How do you handle "too much" business?

[Bill Stearns]

Greetings.
This probably sounds like a really dumb question. Or, maybe, like a good problem to have. But, just wondering (if you are a one-man engraving shop as I am) how do you handle having "too much" business? (Figure I can't be the only one in this boat?) I'll call my situation the "Goldilocks Syndrome". Too small. Too large. Just right. Remaining small, it's been a constant struggle to survive. (as has been my case 'till recently.) Trouble is: My days of wanting to run a "large" business, well, they are behind me now. (i.e. new 'n more equipment, hired help, etc.) Nowadays, I'm striving for the "just right" level; tough to maintain as more 'n more organizations are discovering me! ("Just Right" meaning: enough business that I'm not sweating bills - but, not so much that I don't have a "life" 'way from work: time with family, etc. This up-tick in business wouldn't be an issue if I could space projects out. But, as you know, people 'n organizations come running in needing their items yesterday! - the pressure on! And, to turn 'em away is to risk losing their business for good. Longer days, longer hours my only solution? Mostly, just wondering if, by chance, I am overlooking a different, more creative solution? Or, if I'm looking at this all wrong? Would appreciate your advice.

Bill

[Anthony Scira]

Raise prices ?

[Khalid Nazim]

Only do high margin business. Raise your profit expectations by 10% and only take jobs that pay that much margin. Also, pay yourself more per hour. Buy a Trotec Speedy 400 80W so you can do the work in half the time :)

I get this problem during holiday season and I tackle it by only selling high margin items.

Regards
Khalid

[David Somers]

Bill,

First....congrats!!! That is good news to hear!

So....I guess you have a decision. If you have more business than you can do as a one man shop it would seem like you have a choice.
You could get a second laser, or a larger faster laser that can do more work more quickly under the supervision of 1 person. A second laser seems a bit dangerous to me given the risk of flair ups depending on your materials and your ability to keep both machines under a close eye for fire? At first though it would seem better to have 1 larger faster laser that can handle your increased job load.

Or....you could get a second laser and hire a second person. Of course that entails its own problems. training, supervision, all the issues associated with payroll, etc. Plus buying another machine.

Or....if you have doubts if this is a sustained increase in workload perhaps you can find a way to contract out the extra work for a while as you evaluate what is going on?

Keep in mind I am not a business person Bill. Take anything I say with a big grain of iodized salt. I am just brainstorming with you. And excited for you too! Glad to see things like this coming together for you!

Dave

[Mike Null]

Bill

I have had a $25 minimum fee for over a year and it helps to weed out those "retail" customers and allows me to concentrate on commercial work.
That allows me to schedule my work to their needs and so far they've been quite reasonable about completion dates.

I rarely charge a rush charge but I will do it if it is warranted.

I also have an experienced part time helper who can run the equipment and work with Corel. I schedule him as needed but usually only a few hours a week.

[Mark Sipes]

I would analyse what part of the business is slowing you down... Dealing with customers to make the order, Preparing the customers art/graphics for printing, Supply shipping delays, set up time, run time, clean up time, assembly time, packing time. billing, or raking in the money. Improve process.

The idea of acquiring a part time helper for seasonal load periods is a good one. There are many a stay at home moms with sales/graphic/or motor skills that would love to get out of the house for a few hours a day to make some extra money. Raising prices to pay for an additional employee should still make you a profit after payroll and the extra hours you are spending counting the money at night.

[Glen Monaghan]

My efforts to achieve a better balance have centered on improving efficiency to reduce the time I need to process my work, and making adjustments to products/services and prices to ensure that I feel the work has a good return for my time and efforts.

When my sales doubled four months in a row about a year and a half ago, I was swamped and frazzled. The next month, things slowed a bit and I found that I was then able to keep up just fine because I had been forced to work at a quicker pace, plus I'd been forced by lack of time to let go of some "extra" details that I'd been doing but didn't really need to be doing (such as the time spent doing over-the-top packaging for orders that were being shipped out... doing merely "good" packaging took about half as long as what I'd been doing).

At that time, my perfectionism made it hard to identify other places where I could be more efficient, but I realized that one particularly popular product was taking an inordinate amount of time to prepare for engraving, yet had relatively low margin, so I gambled on increasing its price. Sales of that product dropped dramatically the next month, giving me even more breathing room but worrying me due to lowered revenue. Sales levels recovered some and I'm okay with the lower sales/higher margin trade-off but wanted to boost revenue more. So, I sought out a couple of new product lines to broaden my scope. I chose products that looked like they would be popular, but take less effort to prepare for engraving, and be more profitable. Business has slowly doubled again as the new product sales have ramped up. This summer was definitely a challenge, because the increased sales came while I was moving and setting up a new shop.

Where I'd had the shop spread across multiple rooms, everything is now in one larger room which has definitely streamlined things. I've been trying to organize everything for more efficient operation. Instead of having inventory in one room, the engraver in another, packaging in a third, and administrative/office stuff in yet another room, everything is laid out together in one larger space. Generally, I've been trying to arrange everything in a loop to minimize carrying things around and wasted motion. Although I have plenty of square feet of space, the shape of the space has forced trade-offs. Still experimenting with work flow and identifying efficiency improvements. For example, I'm exploring a new layout where finished product comes out of the engraver onto a shelf to the side and the next job's stuff comes straight down from a staging shelf above the engraver - none of the stepping or spinning around required by my current layout.

Another fairly simple idea I'm setting up - I saw a packing service put their foam packing peanuts in a large cloth funnel hanging over the shipping table, and the funnel has a sort of "scissors valve" at the bottom. You put your box under it and squeeze the "scissors" handles to open the valve and dump peanuts into the box. When you release the handles, the valve closes. I wondered if peanuts wouldn't get wedged in the valve and mess things up but the operator was able to "blip" additional peanuts into the box with a quick squeeze and release, no problem. That arrangement makes more sense and should be significantly more efficient than my current arrangement of bending down, scooping foam peanuts from a bag stored under my packing table, sitting up, dumping the peanuts into the box, and repeating if needed to get enough packing material.

Look for anything you do often that involves a significant amount of time and see if you can simplify and/or automate it. You may recall me asking a while back about creating proof pictures because I was spending a lot of time on them. In the end, I decided that I couldn't/wouldn't eliminate them so I spent the time to learn enough about Corel macros to create a set of macros that dramatically reduce the time and frustration of that process. Major improvement!

So, I'm focusing on better efficiency for the work I do, and more appropriate product/services selection and pricing to try to drive a level of sales that I'm happy to process. I don't have a crystal ball to know what will work and, frankly, don't think I'm a particularly good business man, so it's just a leap of faith that things will continue to work out at least as well as, and I hope better than, they have for the last dozen years that I've been self employed.

[Dave Sheldrake]

never refuse a job outright, just quote higher than normal hoping it won't be accepted that time. If it does then it makes it worthwhile chucking in some extra hours and doing the job. Can backfire though, you still end up getting all the jobs at the higher price :)

guys above have covered efficiency so cant really add to that.

The increase or swamp out means you are good at your job and your prices are fair :) take comfort from that and pat yourself on the back (in between getting everything else done)

cheers

Dave

[Chuck Stone]

Hmm... how do I handle too much business...

Well, usually I wake up. The problem solves itself.

[Martin Boekers]

Glen hit it on the nose.... increase efficiency... I am a small shop, but I have 2 part timers... the problem is getting them up to speed and keeping them there...

The biggest inefficiency I have found, is knowledge of the software. Take time to learn more and more about the graphic programs and their shortcuts or quicker
methods, Corel and Photoshop. Things that used to take 10-15 minutes a few years back now only take a couple.... That makes a huge difference.

Spend an hour or two a week to find out how you can improve "Getting the order right on through it's delivery". I get leery about "artificially" raising prices, once
you lose a customer it's hard to get them back......

[Chuck Stone]

I agree with Martin.. Get better, get faster. Get help!

I keep seeing the common wisdom 'raise prices' but that has never
worked for me. (aside from the normal raises due to increased costs
and expenses) If I've honestly priced my work to begin with, why should
I be unhappy with 100 units at X dollars when I was happy with 10 units
at X dollars? Raising the prices means you risk alienating your current customers.

I think 'too much' business is a reward for having a combination of good
pricing, quality service and a good product. The customers chose you
based on these things.. why take one of them away?

Re-evaluate the pricing? Absolutely. But automatically raise the prices?
That seems like gouging to me, and I know I'm not alone.
I'm stubborn enough to not only never shop with such a merchant
again, and I wouldn't feel bad sharing that opinion with others.

[Chuck Stone]

Another fairly simple idea I'm setting up - I saw a packing service put their foam packing peanuts in a large cloth funnel hanging over the shipping table, and the funnel has a sort of "scissors valve" at the bottom. You put your box under it and squeeze the "scissors" handles to open the valve and dump peanuts into the box. When you release the handles, the valve closes. I wondered if peanuts wouldn't get wedged in the valve and mess things up but the operator was able to "blip" additional peanuts into the box with a quick squeeze and release, no problem. That arrangement makes more sense and should be significantly more efficient than my current arrangement of bending down, scooping foam peanuts from a bag stored under my packing table, sitting up, dumping the peanuts into the box, and repeating if needed to get enough packing material.

I've used them (wish I had a high enough ceiling to use it now!) and the scissor closure works well.
But one thing you'll want to do is place it over a well with plenty of extra room. Ours hung from
a pulley so it could be lowered to dump in the large bags of peanuts. (hint: get the anti-static!)
But it is easy to overfill a box. So .. let it overflow into the well. Our 'well' was just a lower section
of the counter.. giving us a wall on 3 sides to contain the box and peanuts. You'll use those extra
peanuts on the next box, or if you undershoot a little (but not enough for another blast from the
scissors) they're there to pick up and use. It's a neat system and buying the peanuts in 5' tall
bags saves a bundle.

[Bill Stearns]

Thanks, as always, for your helpful advice. Asking the question I did - plus your replies - has kind’ a forced me to think ‘bout my overall business plan: a start. If I can’t afford to stay small, but I don’t care to grow large - what’d I do as more organizations find me? I think Glen’s comment ‘bout being "swamped ‘n frazzled" ‘bout sums up my situation at present. I’m forced to admit that, at 66, I’m not looking for more investment. (new ‘n faster equipment, etc.) (However, I am excited as punch that this up-tick in business will help me to pay off debts.) As suggested: I did raise my prices ‘while back - am making more money ‘cause of this - but, business didn’t become more manageable - if anything it picked up! Implementing Mike’s idea of a minimum fee (i.e. $25) would free up my time; but would alienate too many people who walk-in needing minor engraving. (Their word of mouth has proven invaluable this past 8-1/2 years.) And, there is nobody in these parts to "contract out" to - only competitors. So - maybe, the best suggestion being: to work on improving my operational efficiency! Always room for that. When I say I seem to be growing, I am nowhere near needing a Styrofoam peanut dispenser - but, I'm sure others out there will latch on to the idea; a help to their businesses. So, guess for now just longer days for me - too much business? - what' a dumb thing for me to be worrying 'bout! - now, that I think 'bout it.

Thanks 'gain, guys!

[David Somers]

Bill,

Without giving away too many of the details of your business, how about taking some common task you do and posting about it here and get ideas from the crew on ways to make it more efficient? Take things in logical chunks and see if we can come up with some thoughts to help?

Dave

[Ross Moshinsky]

The answer really is to bring in help. Take in all the work you can. Bring in some help to get the orders done. If/when you lose a client, you can cut loose the part timer. Also if you continue to grow your business, you have an asset that your part timer may want to take over in 3-5 years. So instead of just selling your laser and stuff for $10,000, now maybe you can get 2-5x that because you're selling a business.

You also have to look at your pricing as everyone suggested. Make sure your business is scalable. You shouldn't bring in help if it takes money out of your pocket. You should make money off your help.

[Glen Monaghan]

If I've honestly priced my work to begin with, why should
I be unhappy with 100 units at X dollars when I was happy with 10 units
at X dollars? Raising the prices means you risk alienating your current customers.
As someone who said I raised a price, I'll re-iterate it was for a product that experience showed was taking longer to prepare than expected and was one of my lower margin items. So, while I was okay with the payback for the effort incurred for shipping a few units a week when I first offered that product and my overall sales volume was low, the workload for shipping over a hundred units a week was too onerous for the margin I was getting. Did raising the price risk alienating the customers? Sure, but NOT raising the price was affecting me in a negative way. My goal was to raise the price just enough to feel like I was getting sufficient profit for the greater-than-expected effort, yet not so much as to completely price myself out of the market. Since there was no way to know in advance if I was meeting that goal, I also introduced new products that looked like they'd be less overhead and better margins.

Generally speaking, some of your customers think your prices are a bargain, some think they are just okay, and some think you're bordering on too expensive for their budget. So, if you feel you have "too much" work and not enough time, you can incrementally raise your prices to weed out customers from the lower end of that scale. It may be better to price more appropriately from the get go, but you have to start from where you are. Re-evaluating and raising prices may be particularly important for people coming from a hobby or part time mind-frame, because they often seem to start with the premise that ANY income from their laser is a bonus, and/or they don't feel like they can command more than a bargain basement price when they get started. Perhaps they simply didn't know how to figure a proper pricing up front or really understand the market forces. So re-evaluating (and possibly raising) prices is a legitimate business practice.



I think 'too much' business is a reward for having a combination of good
pricing, quality service and a good product. The customers chose you
based on these things.. why take one of them away?
Because your "good price" is wrong for you? Because you find you are making less than you want/need to make at that price and volume?



Re-evaluate the pricing? Absolutely. But automatically raise the prices?
That seems like gouging to me, and I know I'm not alone.
I'm stubborn enough to not only never shop with such a merchant
again, and I wouldn't feel bad sharing that opinion with others.
Market economics. Not sure where the "automatically raise the prices" came from, but that's capitalism at its finest, eh? Supply and demand, price that the market will bear, and all that. Gasoline companies are notorious for this, jacking the price up for weekends and holidays because they know there will be people who will pay extra to get the fuel they want/need during those times. And what does every gas station do when an oil refinery breaks down or a martial conflict breaks out? Speculatively raise prices in a heartbeat, and only gradually lower them again over a relatively extended timeframe if the situation turns out not to significantly restrict supply... That's classic gouging, but I bet you still buy your gasoline from them.

[Bill Stearns]

Me again guys!
My having too much business? - what’ a problem to have, uh? More I think ‘bout it, ‘more I see that you guys are right. With my income going toward paying off debts - ‘stead of earmarked for more equipment, it makes practical sense for me to focus on improving use of my time; time management, my efficiency, etc. You asked to advise me ‘bout my time spent on "common tasks", where do I start? Bookkeeping. Dusting ‘n re-arranging my display room. Ordering inventory. Packing ‘n shipping. Responding to ‘zillion e-mails. Work on my web site. Single-guy house chores. Soon to be snowplowing my entranceways twice a day. (got’ a love Minnesota!) Time spent with walk-ins. Running deliveries ‘n errands. Then, of course, there’s the actual job of engraving. My bigger, longer-running, engraving jobs allowing smaller ones to pile up ‘n overwhelm me at times. Seems not enough hours in the day. To address your other suggestion: As good as things seem to be going, honestly, there’s still not enough money for hiring someone. But, mostly, you’ve got me thinking: Maybe, more than anything else, it’s my mindset that needs improving? Truth is: at 66, I’ve been feeling that I am wearing out - stamina-wise. Thinking now, maybe, in order to handle more business, I need a change in my life-style? Break away, find, or make time, to join a gym, or something like that? Maybe, it's my working at it so long 'n hard that's got me frazzled?

Bill

[Dave Sheldrake]

Rock and hard place Bill, I guess it's something every business that does well faces eventually. In my case I thought, well just upscale as time goes by and add more machines and more staff. Great, I end up making more money and buy more machines ad-infinitum. I'll admit though it go to the point I had to start thinking is this what I really want? (18 hour days on top of a family life) so in the end I've handed over more and more of the day to day running to staff and take less and less part in the day to day running of stuff.
It's worked well but now at 49 I don't want to be in ever increasing circles till I'm 55 and stress myself into an early heart attack. I'll keep going till I'm 55 then will look at getting out and leaving it running without any real involvement past a name on the company registration papers.

As my grandfather told me many years ago, "The richest person in the graveyard is still just as dead as everybody else"

cheers

Dave

[Tim Bateson]

I did the same as Mike. This past year I implemented a $20 minimum on all walk-in work. I also find myself turning business down or way over pricing it. I'm still really busy with a number of regular customers, and the best part is once in a while one of those way over priced contracts comes through too.

[Bill Stearns]

Wasn’t all that long ‘go I was whining ‘bout having very little business. Now, I am whining ‘bout having too much? I must be doing something right 'cause I'm having a hard time slowing growth! - keeping it manageable. It's my wanting to arrive at a "comfortable financially, but not overwhelming" level that’s tough to achieve. As suggested: sharper use of my time appears to be the best solution for me for now. It’s ‘bout my finding more ways to cut down on the amount of time it takes me to do tasks. TIM & MIKE - I know you both don't care much 'bout walk-in business; your sights elsewhere - me, it's 'big part of my business! In efforts to resolve my issue, I can't envision turning 'way customers in need, or over-pricing just for the heck of it. (and, yes, I have 'few commercial accounts too; Foundations 'n such.) BTW: Didn’t mention it before, but one reason I won’t entertain the idea of hiring help - I once found employees in my past business lying, cheating ‘n stealing from me; embezzlement ‘n all. People I thought I knew ‘n trusted. Hurt too bad to ever go at this again. Anyway - lots of insight in how we run our businesses; always of help.

Bill

[David Takes]

This has a very simple solution. Form a relationship with another trusted shop in your region who is willing to offer a modest discount for some regular business. Have them do your overflow work and mark it up enough to make it worth your while.

[Chuck Stone]

As someone who said I raised a price, I'll re-iterate it was for a product that experience showed was taking longer to prepare than expected and was one of my lower margin items.

FYI, I wasn't referring to anyone specific. I wasn't even thinking about anyone in here.
But you make my point about re-evaluating the pricing. I'm fine with that.. it's good to
do it on a regular basis.. look over the numbers and see what's more or less profitable
than you anticipated. And some products will get price hikes, some might get dropped.
I have no problem there. But too often I hear people saying that if your business is
doing well, you have to raise the prices.



Market economics. Not sure where the "automatically raise the prices" came from, but that's capitalism at its finest, eh? Supply and demand, price that the market will bear, and all that. Gasoline companies are notorious for this, jacking the price up for weekends and holidays because they know there will be people who will pay extra to get the fuel they want/need during those times. And what does every gas station do when an oil refinery breaks down or a martial conflict breaks out? Speculatively raise prices in a heartbeat, and only gradually lower them again over a relatively extended timeframe if the situation turns out not to significantly restrict supply... That's classic gouging, but I bet you still buy your gasoline from them.

Would any of us willingly do business with them if we didn't have to?
And, to be fair, there aren't that many independent stations left.. and
the ones that are still around don't seem to do that. Corporate owned
stations get their price changes dictated to them, sometimes several
times a day. So it isn't always the station's fault.
We're not in the kind of business where people can't go anywhere else,
so it's always in the back of my mind. I'd like my customers to come
back because they want to rather than because they have to.
I could still be wrong, but I've never felt right about charging 'whatever
the market will bear'.

[Chuck Stone]

Another fairly simple idea I'm setting up - I saw a packing service put their foam packing peanuts in a large cloth funnel hanging over the shipping table,

Saw one on Ebay for $130. U-line wants $170
Just saw one on Craigslist for $15. Even if they shipped it to you, you'd
still make out fine..

http://nh.craigslist.org/tls/4749670741.html

[Glen Monaghan]

I could still be wrong, but I've never felt right about charging 'whatever
the market will bear'.

I don't know why you shouldn't earn full value available, or close to it, especially if you are getting swamped with demand for your product/service, but we all make our own pricing decisions as we see fit.

That said, I don't price myself at the top of the market but also don't choose to be anywhere near the low bidder (because I won't lower my own standards enough or cut enough corners to make it a viable choice) and am puzzled at people who "compete" by using rock bottom pricing.

[Glen Monaghan]

Amazing what you can find on Craigslist... I'd almost go for that one but it looks like it would be too tall for my situation, plus I already have everything except the valve-thingy. Haven't had time to figure that part out, but will probably cut from BB on the laser, maybe with a bit of 3D-printed support pieces.

[Glen Monaghan]

Bill,

Really, I'm no where near _needing_ a foam peanut dispenser either, but it's an example of something that can yield an incremental improvement in efficiency. If I had to pay $170 for something commercially produced that wasn't quite right for my setup, it wouldn't be worth it to me and I'd just keep doing what I've been doing. But, I can put together a custom version that is perfect for my setup for about $10 of stuff and an hour's time one weekend, and I charge less than $160 per hour for my time, so I come out ahead on both cost and result ;^).

Realistically, it may only save me 2-4 minutes a day on most days, maybe 20 minutes on occasion. But it's pretty inexpensive, should help a little, and it feels good to know I'm making incremental progress. Besides, it's far more realistic to come up with 10 ways to save a 2-3 minutes every day than 1 way to save 20-30 minutes each day.

Another example I just remembered was buying a new postal scale. My old one only read up to 20 pounds, had a built-in display, and showed either decimal pounds, ounces, or kilograms. I periodically have had to ship packages weighing over 20 pounds, which caused me to jump some hoops to get accurate weights/postage. My postal software wants to know pounds and ounces, not decimal pounds, so I had to mentally convert either the decimal pound or the purely-ounces readings. And those larger packages obscured the scale's display so I was forced to use another small box as a standoff pedestal to raise the package high enough that I could see the display. Had to keep a suitable standoff handy and tare the scale with it. I finally realized just a couple of weeks ago that I could save a ton of aggravation, albeit only a minute or two a day, by purchasing a new scale with 100 pound capacity and a separate display that offered decimal pounds, ounces, pounds and ounces, plus grams and kilograms. It's a little thing, but I think I've smiled every time I've used the new scale because it makes my life just that little bit easier.

What can you do to make your life a little bit easier?

[Dave Sheldrake]

Age old pricing question I guess, do you price at a fixed "self rate" or price at what the market will stand / average market price?

I tend to look at what similar services cost on the open market and if I can make a sensible profit (within my own requirements) I'll do the job, if it doesn't make McDonalds money then I don't. Admittedly I don't do much engraving so can't really offer much of an opinion but for the cutting market pricing an hourly rate based on the speed of your own machines is great until somebody else prices it based on their faster/bigger machine at the same quality level.

I think the cutting market tends to be a bit different, all the client wants to know is how cheap they can get the bits, how fast you will turn them around and is the quality ok.

I've just finished a run today of 25mm hexagons, 60,000 of the things, I can make good money on those at 2p (3 cents) a shot using a 240 watt so the chances of somebody with an Ebay K40 taking that away from me is minimal (possible but minimal) if they price on the number they can make an hour with a fixed hourly rate.

I guess it comes down to luck, we just do what we do and hope our clients like it.......

cheers

Dave

[Bill Stearns]

Hey All -
Appears that the discussion has kind' a turned to various ways to save time 'n improve efficiency - wondering if we shouldn't start 'new thread - sharing ways to do this? Even little ways; as someone stated, even shaving off minutes here 'n there on tasks can count up! An example might be: I will periodically order 'zillion little plates from Johnson Plastics. (okay, maybe, 'hundred 'n fifty or so.) - found myself spending an inordinate 'mount of time peeling off the protective coating on each. Discovered that by quickly passing the corner of each small plate over a candle flame this peeled up the coating; making it much easier to quickly remove. (Didn't harm the metal a bit.) Also: when removing these same small plates from my template/holder - I used to pick at the corner of each one with a pin to get it out; found I could use sticky tape to extract each one far more easily. Both ideas have saved me a ton of time! YOUR TURN ....

Bill

[Chuck Stone]

Amazing what you can find on Craigslist... I'd almost go for that one but it looks like it would be too tall for my situation,

Yep.. just thought I'd post it.
BTW.. the 'valve thingy' alone cost a lot more than $15!
Clamps on with a 6" hose clamp. (or is it 5"? ) The rest is
a square metal frame and sewn canvas.

[Tim Bateson]

I now PUSH "what the market will bear". This isn't a hobby for me. When business falls off I'll consider lowering prices, but until that happens, why would I charge less?

This week I needed a connector for 2 Cat 5 cables (RJ45 Inline Coupler) - Staples charged me over $13. I could have bought on ebay directly from China for $.87 w/fee shipping. I needed it now and was willing to pay for that convenience. If everyone started saving money by buying direct, that $13 would fall dramatically. This is "what the market will bear".

[Bill Stearns]

TIM & ALL -
It’s always kind’ a entertaining, certainly informative, discussing how we price our products ‘n services. Different strokes for different folks. Personally, I feel that "What the market will bear", while being a popular pricing strategy, can also be a risky one. ‘Cause you mostly, but not always, find out by losing customers; sometimes irreplaceable customers. This isn’t to say that pricing should always be arrived at the old fashion way - wholesale cost, plus, etc. etc. Lots of variables at play, for sure. For many of the standard items I provide, (i.e. plaques, trophies) I typically base price on cost/plus - but, for my other more unique items (i.e. photograph engraving ‘n black granite memorial tiles), I form my pricing ‘round what I call "perceived value". You only need to have a customer say once: "Is that all?" ‘fore you get the message that you could ‘n should be charging more. Thus, a $5 Home Depot granite tile becomes worth $69.95 to $99.95 ‘n up. Perceived value right? A sensible strategy, yet not up there with the "overcharge ‘em ‘ just cause you can" idea - not up there with Gordon Gekko’s "greed is good" speech ‘n the movie Wall Street. Back to work I go ...

Bill

[Tim Bateson]

Bill, I do agree and probably do a lot of the same. In my case I'm not the only game in town. I have lost business because of my prices. However when 9 out of 10 customers end up coming back to me, I know I'm not gouging, but offering a quality product at a fare market rate. On the other hand I do have a product or two that are some of the lowest prices around. As stated about efficiency earlier - I can produce them fast & cheap - cheap as in my cost - same quality as everyone else. I even have a couple items I sell at or near cost.

Know .... Your Customer..... Your Competition..... Your Capabilities..... Your Limitations.

Over the past 7 years I have built a solid business that if I choose to sell, has some value that goes will above the cost of equipment and materials on hand. In fact at this point my customer base is worth well beyond the value of the equipment & materials on hand. I'm not full-time yet, but plan to be in the next 5-6 years. (My 10 year plan is getting a 2-3 year set back due to a move next year).

[Phil Thien]

In the past, I've had to have quite a bit of custom silk screening of control plates done. The place I was going was charging a premium price, but I knew I was getting premium work, too. There was ever only one problem and they had it corrected within hours.

I knew I could get a better price elsewhere, but I was happy with the work and whatever savings were to be had wouldn't have warranted even a single screw-up. Having $4 or $5 in parts hold-up a $10k order wouldn't make any sense, so I never risked it.

So I think the key is, keep the quality high and then set the prices in accordance with the amount of work you want.

Of course, you have to be careful, you can't jack-around prices on reorders. I mean, they can go up slightly to cover inflated materials costs. But if I order 1000 pieces of a control plate in summer for $5 each, you can't start charging me $7.50 each in December because you're busy and don't want the extra work. You can get up to $5.50 and suffer through it, that is about it.

[Bill Stearns]

TIM & ALL ...
RE: ("Know your customers - competition - capabilities - limitations.")
Sage advice, for sure. The value in knowing "our customers" and "our competition" is pretty self-evident. (Whether we’re talking ‘bout pricing, or marketing strategies; whatever.) It’s the know your "capabilities" and your "limitations" that grabbed me! I’ll have to give this serious thought. Wasn’t that long ‘go that ‘few SMC folks were telling me: "You can’t make it with just laser engraving alone!" Yet, given ‘little creativity, I have continued (going on nine years, now) to find my "capabilities" almost limitless. My "limitations"? - well, that’s a different matter; the crux of my "problem". At 66, they are waining; stamina-wise. Forcing me to question: Am I in control of my business (growth), or is business controlling me? (The latter appears to be the case.) Uncontrollable things happen if, and when, you allow the "market/public" (need ‘n demand) to dictate your business planning. I see now: the more diverse my product offerings became the less control I’ve had over ‘planning"; over my own needs. ‘Cause, to a large extent, it’s our product offerings which dictate who our customers are, and how many we have.Thinking now: ‘Stead of pricing differently, I am going to consider cutting down on the product categories I offer. At the same time, focus on what’s selling best? - and, what’s most profitable.

Later,
Bill

[Frank barry]

hi just 2cents worth
in any business you have to work smart when you try to be all things in your business you will fall well short in some areas well i do for me I hate paper work and always have so now I get someone else to do most of it
you need to have a refined process for each type of job you do and stick to it in that way you can price your work and if you stick to the process you will be sure you make a return on it as we say in Ireland there is no point in being a busy fool
the other thing I have learnt is you cant be all things to all people and you have to learn to say no measure the time you spend on each job and make sure you have a good return for your efforts in that way you will know the jobs you need to increase the price on
I would say be glad you have so much work spare a taught for those who cant get enough work in
cheers Frank

[Bill Cunningham]

I also have a $25 minimum setup charge + an average of $1.20 a sq. Inch for laser time. I also don't advertise at all. All my work comes from word of mouth, and my website. I only accept jobs that I know I can process on time. Some jobs that I really don't want I price high (scary high) and if it comes in, I live with it. I have special customers that I will drop everything for, but those ones have been with me for years, or bring in steady constant jobs and they earned it.