Page 1 of 3 123 LastLast
Results 1 to 15 of 33

Thread: raising prices- is it worth it?

  1. #1

    raising prices- is it worth it?

    The last thing I've ever been accused of (a few cheapskates notwithstanding ) is overcharging for my work. Many of my cold-call customers pay me more than I charge, and most of my business customers tell me I should raise my prices, and have been telling me for years. I always tell them the reason I don't is because, if I do, you'll start shopping around.... always good for a chuckle.

    Was just going thru my some of my email folders, and was moving a customer's files. Then I noticed something: This customer (of over 25 years) averages 4 to 6 orders per month. I went back awhile, and the lowest orders in one month for the past couple of years is 2, and that was one month.

    Last month I told the guy I deal with was going to raise their prices, which have been the same for 12 years or more. "Great, you should, it's about time!"...

    Since then, crickets. Haven't seen an order from them in 4 weeks. I think the last time that happened was '08. Coincidence, or are they shopping around? So much for fair warning...
    ========================================
    ELEVEN - rotary cutter tool machines
    FOUR - CO2 lasers
    THREE- make that FOUR now - fiber lasers
    ONE - vinyl cutter
    CASmate, Corel, Gravostyle


  2. #2
    I, personally, think it's worth it. I have no desire to be the cheapest guy in town. I probably was for a while. Not now. What I found was that it weeded out a lot of the things we didn't actually make money on, like those jobs where you think it's going to take 15 minutes and 6 hours later you're still working on it for some reason. I call it "noise" and it wiped out a lot of the "noise" and I believe it made us more profitable. I have a terrible fault, and that's trying to help everyone with everything. I've been slow to realize that I can't be that person. While I think it's nobel to want to help everyone, it's more often at my expense.

    In this case, I'd give the guy a call and ask him. I suspect there's just some bump in the road that caused him not to come in. I had a repeat customer recently that disappeared. Finally showed up about a month later with a cane. He had his knee replaced and was out and no one else handled his work when he was out. You just never know what's going on.
    Lasers : Trotec Speedy 300 75W, Trotec Speedy 300 80W, Galvo Fiber Laser 20W
    Printers : Mimaki UJF-6042 UV Flatbed Printer , HP Designjet L26500 61" Wide Format Latex Printer, Summa S140-T 48" Vinyl Plotter
    Router : ShopBot 48" x 96" CNC Router Rotary Engravers : (2) Xenetech XOT 16 x 25 Rotary Engravers

    Real name Steve but that name was taken on the forum. Used Middle name. Call me Steve or Scott, doesn't matter.

  3. #3
    For sure it could just be coincidence, this time of year some businesses are more concerned with arranging the xmas party than working. I probably will call him and just ask him what's up, I've known him long enough I believe he'll be honest with me.

    But the shopping around has happened before, several times. But sooner or later, they almost always come back!
    ========================================
    ELEVEN - rotary cutter tool machines
    FOUR - CO2 lasers
    THREE- make that FOUR now - fiber lasers
    ONE - vinyl cutter
    CASmate, Corel, Gravostyle


  4. #4
    My guess is they'll call next week and they don't really care about the price increase. My bet is while you've been charging the same price for 12 years, they've been bumping the price to the end user and happily pocketing the extra cash you're saving them.

    1. Don't draw attention to price increases. Charge it and deal with the fallout afterwards. You obviously shouldn't do this if there is a major increase, but if you're bumping just to keep up with general inflation, then you don't need to let them know you're bumping their price by 3-6%. Also it's best to increase the price on a small project, not the big one. That way it's not some big surprise when they give you a larger order.

    2. You should never go 12 years without adjusting your prices. I can't think of a circumstance where your prices should be that fixed. If you told me because of changing materials and process you've been able to keep the price down, I could buy into that. I know by switching materials and pushing jobs from the rotary engraver to the laser, I'm able to keep prices down but that doesn't mean I haven't increased prices during that period. You should adjust prices yearly. Maybe not every job but some jobs. If you have a job you do out of Romark, I gaurantee prices have gone up during that period. Even if it's a straight engraving job, I bet your cost of living has increased over the last 12 years. Why shouldn't your prices reflect that?
    Equipment: IS400, IS6000, VLS 6.60, LS100, HP4550, Ricoh GX e3300n, Hotronix STX20
    Software: Adobe Suite & Gravostyle 5
    Business: Trophy, Awards and Engraving

  5. #5
    Join Date
    Oct 2013
    Location
    United States
    Posts
    1,038
    I also think raising prices is worth it. The headache people who you barely make anything on go away to the cheapest guy and you have more time to focus on those customers that bring in more money. By more money, I mean more money per hour. Let's say a guy brings in $500 of business a month to you, that's $6000 a year and a heck of client. However if you have to spend 25 hours a month servicing him that really isn't a good use of your time. If that guy takes only 5 hours then you can spend the other 20 servicing other clients or playing with your kids, seeing your spouse, going on trips, etc. To me it's not worth it to do jobs that don't pay enough to make it worth my time. And keep in mind all of your expenses go up over time too, if you haven't raised him in 12 years you're probably about 9 years over due.
    Trotec Speedy 400 120w, Trotec Speedy 300 80w
    Thunderlaser Mars-130 with EFR 130w tube
    Signature Rotary Engravers (2)
    Epson F6070 Large Format Printer, Geo Knight Air Heat Presses (2)

  6. #6
    Join Date
    Jun 2009
    Location
    Victoria, BC
    Posts
    2,367
    Look at it this way. My company charged $35.00 an hour for a long time. We decided that had to change, and doubled our rate (we were undercharging.) not only did our business double (yes, you read that right) we did not lose any customers and even our most persnickity clients stayed, and the major whiners stopped being whiners. It was interesting.

    also look at it this way: at $60 an hour we had to work 8 hours to earn $480. At $80/hr we only had to work 6 to earn the same amount. Scaling this up shows us even more how smart it is.

    And we took a lot less crap from our clients as well.
    Paul

  7. #7
    My fiance runs most of our design/laser business but coming from the software development world myself I helped apply a few things to pricing:

    – Big companies actually don't normally sign first time deals that seem 'too good to be true'. My experience in the software world has been that if you come off as far too cheap you look unreliable, unprofessional and quite frankly like you have no idea what you're doing.

    – Because we do a lot of design + laser jobs the cheaper the client the more work it is to even make the sale. They typically ask for additional quotes/sizes/materials because the first quote is too expensive. When we know we're dealing with someone that just wants a bargain and not the quality we offer we normally budge very little on prices through the quotes because we know they are just going to be a total pain asking for the most changes etc… through the entire project.

    So far this has served us really well, and we keep our prices quite high and we've even had competitor's customers come to us because the quality is what matters to them.

  8. #8
    Join Date
    Aug 2006
    Location
    Suwanee, GA
    Posts
    3,686
    The business coach I had taught me quite a bit, but one of the most important bits of info was this - the fastest, easiest way to increase your profit is to raise your prices. Cutting cost, changing processes, etc., all take time and may not work, but raising your price is instant, and works. There is always going to be fallout but if you analyze those that fallout, you'll probably find that they weren't your best customers anyway, and you will also realize that they have freed you up to better serving your good customers as well as giving you time to work on getting more of the customers you really want to have. I have adjusted my prices almost every year and this year is going to be a pretty large adjustment!

  9. #9
    We had a customer that we "thought" was our best customer. Long time customer of many years. They were a $30,000 + a year customer. They repeatedly got irrational with their contact with us. Forgetting to send the order to us, then blaming us for the items not being there. Nice email trails to back it all up. Finally, we "let them go" as a customer and sent them into the free market. We thought it would be an impact to our business. It was. A positive impact. Turns out with all their demands and trips to locations to survey sites, etc, we weren't actually making our normal margins on their account. We actually were more profitable and had a better year AFTER they were gone.

    They came back and we doubled our prices for the aggravation factor of dealing with them, they never blinked once on the pricing at the new prices. We've since refused any work from them because they are so difficult to work with.
    Lasers : Trotec Speedy 300 75W, Trotec Speedy 300 80W, Galvo Fiber Laser 20W
    Printers : Mimaki UJF-6042 UV Flatbed Printer , HP Designjet L26500 61" Wide Format Latex Printer, Summa S140-T 48" Vinyl Plotter
    Router : ShopBot 48" x 96" CNC Router Rotary Engravers : (2) Xenetech XOT 16 x 25 Rotary Engravers

    Real name Steve but that name was taken on the forum. Used Middle name. Call me Steve or Scott, doesn't matter.

  10. #10
    Whats that saying? "Anyone can give it away"
    3 X Speedy 300 80w
    1 x Speedmarker 700 FL 30W
    1 x Speedy 400 120W
    1 x Speedy 360 50W Fiber
    1 X Speedy 100 60W
    Roland LEF 12 UV Printer
    HP 360 Latex Printer
    Graphtec 8600-160

  11. #11
    Thanks all, for the feedback!

    Since I started this, I've been watching the clock while running jobs...

    Some jobs I barely make $20 an hour, some work out to over $300 an hour. Setup time is usually the reason for the low rates--

    The company in question, I'm at about $35-$40 an hour right now. I'll take $40 an hour for 1000+ part jobs, but for 2-10 part jobs, nah...
    ========================================
    ELEVEN - rotary cutter tool machines
    FOUR - CO2 lasers
    THREE- make that FOUR now - fiber lasers
    ONE - vinyl cutter
    CASmate, Corel, Gravostyle


  12. #12
    Quote Originally Posted by Kev Williams View Post
    Thanks all, for the feedback!

    Since I started this, I've been watching the clock while running jobs...

    Some jobs I barely make $20 an hour, some work out to over $300 an hour. Setup time is usually the reason for the low rates--

    The company in question, I'm at about $35-$40 an hour right now. I'll take $40 an hour for 1000+ part jobs, but for 2-10 part jobs, nah...
    Anyone that does engraving will understand that some jobs are stinkers and some jobs are very profitable. There is a certain percentage of our business that we don't really make money on. Most businesses have that. For example: we can't make money on a couple of trophy plates. Even if we charge a $15 minimum and consider the material scrap, the time with the customer, setting up, and running the job makes it unprofitable work. You do it because you almost don't have a choice. It's like when a bar sells a $7.50 hamburger. They only make a few bucks on that burger but they do it so they can sell you a $4 beer at a $3.50 profit. It's almost impossible for the local bar to not sell burgers just like it's almost impossible to offer one for $10 and not get dirty looks from patrons.

    As for averaging $35-40/hr, I think you're going to get a lot of responses on here from people thinking that's on the low side. I understand you run out of your home which means you have a low overhead, but even so, with your list of equipment and skillset, I wouldn't think you should be under $60/hr on a production run. Most people with overhead would consider that close to giving it away so it still gives you a real advantage in the market.
    Equipment: IS400, IS6000, VLS 6.60, LS100, HP4550, Ricoh GX e3300n, Hotronix STX20
    Software: Adobe Suite & Gravostyle 5
    Business: Trophy, Awards and Engraving

  13. #13
    Thanks for reminding me... I need to do this.

  14. #14
    Keep in mind the sodas (small, medium or large) at the Fast Food place or the Movies -- cost is super low and sell for $3-6. Quite a mark up. I know I need to raise some prices but keep putting it off. Moved my shop earlier this year and business has been so slow I hate to lose any business so I put off raising prices. Right now the only person making any money off my business is my landlord. But, I think the first of the year things are going to go up some. Still hoping to hang in there.

    Jeff in northern Wisconsin
    SawmillCreek.org
    [SIGPIC][/SIGPIC]
    45W Epilog Helix
    Corel X4, Photoshop CS3
    Sherline 4400 lathe
    JET 1221 Lathe
    JET 1014 Lathe
    Craftman 36" VS lathe

  15. #15
    Quote Originally Posted by Kev Williams View Post
    I'll take $40 an hour for 1000+ part jobs, but for 2-10 part jobs, nah...
    Serious question here, what if the market value for that 1000 piece job let you make $400 per hour on a 1000 piece job?

    Had a case just yesterday/today. Customer showed up in a frenzy, needs stuff before Christmas. We told them we'd work up a quote. They called today to see if the quote was ready. We had just about finished it. We were in the $12-13 each range for the items. We asked "Do you have a budget for this item" and they very quickly said "$20 each".

    So should we charge $12 each? Or $19.50 each?
    Lasers : Trotec Speedy 300 75W, Trotec Speedy 300 80W, Galvo Fiber Laser 20W
    Printers : Mimaki UJF-6042 UV Flatbed Printer , HP Designjet L26500 61" Wide Format Latex Printer, Summa S140-T 48" Vinyl Plotter
    Router : ShopBot 48" x 96" CNC Router Rotary Engravers : (2) Xenetech XOT 16 x 25 Rotary Engravers

    Real name Steve but that name was taken on the forum. Used Middle name. Call me Steve or Scott, doesn't matter.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •