them are locked in some sort of gladiatorial battle of right and wrong. Trust me, leave Gladiators to Russell Crowe! In the real world this sign pricing strategy will only have one winner, and it’s certainly not the combatants!
Take a tip…donate your profit to a charity, at least that way you will feel good about ripping up your sign making profits.
4. Market Rules (or 1+1 = 2 less whatever is current today = .5)
Hmm, last time you looked it was your sign business right? And you’re in business to make a profit right? Then, if you have faith in that concept why let wildly fluctuating sign market prices control your sign making business? Thankfully the sign and print manufacturing business marketplace is not an open market place like a stock market. If your aim is to sell your sign products to a wide and varied group of diverse sign clients well simply put, that diversity offers some safe harbours, learn to listen to sign clients specific needs and develop a balance of price, quality and service to suit.
5. Fair and reasonable (or 1+1 = 3+)
Most fair-minded and well-run businesses understand value for money. The principle secret is selling signs and prints at more than they cost you to make…YES? So, use common sense, based on your real costs add a percentage margin aimed at delivering what your sign making business needs to run a fair and reasonable business, within your values and aims. Sounds too idealistic?
Time and time again we see profitable sign and print businesses who understand their business and their clients’ needs. Tell me what have you got to lose? Who knows you may even get time to have a round of golf, walk along a beach or see your kids!
6.Value based prices (or 1+1 = 20)
This is better told as a real life tale, it is one of mine and based completely on facts. Many years ago we supplied a simple banner to a client who did waterproofing inner city. His claim was this banner, worth say $300, increased his whole business by hundreds of thousands of dollars every year. We of course suggested more signs, graphics on his vehicles, reception signs, and just about anywhere he could put a sign, he did.
Everybody is winning so far - Right? The result was simple; his business grew exponentially as did the profits he collected… Nice story?
Ask yourself: “Would the banner, at a cost of $450 or $600 have made any less of a result for the client?” or “Would my clients’ customers stopped calling him?” Than had I charged say $600 and made a very handsome profit, in turn we could have really done something very special – and even generated more business for the waterproofing business. Over the years we taught him the value of a GREAT sign, and he understood the value of our work, together we formed a stronger relationship!
We call it Value Based pricing, if you learn the real value of the goods you make, importantly you can live a different life. I share a view with many like minded individuals, that an appropriate percentage profit component should be added to every project you deem is suitable to ‘add value’, based on your experience…Try it.
How much does it cost V’s what does it sell for? If you accept the fact that NO two businesses are the same, just as no two people are the same, then “how the hell do people expect prices to be matched or the same!” So, if your work is the result of years of training, investment in skills, knowledge, premises and equipment then isn’t it up to you to set your prices?
Learn to trust yourself!
How much is your artwork worth? Let me offer you one of life’s great lessons, and as I understand it a true story - Picasso is having a coffee in a piazza. An American woman noticing him and his sketchpad interrupts and asks if he could sketch her? Certainly madam, please sit Picasso offers, in a few short moments a masterpiece develops before her eyes. He showcases his artwork to her and she was thrilled. Politely she asks, may I buy it from you?
He replies, certainly it’s what I do for a living. She replies, how much? Picasso proudly replies: $10,000.
But it has only taken you a few minutes she retorts! Picasso calmly replies, "No madam, it’s taken me my whole life so far!"
Here are some Picasso quotes as gems of wisdom - "I don't own any of my own paintings because a Picasso original costs several thousand dollars -- it's a luxury I can't afford."
"I don’t seek – I find" - Pablo Picasso 1881 – 1973
A good starting point is to evaluate your prospective clients into categories: perhaps these profiles may assist, but don’t be afraid to develop your own additional categories or amendment to these ones.
- Large company with a lot of repeat work
- Doesn't seek other quotes
- Trusts you not to take advantage of them
- Trusts the quality of your company’s work
- They are willing to pay a little extra for quality work
- They are willing to pay a deposit, or have an established trading account
- Willing to answer questions and have a degree of understanding of signs
- They give plenty of advance notice to have their work done
- Often recommend our company to others
- Small to medium company with potential to grow
- Generally don’t seek other quotes, or will only get other quotes on an irregular basis
- They are willing to pay a little extra for quality work
- They are willing to pay a deposit, or have an established trading account
- Co-operates with you and gives plenty of detail of work to be done
- Gives plenty of advance notice to have their work done
- Will recommend our company to others
- Small company with few employees
- Generally will have at least 3 companies submit quotes
- Promises repeat work if we give them a discount
- Needs signs in unreasonable time frames, everything is urgent
- Takes their own time to approve quote, but wants instant production on their project
- Doesn't really want to answer questions to help us with their own quote
- Small company with few or no employees
- Sends a fax/email request for a quote without ringing first
- Non-qualified prospect
- Wants to bargain and negotiate a ‘best’ price
- Whines about feeding the kids
- Won't answer questions we need prior to going out to the site
The best business model for long term sustained business growth is fixed cost/multiple returns. In the categories above only A and B fit this model.
1.4 Types of Signs
Some people consider that if the output is from a computerised machine like a digital printer or router it’s a predictable event and is reasonable to expect the price of a sign should be static. The best sign company performers we observe are skilful at understanding a phenomena we call Value Based Pricing.
Let us explain:
There is, in some sign schools of thought that labour+materials+costs+margin=sign price. Whereas we put forward by using a sign quoting online estimator will offer your sign business the opportunity to add value to your business and your client’s business.
Hypothetical concepts in sign values:
We suggest 5 key sign layouts that offer scope in understanding the value of what quality sign layouts can add to the impact that signs have in attracting business to the sign customer’s business. Conversely, the value of a simple sign layout versus a complex one could be questioned. Take a simple layout in relationship to a safety sign – then ask yourself the value of that sign, if it aids in saving a life? The well used quote – “perception is reality” is key in understanding the power of an appropriate sign in the value proposition.
A simple design based purely on text and standard design techniques
Basic sign design adds some fundamental graphic design skill sets and may, due to the signs end use, add additional text
The accepted norm with signage is that technologically it has changed since the advent of digital print equipment. Therefore, as the digital output is the largest output, the ‘average’ has changed. The likelihood is that an average sign design will now include more colour, an increased amount of text, perhaps a logo or image to an average design time
Based on Digital output the gamut of design range increases proportionally. We propose Detailed increases items on the design. Likewise text may increase, allowance for greater research in design, increased support items like stock photos, borders, and increased effort by the sign designer to present a more professionally outputted sign
Interesting we may not have considered the category previously. However, once again technology has provided a wider range of sign making tools and products. Perhaps custom photography added to 3 dimensional cut out profile shapes. Of course the previously mentioned text, logos etc are an integral part of most signs. Suffice to say Complex is an open book which can go from the sublime to the outrageous
1.5 What’s it cost to make it?
Signs are mostly custom made projects and it is very important to look at and know the actual cost to manufacture, it is imperative to track materials and labour to get a true costing. By keeping track of charges gives you the opportunity of comparing production times and costs for similar jobs, and will allow you to see if your estimating is on target.
The foundation of pricing your work accurately is knowing your overheads, billable hours and profit etc. Estimates are purely hopeful guesses of what you think signage should sell for. Accurate pricing takes out the risk of working harder for less money. Do a little homework by looking closely at your overheads, your costs and your pricing, there is basically three primary options of increasing your bottom line; increase your efficiency, increase your prices and/or work more hours. The last option will work for a short time only but the most profitable is to be more efficient. Find ways to streamline production, most already know what needs to be done to work more efficiently. With just a 10% increase in efficiency can make a huge difference of enabling you to knock off on time as well as financial benefits. Fixed expenses are constant; the additional work you produce is profit.
To check that your pricing is correct you need to know your overheads, what it costs to operate the business. Review time and materials in your estimates against actual, and remember to charge for all of your materials etc. remembering resources or products used on a job and not charged for steals directly away from your net profit.
Important facts about overheads and hourly rates
- Once you have worked out your overheads and calculated an hourly rate it is a good idea to check with your accountant, they can fine-tune your hourly rate and may find expenses you overlooked
- If you and your sign shop are highly efficient and productive your costs should reflect this, adjust your rates accordingly
- Evaluate your overheads regularly
- Larger sign shops are often perceived as being in a position that they have to charge a higher cost because of their additional wage, insurances, overheads etc. It's fair to assume that it's proportional for smaller shops to have a reflection of these costs, just in a smaller scale. However, if you have very well maintained overhead costs you may feel inclined to charge less than a large shop, but I have to ask the question why would you? If the product is worth say $1000 and you can produce it for less than a larger shop why not accept the market price and benefit from the additional profit
Above all have a reason for customers to continually return to your shop and services by producing effective, appealing signs that will deliver real advertising value to your customers.
We are currently compiling a detailed and simple calculator to work out your hourly overhead rate, download the detailed one here and the simple one will be uploaded shortly.
Sign and Print Overhead Estimator (147 KB)
1.7 How to Determine your Hourly Rate (wages calculator)
Do not confuse billable and chargeable hours – billable hours are the hours you have calculated into your quote. Chargeable hours are the actual hours taken to perform the job. You need to know what your charge out rate is per hour to cover the real costs running your sign shop. Compare actual hours taken to perform a job against the price/hours you have quoted for, to see how they compare. Don’t forget to also include cost of materials. This will help you understand if your prices and estimating are running in zinc.
To help clarify your hourly rate divide your yearly expenses by annual billable hours e.g. say your total yearly expenses are $75000 divide this figure by 1326 (i.e. the total hours worked out by using 30 hours per week x 44.2 weeks, which is the Estimated hours of direct labour). This will give you an hourly rate of $56.56 before profit, then add a profit percentage and you will end up with an hourly rate.
If you wish to receive a free download for our Wages Calculator please follow this link, http://www.kimsoftware.com.au/wages-overheads fill in the request, you will be sent an Auto Responder and just choose the form you require.
1.8 Knowledge base
The Sign Quoting Knowledge Base is provided as a resource for sign makers and sign estimators to develop knowledge. Sign people grow their skill sets in making signs and digital print, somewhat organically perhaps, initially at trade school or through the course of learning sign making. Our findings in “learning the sign trade” provide an insight to how Sign Quoting can offer free sign software tools to improve and grow sign makers ability to enjoy what sign makers do and improve their ability to increase profits and importantly leverage sign people's time more efficiently. The net result is aimed to allow sign based businesses more time to make signs, rather than manage signs! Please enjoy our free sign improvement tools…
Lettering Size and Legibility Chart
Approximate Letter Size for Optimum Visibility
The following chart is to help ascertain the best size lettering used for the distance they will be viewed. Of course there are many factors that will influence this decision and this chart is based on approximations and averages. Some of the determining factors would be the choice of colours on different backgrounds, font and letter styles, weather conditions, textures, day or night viewing including an individual’s eyesight and whether they are standing or driving past a sign, all of these factors will contribute to the readability.
Be aware that large letters do not necessarily mean better legibility; the empty space surrounding the letters must be sufficient to allow for a contrast to be created with the background. Aim not to place letters too close to the edge, or too close together nor crowd the area you have available. Trying to squash letters too close together to fit into a designated area may drastically reduce the legibility.
The “height” is not the main concern and tall letters prove to be less legible than shorter standard type fonts. It is always best to seek professional advice from someone working within the signage industry.
|Maximum Readable Distance||Readable Distance for Maximum Impact||Letter Height|
This chart is purely as a guide and an approximation only, and by using the above example an 8cm (3”) letter can be “read” from 30m (100’) away, it isn’t the best, but under perfect conditions it could be read. However, the centre columns show that at 9m (30’) you will get the best readability for this height letter. A rule of thumb is to choose a distance of 3m (10’) for every 2.5cm (1”) letter. Try this for yourself by typing a few words into a computer program using different type fonts, colours, sizes etc., print them out and place on a wall, stand back and view from different distances to see how the variables all play a part in the readability. Remember not to cram your letters into a too smaller area, as your sign will not be readable by the customers you are trying to attract.
|PART 1||PART 2||PART 1||PART 2|
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Artwork Guidelines Chart
Measuring signs - Site Surveys Tips
Types of Signs: Some people consider if the output from a computerised machine, like a digital printer or router is a predictable event its reasonable to expect the price of a sign should be static. The best performers we observe are skilful at understanding a phenomena we call Value Based Pricing.
Sign Quoting Check List
Installing signs and digital printing is an area in the sign business that needs to be considered in virtually every stage of the sign process. The aim of this sign installation checklist is to make you aware of just some of the downsides and pitfalls that you may encounter during the
sign installation. It’s prudent to allow for these costs as they could minimise the profit on your sign project. We have provided this as a downloadable document to allow you to maximise the benefits to your sign or digital print company.
Sure it’s not all encompassing but add you own or suggest some to be added.
Pricing a sign or digital print is not a guess
The understanding in pricing a sign or digital print is not a guess if you want to ensure profitability. After observing many ideas and concepts of pricing from all over the world I present this information to offer you an insight on the lessons we have learnt. Sure not all will suit everybody – but that’s the whole point about pricing signs, every one is different. This one is a seminar presentation we have delivered many times in Australia and beyond, there is a download PDF of an article on Correctly Pricing Sign Jobs at the bottom of the page.
There are a few concepts for your to ponder…
1. Who cares about sign pricing anyway?
- a. Everybody that’s who! I hope you agree, most care but are there any guidelines, rules, and what can you do?
- b. From research we found literally 100’s of articles about – how to price a sign, sign costing guidelines, article upon articles of sign pricing and quoting signs
- c. Almost every country we reviewed offered printed sign industry price guides
- d. Sign Estimating and Sign Quoting in our view is probably THE most talked about, reported on and featured sign industry topic there is
- e. Worst of all the conflicting viewpoints confuse not clarify the position my sign estimators find them self in
2. Can your sign business benefit from getting back to basics in sign estimating?
- a. They say price isn’t everything…More and more in my travels across Australia, NZ and beyond increasingly clients in the industry are making comments like “We can’t seem to get our prices right”
- b. Comments like “we priced a job at $2000 and someone else grabbed the job at $1000, the actual numbers don’t matter whether its 1000 or 100,000 this is a very complex and complicated issue! Lets look at a simple viewpoint…
- c. If you accept NO two businesses are the same just as no two people are the same, then “its reasonable to expect no prices to be matched are the same!”
- d. Answer: No. 1 = Know your own prices!
- e. “How can you price signs and print correctly?” It is the age-old question. The real trouble is, it is a VERY hard and multi dimensional answer that’s needed! I am not going to offer a silver bullet. There simply isn’t any silver bullet answer for this question!
- f. Answer: No 2 = Know your own costs! (or I propose – if you don’t know your cost, how can you estimate a sign correctly?)
3. Look at your overhead basics that will affect the operational cost of your sign shop. Check out Overheads calculator.
- a. Look at the cost of your overheads in your sign business
- b. Look at the cost of goods to make signs and digital prints
- c. What is the Sign Market size in your region
- d. Location of your sign business relative to other business – can you be found?
- e. Your relative size of your sign orders and buying power of sign supplies
- f. Review your sign making equipment and versatility
- g. Is your sign and large format digital printing equipment speed adequate?
- h. Does your sign making equipment capacity suit your sign clients and sign products?
- i. Are your sign staff skills matched to your sign production out put?
- j. Do you have the right sign business management skills
- k. Is your sign vehicle costs under control and matched to your size sign business?
- l. Have you looked at the rent or building costs of your sign shop?
- m. Do you make the right type of signs for your premises and sign equipment?
4. Look at your wages and labour costs that will affect the operational cost of your sign shop. Check out Wages calculator.
A checklist is just one way to work through your own labour costs.
- a. Salary, wages and contractor’s costs, Workers Compensation Insurance,
- b. Holiday pay, Sick days, Annual leave, Superannuation costs
- c. Bonuses, accreditation costs, leave loadings, state payroll taxes
- d. and many other items are a must to be added to calculate your own stage two of this part, of getting your prices right
- e. Knowing your real labour costs is key to making profit: Generally the accepted practice is to estimate how many hours a person takes to do a task. Let’s assume you get the hours exactly right? If your hourly rate isn’t correct…well, it will certainly limit your profit
5. Think about the impact of chargeable hours versus non chargeable:
In a perfect world you could charge out 8 hours out of 8 hours, in reality that is far from the truth. Many other factors include:
- a. Sign estimation accuracy of your sign management team
- b. The varying skills of your sign manufacturing staff
- c. Productivity and out put speed levels of your sign making people
- d. Check out Sign Shop Wages calculator
6. Let’s take a look at costs of sign making supplies:
When you purchase goods from sign suppliers there are issues that may affect you:
- a. How well you pay your accounts – do you pay on time?
- b. The quantity of your purchasing power – do you buy a lot or a little?
- c. The level of discount you gain is balanced by your standing with your sign supplier
- d. Your risk and credit rating will affect your standing with your sign supplier
- e. If you are an “A1” rated client with your suppliers - you will get a better deal
- f. What is your mark up? seems likely its around 35 – 50% while figures we have been given ranged from a low rubbery 20% and up to 100% plus
Colour Contrast Visibility Chart
The following chart helps to advise the best colour combination/contrast for best visibility. Signage viewed from distances requires more contrasting colour combinations than items viewed up close. As a lot of billboards and larger stationery signs are viewed by passing traffic they require more of a contrast than say a smaller sign or magazine article where viewers have more time to spend reading. Less contrasting colours appear more appealing when they are viewed at a closer range.
Many factors come into consideration when applying the right graphics for your project. It is always advisable to seek a professional graphic consultant trained in the area you require to create the best colour combination. If you were trying to design a billboard or larger type of sign you would not seek help from a web designing professional as they may not make the best decision for these types of signs. Nor should you hire out different aspects from a large project to several different companies, as you will more than likely end up with too many variations.
The colours from top to bottom show the descending contrast of colours in combination to each other. For good colour contrast the top 6 rows are the favoured choices, with the next three rows showing less contrast and the last two rows giving poor readability.
Although the colours on the last two rows are bright and vivid it is advised to limit their use together as accents only.
The naked eye cannot focus on Red/Blue or Red/Green when the colours touch and if these colours are preferred it is advisable to introduce a white or very light yellow as a transition creating a contrast and avoid the “sizzle” effect that these colours together provide.
Colours viewed on computer monitors never match actual painted, printed or manually rendered colours due to different technologies creating the colours that you see. Whilst in the dark you can still see the colours on the computer screen due to them being made up of phosphorous coatings on a Cathode Ray tube (CRT), lit by an electronic beam from liquid crystal diodes (LCD) being turned on or off by electrical charges, whereas printed colours are best viewed in well lit rooms. One of the key factors is the back light effect, that is your viewing a colour illuminated from behind therefore offering a totally different view than provided by using media used extensively in the sign and print area.
It is advised not to use your computer monitor as an exact colour choice, always use actual ink or paint swatches.
Common Configurations and Measurements
It’s really easy to get conversion rates and tables from the internet, convert metric to imperial and vice versa, we have just downloaded some common ones for you, saving you the time to look up.