Acrylic Awards....

[Carol VanArnam]

So this was my project last night. Made 8 of these for a local casino. The acrylic cost $27 each and I sold them for $42 each. It was my first acrylic award job so it took much longer than usual. Raster time per item was only 4 minutes. The award is about 8 x 7 inches.

Can anyone tell me if my price was over or under what it should have been....

The items are from PDU. They have a web page you can download the vector outline of the item. It's great to use to cut out a template to set the award in. Also the template is great to set up your artwork in.

I emailed the template to the customer along with the pdf file of the award. Made the whole sale very smooth. They could see the picture of the item and what the final product looked like.

[Bob Cole]

The awards look great.

I would be interested in knowing what others would charge for this type of work.

[James Stokes]

I would have figured the material x 3. I would have charged $ 81

[Frank Corker]

Carol, that is a fantastic job, no wonder the sale went smoothly. Personally I think the price you sold them for will have them coming back for more, if they had been too high (especially with 8 pieces) then you might never have secured it. I appreciate what James is saying but I think they may have stalled with $648 instead of the $336 you charged.

If they come back, it will be for cost as well as the professional finish. I think they are brilliant. What thickness is the acrylic by the way?

[Mike Null]

I would have charged $90-100 each. I don't see where you made any money at all.

Your work is professional; you should be paid for it.

[Joe Pelonio]

I normally figure double the material cost and $1/minute setup and run time, so I'd be at $58 plus the time it took to set them up.

[James Stokes]

One thing you need to take in to consideration, the customer. She said this was a Casino, Not Mary Ruth Grandma off the street. If you are going to be in this business do it to make money not pocket change.

[Frank Corker]

I agree James but when it comes to money, every company wants to cut costs, this is something they could do without. This is where they would be quite happy to lose out on the goodwill feeling they receive. I just happen to think that the cost was reasonable, I also think that Joe's method of working his charges out are about the best. Near where I am there are engravers who are charging shed loads of money for what effectively is 'tac' (which looks like 'tac') and they only just survive.

[Mike Null]

Frank

There's a minus net profit in her pricing when all costs are taken into account.

[Stephen Beckham]

Going off of several articles and business research, my understanding is anything over a 33% Margin is considered a Profitable sell.

Carol, my little friend (Senari Financial Calculator - $20 investment that will payoff immediately) tells me you sold at a 35.7% margin - so I see it that you made industry standard minimum(ish). To me - that's where I try to stay for my special customers.

Not to pick on anyone - but everyone else came in at...
James - 66.6% Mike - 70% Joe - 53.4%

So the next step - how high can you go - again, it will be location dependent and item dependent. But the articles stated that our industry will allow us to go up to 85% Margin without anyone batting an eye. I disagree - that would be $180 for your item. No - one, not even the Trump (okay maybe NASA) would pay that much. But everyone is within the standards - nobody gouged and nobody lost money including you.

Basically, the magic number was 60% ($67ish) was where the article stated you'd could profit, cover employee labor, shipping, and engraving and still be considered a "fair" market value.

Again - not the expert here, but what I usually do is put the catalog cost of an item in the calculator and calculate for the sale cost for a margin of 60%. That is what I give the customer as the "Not to exceed (NTE)" cost. I then further explain that there will be a price break for multiple items, military discount, booster clubs ect. I don't artificially mark up to 85% margin to discount back down to 60%, but I will start at the fair market value as the NTE amount and work down from there. That way I'm comfortable giving up to a 30% discount putting me down to about the 40% margin zone. The hardest thing is to explain to the customers why you go up. Eliminating a discount is not considered raising prices. Americans are use to sales and discounts only lasting so long.

I really appreciate seeing how others price items - it's been an eye opener and I see that out of the ones mentioned - we're all in the right market rates. The only other issue is too cheap is considered low quality.

SORRY for the longwinded response - I would like to get some feedback if my algebra formulas are wrong. I just like consistancy - the calculator using the margin calculation function keeps me honest and in the green...

Steve

[Gary Hair]

I think the price was a bit low as well. Those of you that made the excuses for the customer are doing yourself a real disservice. Either you don't value your work or you are a price shopper yourself and automatically assume everyone else is as well.

Humor me and answer the following - not here, just to yourself.
1. What do you consider a small amount of money?
2. What do you consider a medium amount of money?
3. What do you consider a large amount of money?
4. If you need a book to learn a certain aspect of your craft, how much would you consider to be a reasonable price?
5. When you shop for something like a television do you shop based solely on price or solely on value?

These are the kinds of things that drive us to place value on our work and assign prices as well. If you are the consumate "price shopper" you will likely sell on price and set your prices lower than someone who shops more on value. You are also likely to project your feelings about price sensitivity to your customers.

I set my shop time, lasering, sandcarving, dye sublimating, vinyl work, artwork, etc., at $120 per hour. I have only had one person so far who complained about my prices. This person wanted sandcarved logos on wine glasses for $0.50 each, yes, fifty cents each! Obviously they were smoking crack, but that's another story altogether.

It's possible I have lost business due to prices but those are not my ideal customers anyway. I do professional work and charge professional prices.

I read too many posts about people working 80 hours a week and complaining about how they can't make ends meet. If that were me I would go get a job at McDonalds instead. I put in betwen 40 and 60 hours a week and am making a very good living. No reason not to.

If you don't value your work how can you expect someone else to value it?

Gary

Flame resistant suit has been purchased, I'll put it on before I login again... :cool:

[Phyllis Meyer]

Carol,

Nice work! Is this your first sale to the Casino? I believe that you have opened the door to more sales! I appreciate anyone that can work the calculators and the "down to the minute accuracy" of what their laser can do...that is not my strong point, but marketing is (creative/crazy ways work for us). I do think your price was good and yet I also agree with others about your work being professional and that calls for professional pricing.

This is a learning experience and it takes time! We are all learning from pricing do's and don'ts. The formulas for profit are great, but there are always other factors to consider! Once again...did we buy a laser for a hobby, or a business? When we know that answer, the pricing gets much easier to calculate!:)

Phyllis:)

[Mike Null]

Steve

I don't know where your studies are from but the only people I know of, and I speak from experience, who can work on 1/3 mark up are supermarkets and appliance dealers.

What you are not taking into account is operating costs. Even if you did nothing to the acrylic award but turned it over to your customer it's not likely that you could break even at 1/3 margin.

Even if you do nothing you have the cost of the facility, your labor, packing and shipping costs.

[Joe Pelonio]

I like to consider 40% as a minimum profit for wholesale customers, that is customers that resell my work and are ordering things every day so a lot of volume. When I first started in the vinyl sign business I saw the previous owner's books, and his profit was 37%. My goal was to make that 50-75%.

I've done that and in many cases still find my prices low compared to many others.

[Jim Good]

Carol, wrong or right, this is what I would do. I would quote a price of $79.95 (basically 3x) and give them the engraving for free. On the quote I would make sure they knew you typically charge an engraving fee. If you didn't have to do much with the graphics, then show them you threw that in for free although it typically would have cost them $25-$75 as an art fee.

Maybe at 10 pieces or more you could have given a small volume discount but not at 8.

Bottom line is that award is worth $80 and I'm guessing most of their quotes exceeded that amount. Your quote would show them you are giving them some freebies since they are a new customer. Once you've gotten them as a returning customer you can begin recouping those free charges from them, which are actual costs to you and should be included.

Just my opinion. :D

Jim

[Mike Hood]

I try never to fall below $120/hr for shop time, and if I can accomplish that through margin and labor, I'll go that far. I hate to use raw material costs as a benchmark, because my cheapest raw material (1/8" birch ply) pays the highest profits. I get $2.50/min for airplane parts and can sit there for hours doing it. (each shipset will feed 450-500 minutes of labor time)

[Stephen Beckham]

Steve

I don't know where your studies are from but the only people I know of, and I speak from experience, who can work on 1/3 mark up are supermarkets and appliance dealers.

What you are not taking into account is operating costs. Even if you did nothing to the acrylic award but turned it over to your customer it's not likely that you could break even at 1/3 margin.

Even if you do nothing you have the cost of the facility, your labor, packing and shipping costs.


Mike - got all that and I'm not talking markup, I'm talking Profit Margin which to my understanding is sale price minus all costs and overhead. A 60% margin is roughly a X 2.8 on cost. Putting the $27 item in the $70 range. No question if it is worth that much. In my small town America - I would have those sit on the shelf a long time at that price. People here want big city item as small city price. I keep it about the 50% margin.

I just realized I never said what I would charge - I would have sold them for $53-$54 or about a 49% to 50% Margin (not markup). Another interesting part was the customer - a casino - they would probably be one of those that would pay the higher price for the same item. But next time they would shop around. With Carol's price, she made money and I'd bet :p the casino's will come back to her without looking for the price comparisions.

The difference is the definition of Markup Vs Profit Margin. Trust me, I tried to figure it out - but after I was told to get the financial calculator that has a Margin Function key right on it - I'll never know the difference, but I'll let my little buddy give me a consistant price.

Thanks for the feedback Mike, I hope I made since....

[bruce cain]

Did I mis-read Carols post or did she not do $120. in one hour?

[James Stokes]

No in actuality she did not do $120 per hr. She had customer time, Time e-mailing proofs set-up time and the time to order, recieve the goods, unpack, Repack, Deliver and billing. That all needs to be figured in to the time.

[Ed Maloney]

James - You bring up a situation that I was thinking of the other day. I was brushing on some finish on 25 12x24 plywood pieces (both sides) for a sales presentation I'm putting together. Obviously it took some time. Then there was the waxing, actual lasering and gluing/assembling the samples. Now if I include all the prep and assembly time in the pricing I'm thinking no one would want to pay the resulting price. I do figure in 2.5x material costs into my pricing.

So my pricing right now is based on shipping costs of the materials (to me), the materials, and laser time.

Anyone figuring in the time being spent on the whole process?

[Mike Null]

Ed

I try to account for that. Like some others I price my laser time at $120 Hr.

Using material cost as a pricing guide is sure to bankrupt you in a hurry. For example I take great delight in fishing a piece of wood our of my wood bin to make a sign. It's probably been there for years. Cost? Negligible.

But suppose i had to go get the wood or order it. I work from my home but I still have utility costs, web site, telephone, equipment maintenance, replacement costs, packing and other materials and I haven't mentioned my own labor.

[Bill Stein]

Ed,

What is your time worth? -- to you?

At the end of the day, there is one question to be answered.

Would I resent doing this job again for the same amount of money? If I feel that I am adquately compensated for my work, the answer is no. But if I feel that I am being "underpaid" for the project, the answer is usually yes.

Answering that question doesn't tell me how to price. But it sure provides a gut check on if I am happy with the price I quoted and did the project for. And that helps my decisions when pricing the next job.

Bill

[Ed Maloney]

Mike - So you charge $2/minute laser time to account for the extra time you are spending on ordering, prep, etc? Not the actual clock time to do the prep and assembly time? If that's the case, sounds like a good model.

[James Stokes]

I do not generally do my jobs by laser time. I do them by the job. The acrylic awards above I would have charged $81. This would have paid for the incedental time. If I have to go to the lumber yard, get material, Then go prep I would like to get about $35 per hr for that time. Therefor I try to figure total time on a job and charge accordingly. If they will not pay that then they can go else where. I do not believe in working for free.

I have a couple customers I work for by the hr. I charge them a straight $35 per hr while I am working on their jobs. From the time they walk in the door to the time they walk out.

[Frank Corker]

At this point, having made it perfectly clear in my earlier point about the quality of the work and the pricing, there is another thing that needs to be considered.

About 4 months ago I was asked to commission acrylic awards for a local company, the design I created I even made one to satisfy myself that it was up to my own high standards. So the day arrived when one of the company called and was bringing with him their last year's award to show me. I was shaken to my feet, solid glass on a bevelled glass plinth and about 2" taller than my creation and half inch narrower. Very nice, very heavy and looked expensive except for the engraving, which was crap. Chinese glass, probably bought in huge bulk, but the price was just under half of my creation. They loved my design but they wanted to pay the price the other company were still offering. No sale.

That's what I mean by another factor that needs to be considered. There are so many imports available to those who can buy in bulk that it is far too easy to outprice yourself out of a job. Another reason why Carol's price was right. We all agree that it's bespoke and people love bespoke but if it's more than half the price of 'one over the counter' it can be bespoke as much as you want, they won't pay it.

[Ron Thompson]

Carol,

Please give us the web address for PDU.

And I think you did great.

Ron Thompson
San Jose, CA

[Mike Null]

Ed

Realistically, every job is different. I have a fixed price for name tags for example. My engraving rate for name tags is actually over $400 per hour. My lowest priced name tag, a 1x3" takes 27 minutes to do a sheet of 77, engraved and cut. My wholesale price for these is 2.85. That's 219.45 or $8.12 per minute. My material (plastic and pins) cost is under $20 including freight. My customers re-sell these at $5.00. There is about 30 minutes of assembly and packaging also and maybe 15-30 minutes of set up time.

It's only fair to say that these are my highest margin items. Plaques and other awards are not nearly as profitable. But marking customers materials is close.

One of my hidden pluses is that I have virtually no customer contact as almost everything is done by email. Customer contact, especially at retail is a time hog.

I should mention this as well. Retail customers seem to want everything yesterday. You've heard of rush charges. A few weeks ago on another forum an old hand at the business shared his rush charge strategy which I adopted.

He eliminated the term "rush" which he felt had a negative connotation and substituted "Express" for next day service and "Priority" for same day service. He set two different prices accordingly and says he rarely meets with customer resistance.

[Jeanette Brewer]

Please give us the web address for PDU.


PDU's website is www.pdu.com (http://www.pdu.com)

[Carol VanArnam]

It's going to take me all night to read the answers. Thanks guys for the help. This was my first acrylic award job and I had no idea what to charge. I appreciate your answers because you all have learned and know the tricks. There is only one other place in town to get awards and trophies so my competition is limited.

My rule is the first customer always gets a great deal because he is the customer I learned from.... the rest of the customers BEWARE!

THANKS AGAIN FOR ALL OF THE REMARKS
I FEEL SMARTER ALREADY.....

[Carol VanArnam]

PDU ACRYLIC AWARDS AND TROPHIES-
http://www.pdu.com/2007CorpCatalog/IndexCorpCatalog.htm

what I like about them is I get their product from my local trophy dealer. It takes only 1 day to get anything you see at the PDU web page. My dealer ships same day so poof the next day I'm lasering away.

PDU has a tab on their web page for laser engravers. They post eps files of their stuff so we can use it for layout and rastering. They also will ship you a CD with pdf pictures of all of their products. The CD is free so posting the files on your web page is great. Emailing the pictures to the customer is also easy. It's just they have a lot of support and a great product.

Frank- this award is 3/4 inch thick

[Mike Null]

Carol

One thing you might try is to look at the Tropar web site. They price their items at retail less engraving. For example a $60 item will cost you $20 plus shipping. You then determine how much you want to add for set up and enraving. Your cost is one third of the retail.

Another nice thing about them is that nearly everything is gift boxed.
http://www.tropar.com/

All this pricing stuff aside, you really did a nice job on those awards.

[Garry McKinney]

Carol
I think your pricing was a bit under priced. Mike's pricing at 120 is a bit under the avg shop rate in America. Most mfg operations are at the 150. range.

The second rule of thumb is a min of twice material.

The thrid is direct cost pricing.

Direct cost would be
Material +
operation cost 1 + (labor cost per hour /rate per hour )
operation cost 2 +
operation cost 3 = labor
labor +
overhead all cost of operation ( elec, water , rents, gas, sanding belts, polishing wheels , glue, taxes ,comp ) +

packaging + =

net pricing +
(x) profit = wholesale price +

(x) markup = retail price

Anyway the problems with each way are different the direct cost method works on large volumes , it is also the most cost effective means

But if you were happy and they were happy it was a good sell as long as you paid for all your cost and considered replacement of your laser as part of your cost.

[Belinda Barfield]

Carol,

Engraver's Journal started a series in October '06 entitled "How Not to Make Profit". Part 1 or Part 2 discusses all the "hidden" costs that we don't typically think of when pricing a job. Many of these costs have been mentioned by others, but the series also gives a lot of other info regarding how to calculate price. It might take me a day or so to dig out the 06 issues (we moved to a new facility in January and I'm still unpacking the nonessentials), but I would be happy to get a copy to you if you are interested.

[Shane Turner]

This has been a truely enlightening topic. I've actually learned a lot reading everyones replies.

Thank you one and all.

[Jim Good]

Carol,

It sounds like you have ready access to PDU. I am in the same boat as "The Source" is only a 10 minute drive for me. They are a distributor of PDU products so I just place a call and tell them what I need and I can pick it up at my leisure. The more new products they add to their line, the happier I am! It's nice to get rid of the shipping costs, too.

Jim