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Chuck Patterson
06-25-2009, 4:18 PM
Hello Everyone,

I am brand new to the engraving and am having difficulties with pricing of services and products. Lost my job after 21+ years and now trying to make a living at it like the rest of you. Previously, I posted a question on how to price out electrical panels tags and with everyone's input and suggestions the project was very successful and profitable. Thank you everyone who contributed.

Now that I have a shop and my doors are open full time, I have customers bringing their own products (mugs, phones, iPods, glasses, bottles, you name it) for custom engraving. Quantity ranches from 1 and up. Then there are the retail products; trophies, glasses/mugs, plaques, signs, medals, name tags, custom laser jobs outside the scope of those mentioned in the first paragraph.

I HAVE NO IDEA WHAT TO CHARGE!!!! Boy I need a ton of assistance in this area. If you would like to confidentially share you price lists, hourly rates, suggestions, or ideas you can email them to me or post your suggestions here. (side note: I am the only engraver and trophy dealer within a 50 mile radius. So competitor down the street is not a factor at this time.)

Here is an example: Lady brings in two 25oz Mugs. Design is pretty simple, just text on an arch with simple text below the arch. Design takes about 20 minutes to create. Test engraving on scrape to make sure design will engrave without any hitches. Engraving on mug takes about 6.5 minutes.
What would you do?

Patterson Engraving wants to be fair and reasonable with pricing and be a successful business. Is there such a thing?

Any help would be greatly appreciated. I would rather make a living engraving than to go back to work for someone else.

Thank you in advance for your help.

Chuck Patterson
Patterson Engraving

Tim Bateson
06-25-2009, 5:17 PM
...Lost my job after 21+ years and now trying to make a living at it like the rest of you...

I think you'll find a consensus here that you are not likely to make a living with just a laser. You'll need to invest and diversify/expand. All of that cost big $$ and takes time to become profitable. There are a lot of good threads here on this subject. Read them, study them, learn from them.


...Engraving on mug takes about 6.5 minutes...

I think you have way underestimated your actual time - Did you account for:
1. Time spent with the customer
2. Time spend loading graphics/pictures/text
3. Time adjusting/sizing/placement of graphics/pictures/text
4. Time for setup for this job
5. Time testing
6. Time engraving
7. Time for cleanup
8. Time for billing
9. Time again with the customer
10. Time for bookkeeping

All of this in 6.5 minutes?????

Mike Null
06-25-2009, 5:57 PM
Chuck

Why don't you do your pricing homework via the internet by checking various engravers sites. You'll get a range of pricing as well as various add ons that normally go into the pricing.

That will be factual rather than guessimates that you may get here.

I'm not suggesting that Creekers won't help but it might produce better results the other way.

Dan Mazurak
06-25-2009, 6:32 PM
Only you can calculate your costs. I don't mean to sound harsh, but if you can't price a job you are doomed to fail. I could tell you what my costs are, but they are different than yours and would do you no good.

Dan Hintz
06-25-2009, 7:24 PM
Dan,

While it's true only Chuck can calculate his cost, it's often quite helpful to others to know if they're at least in the correct ballpark. I may decide that it costs 'X' to sell a product and still make a reasonable profit, but most markets may only support half of that... in that case, I probably would stay away from that product. In others, I may find out I'm charging half what the market will bear, but it will save me a lot of time, energy, and money if I start at 10% less rather than 50%.

Costing comes from experience, so saying someone will fail because they can't do it out of the box may be a bit harbinger of doom. Teach him how to fish, let him feed himself for life, that sort of thing.

Gary Hair
06-25-2009, 7:52 PM
Chuck,
The first thing you need to do is determine what hourly rate you need to charge in order to be profitable. Everyone has a different formula to calculate "profitability", but it really comes down to covering all of your expenses - equipment, supplies, utilities, replacement equipment, additional equipment, etc., and you also have to have a salary. These are all part of your expenses. The amounts of each of those will vary person to person, business to business, but they all still need to be met in order to be profitable (and viable).

After you determine that rate then you can start accurately pricing your work. If you need to make $120 per hour then that job should be, at a minimum, $66.00, that's $2.00 per minute for 33 minutes - if that's truly how long it took to complete the job from start to finish.

You also have to factor in "perceived value". Just because an item only took 15 minutes to setup and engrave, doesn't mean it's only "worth" $30.00, it could be worth $100. It depends on the item. I won't engrave a $500 vase for the same price as a $50 vase, I have too much at stake if I screw up the $500 one.

Quantity is also a factor. I have many jobs that it takes 20 minutes to get the first piece done and the next one is done in an additional 30 seconds. That doesn't mean that I'll charge for 10.25 minutes each, it could be much higher.

Pricing is the most difficult thing to master and the one that can affect your success more than anything else. Charge too much and you'll lose business. Charge too little and you'll never get ahead.

Attached is a spreadsheet that I got from someone, I have no idea who. It has a lot of the bases covered that you need to think about and help determine your hourly rate. I haven't played with it much so I can't tell you if it's setup correctly or if it even works. Use it at your own risk!

If you have a specific item to ask about pricing just to get a "reality check", feel free to ask - most everyone here is willing to give their opinion.

Gary

Mike Null
06-25-2009, 9:29 PM
Gary

While I like the principle of the shop rate from what I can gather here on SMC it won't work for most members because they are single operators with lower volume. Even in my case where my volume is a little higher, I'm still a single operator and there are too many elements of the business where something closer to minimum wage is what the competition with more than a one person shop is paying.

A good example is assembly--work that can be done by minimum wage people or packing. These things take considerable time and cannot be charged at the shop rate or you'll price yourself out of the market.

If you are a low volume operation this is even more striking hence my recommendation to check the market to see where prices really are. I'm not recommending the lowest price but something in the ballpark.

Joe Pelonio
06-25-2009, 10:30 PM
Another factor is competition. If you are the only game in town then enjoy the monopoly and charge as much as you can get without driving them to the next city. Those with several or many others doing the same thing have to be priced lower to get the bigger jobs.

Since I started working a daytime job I have much less time so raised prices to eliminate some of the one-off jobs, and find that the customers are still happy so I have probably been too low in the past.

Gary Hair
06-26-2009, 2:24 AM
Even in my case where my volume is a little higher, I'm still a single operator and there are too many elements of the business where something closer to minimum wage is what the competition with more than a one person shop is paying.

If you have a person that you pay minimum wage then your expenses are higher than they would be without that person and you need to charge even more per hour than I do!

If you are a one man shop and charging rates based on what you would need to collect to pay a person minimum wage, just to be "competitive", then what are you in business for? You could make minimum wage, or more, almost anywhere else and not have any of the risk involved with owning a business.

Gary

Rodne Gold
06-26-2009, 3:52 AM
A pretty good thumbsuck pricing model is
5-8x material costs if fabricating from scratch and
$60-80 an hour for "engraving time" (time to include all aspects of the job)
Add a minimum of 50% to bought in products you supply to the customaer - apart from the engraving costs.
So your mug job took 45 mins all in to do - shoulda cost round $50 for both.

I tend to agree with Dan M tho , if you have to ask about pricing at this stage , you cannot possibly work out whether you are making or losing money on your investment and that is a pretty bad thing not to know if you in business.

Mike Null
06-26-2009, 7:52 AM
Gary

I don't think I explained myself well. A one person shop has to do the minimum wage aspects of the job as well as the engraving and artistic parts. A better example might be trophies where a single person could not possibly compete with a high volume shop down the street where they are using a minimum wage person for the complete assembly. The shop rate works on jobs with low labor content but on those, such as the plaque job I'm working on now it doesn't work. (I have a considerable amount of foil and weeding as well as colorfill on this particular job)

I just don't see a "one price fits all" as workable for the small shop and see pricing to the market as a much more viable method. That's why I suggested gathering info from competitors sites on the internet.

Dee Gallo
06-26-2009, 9:08 AM
I just don't see a "one price fits all" as workable for the small shop and see pricing to the market as a much more viable method. That's why I suggested gathering info from competitors sites on the internet.


I agree with Mike for 2 reasons. First, because your competitors are in your same area competing for the same $$/customers so it only makes sense to find out what they are charging for the same services. But mostly because your level of efficiency changes over time and with each job, therefore your time allotted will change.

Some examples: some people are very skilled at computer graphics and others are not - this will affect how much prep time you spend on each job. Some people prefer to do custom or one-off jobs vs. others who do large repetitive commercial jobs... these may actually take the same amount of time, but are they worth the same amount of money? As you become more and more skilled with your laser, you actually work faster too, not having to do a lot of testing and so on, because you have settings saved and understand the machine better.

So, I prefer to go by a per job rate, estimating what the end product is worth and charge accordingly. If I can't make the amount I think it's worth, I don't do it.

my two cents, :) dee

Tim Bateson
06-26-2009, 9:09 AM
I agree with Mike. Some jobs have a higher margin then others. There are some jobs where the margin is as high as 5,000% (dog tags & name badges). Other jobs where I might make 25-50%. These margins are based on raw material price, not time & labor. The pens that Steve talked about a few weeks ago is a good example. Few if any of us could compete with those prices. If we did, our hourly wages would be less then minimum wage - if any.

Charge what the market will pay - then a couple $ more, but be prepared to walk away from a job if you can't make a decent profit. Know what your overhead is and what you need for sustainment. If you can't get that, then WallyWorld is always hiring.

The #1 tool you'll need is a comprehensive Business Plan - If more people did this & were totally honest when doing so there would be far fewer failed businesses. I invested in my laser equipment knowing it may be many years if ever to make a living. I could afford to do so. If I had to borrow money for a start-up, then I would not be in the laser engraving business. I've crunched the numbers and even being optimistic it's a long shot. Disclaimer - this reflects my market and in my part of the country.

Gary and Jessica Houghton
06-26-2009, 10:38 AM
Charge what the market will pay - then a couple $ more, but be prepared to walk away from a job if you can't make a decent profit. Know what your overhead is and what you need for sustainment.

I totally agree with this statement. I charge what the market will pay, but also what I think is fair and I take into account how much I would pay for the item. I consider how much I would pay for the item if I had no idea what time goes into the work to get the finished product. Most people don't look at the time and think that you should be compensated for it. If the time out weighs the cost you would be willing to pay, then don't do that job.

Someone said in an earlier post that you should have charged $50 for the pair. Is that what you would pay? I wouldn't. I charge less than that. I have people come in and say how reasonable we are on prices and I have people who tell me I am too high. I did what Mike suggested and looked at what other people charge. I came in way lower to start, and within a year I raised the rates. Not enough to turn too many away, but enough to make me money and continue makin money.

As long winded as I am being, my point is charge what is fair and what you would pay.

Rodne Gold
06-26-2009, 11:10 AM
I can tell you that if you are a one man show with a $20-25k laser and charge less than $60 an hr , you will be lucky to pull $4k gross a month.....No profit..just salary ...if you lucky!!!!
You cannot determine what the market can bear unless you are aware of the market and what other options cost..Ie REAL familiar with pricing.
Most likely the best way to start getting the correct market pricing is to do what most of my competitors do to me , call for bogus quotes.

Steven Wallace
06-26-2009, 11:56 AM
What makes you think we are making a living at this. Read some previous posts and you'll find out we are not rich just in debt like the rest of the country. I am sorry to hear about your job. I was on the chopping block this last month myself and barely escaped this time. Who knows about the next time. But I have also heard some of the engraves going out and find a day job to support their engraving habit. Good luck and the guys here have posted some great advice as they always do. Creeker's Rock!!!

Mike Null
06-26-2009, 1:26 PM
Rodney

From what I can gather many of the members don't have 40 hours worth of work per month--not per week. I maintain they must price to the market rather than use an hourly rate.

Though I agree that a rate of $60 per hour is extremely low.