There is a guy 2 towns over that has a trophy shop in the back of his cousins t-shirt shop whis is in a store front in a busy downtown. This guy and I have started doing business together, well mainly he has been buying printed decals and banners from me. He has a vinyl cutter and does coro signs and small banners but it seems everthing that is larger he wants me to do. So far it has been pretty good work (except for the print of a trout that I used frog juice on and he put them face to face, but the new laminator just came in so that wont happen again) cause he sells it, designs it, and sends me a good file that is print ready.
I guess what I am asking is what kind of a discount do people typically give in this kind of a situation? I know the default in estimate is 30% is that typical? I want to be fair but I want to make sure it is worth it also.
I am just curious how other people handle this.
THANKS AGAIN, JAKE
Posted by Dave Draper (Member # 102) on :
I think you could be looking at this from the wrong angle.
Instead of taking 30% off (of what? some chart, some price guide? what?) why not charge what you have to make and let the other guy mark it up to what he has to make.
His customers do not know what the price of any sign or digital print is, and neither do most of the sign shops, that is why prices are from $2.00 a square foot to $10 a s.f. (and more)
So, just my opinion, charge what makes you happy and let him figure out the rest.
Posted by Glenn Taylor (Member # 162) on :
Generally, I make a 40% margin on anything I sell to the general public. If I'm wholesaling, then I only mark it up with a 20% margin.
.
Posted by Raymond Chapman (Member # 361) on :
Why should I make less money if I am selling it to another sign shop than to the general public?
I do work for local shops and some out of town, but I charge my usual rates. Now, the price may be less than I would sell to my regular customer because I have not had to do any design work, selling, or chasing folks around for money.(well, you still have to do that with some sign guys, but not most)
One time I had a sign guy ask me to reduce my price so that he could make more money. What's wrong with this picture?
If another shop in town needs supplies, we usually trade something out or if it's a simple product I just give it to them. There will be a time when I may need something in a hurry and I want to be sure that we are still friends.
That's a little different than continually reducing your price in order for them to continue in business.
Posted by Tim Whitcher (Member # 685) on :
Since he's handling the layout and sales work, that's what he should be charging his customer for, as well as adding a mark up at his discretion. Since you're basically providing labor and material, you should charge for that (kind of like a service bureau). I might give a discount to him if he were sending me x amount of steady business per month; or maybe a "commission" (percentage of the sales he's generating) with a base set at x amount and above each month. Kind of like an affiliate program.
Posted by Dan Sawatzky (Member # 88) on :
Generally I don't discount the work we do for other shops. I know what we need to make in our shop and doing work for others doesn't change that.
That being said if its something small and I'm doing someone a favor I just tell my friend to catch up next time - I wouldn't even bother billing it out.
-grampa dan
Posted by Si Allen (Member # 420) on :
Charge what you would charge a retail customer...less the time and effort that you would spend with that retail customer. That way it is fair to both you and him!
Just mt 2¢ worth!
Posted by Dave Grundy (Member # 103) on :
If the guy sends "ready to produce" files, that require no real effort to produce, other than feeding in the info..why not give him a discount?
No design time, correct file formats..just plug it in and do the work..quick and easy profit?
Posted by Alicia B. Jennings (Member # 1272) on :
Unless the guy comes over your house and does some chores, you gotta charge him your going rate. It is up to him to mark it up to his customer. Hopefully, he comes prepared, so that you don't have to spend much time with the job.
Posted by Jake Lyman (Member # 3280) on :
I have been charging him the going rate with a little subtracted for not having to spend time with the customer, I haven't set a specific percent.
Last night I delivered him some decals, cause I was going right by, and he hands me a disk and a business card for an electrician he has made job signs for that needs six vans lettered, and says to me, "I don't have an inside place to do this so I suggested to the customer to talk toy you and he said have him call me and set up a time to get them done".
Now I wish I had something I could send his way.
JAKE
Posted by Mike Faig (Member # 6104) on :
Patience Grasshopper. In time you will send prosperity his general direction. When you do get and finish those vans, Send him out to dinner.
Posted by Monte Jumper (Member # 1106) on :
I agree with most of whats been said here.
In reality you cannot make things for another sign shop or trophy shop for less than you can for a retail customer.
The sooner everyone realizes this the better the trade will be.
The fact is that other company cannot or will not produce the product you offer...therefore it should be their responsibility to mark it up and make their profit margin...why mark yours down to make less profit than the guy that is the end seller?
I'm sorry but I will never understand this logic.
Posted by Ricky Jackson (Member # 5082) on :
You guys are all wrong. It's the same as a bird dog fee: you don't give him a trade discount at all; you have the wife fix him a batch of chocolate chip cookies or give him a gift card to a nice restaurant.
Posted by Glenn Taylor (Member # 162) on :
Well, I guess I'll be the fly in the ointment. I do a lot of wholesale work. And, yes, it can be done for less depending on the nature of the job. It also has a lot of benefits.
(read that again please so there is no misunderstanding)
For example, I screen print a lot of signs for other shops in the area. Because of the volume of the work, I'm able to buy my material in bulk resulting in a better price from my supplier.
Stouse would be a prime example of this model. They buy their material by the truckload. And because of the volume, they are able to buy direct from the manufacturer, not the distributor.
The net result is that I am able to reasonably maintain my profit margins while selling at a lower wholesale price.
The added benefit from a purely business perspective is that this model also allows me to build a potential client list. I've seen several shops that I've done work go out of business for whatever reason these past few years. And when they did, I sent a letter to their customer letting them know that I have their files already on hand and that I'm there to help. I've picked up quite a few profitable clients that way.
Don't misunderstand. I have not and will not seek out another shop's customer until after that shop has gone out of business. Period.
Now as to wholesaling the more custom work, I almost prefer doing wholesale work. I don't have to waste time trying to sell a job. The other shop has already done the leg work. I'm also dealing with someone who understands the business. They are less argumentative, already know what they want, and waste very little of my time. That alone is worth a lot to me.
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Posted by Raymond Chapman (Member # 361) on :
Get back in the ointment, Glenn. Face it, you're just wierd. (And said with a smiley face)
Posted by Glenn Taylor (Member # 162) on :
Wierd?
Yes I am! I've even figured out how to give away 300 t-shirts at a time for free and double my normal gross profit. (I'll let you all scratch your head on that one for a while. hehehehe)
Gotta ask yourselves..... Why are you in business? To make signs or make money?
.
Posted by Dave Grundy (Member # 103) on :
To make money!!!!! Profit is NOT a four letter word!!
edited to add..
I like your idea of being able to offer your services to clients of other shops who have since closed up.
[ November 10, 2006, 07:25 PM: Message edited by: Dave Grundy ]
Posted by Raymond Chapman (Member # 361) on :
Somebody tell Dave it's six letters. (Of course it's not a four letter word - it's six. Well, duh!)
OK Glenn...how did you do it? Inquiring minds want to know.
[ November 10, 2006, 07:18 PM: Message edited by: Raymond Chapman ]
Posted by Glenn Taylor (Member # 162) on :
Just using general numbers....
1) Volunteer to donate 300 t-shirts to a local high school. Figure a first quality shirt such as a Gildan Ultra, a two color print featuring the school's football or basketball team on the front and a one color on the back.
Under normal circumstances, if I were selling a job like this, it would go for about $1600.
2) Sell 6 5"x3" ads on the back for $500 per ad. ($3000)
3) Print the shirts and give them to the school to be passed out during a game or two.
You'd be surprised at how well this works.
You are a hero to the school and succeed in opening a few new doors for your business in the process. All the while, making a lot more money in the process.
.
[ November 10, 2006, 07:27 PM: Message edited by: Glenn Taylor ]
Posted by Greg DePauw (Member # 6604) on :
Both parties have to feel like they have WON. If you feel shorted.......tell them. Make it work for both of you. What goes around comes around. Greg
Posted by Mike O'Neill (Member # 470) on :
That's thinking outside of the box, Glenn just like turning billboards into buildings...!
Posted by Monte Jumper (Member # 1106) on :
A small note...of course we give dicount to anyone seeking multiple quantities of products such as silk screening or router work ...BUT...that discount doesen't vary from a retail customer to another sign shop.
We still bill both the same...because you still can't do it any cheaper for one than the other.
I'm sorry I've tried do the trade discount thing and all I had was a shop full of lost profit jobs.
I'm afraid you will just have to decide whats right for you...I'll bet tho you will do it for a while (like the rst of us here) then you'll go back to "not leaving money on the table".
Let us know how it works out for you.
Posted by Mike Pipes (Member # 1573) on :
Glenn, I do the same thing with magazines that want to run photos but only want to give photo credits and no money. Photo credits don't bring me more work but I'll agree to it as long as I get to specify exactly what goes in the credit line. I can get someone else to sponsor the photos for way more than the typical editorial fee anyway, yet they get a super cheap ad in a magazine that charges $5,000 for a 1/4 page ad in just ONE issue, and they don't have to wait 2 months to see their ad come out in print. I get paid, my sponsor gets a cheap ad, the mag gets their free photo. Everybody's happy.
If a small discount from retail zaps the profit from the job, the retail price was too low in the first place, or the costs to produce the job were too high compared to what the product can bring in in its market. Your average mom and pop sign shop probably isn't setup to provide the best wholesale price but someone like Glenn who *IS* positioned for that type of business can crank it out all day long and pull in profit on it. Don't anyone sit on here and think that any other shop doing wholesale work for 50% off retail is losing money doing it. There are plenty of people doing it and making a friggin killing. The key is their regular retail pricing isn't scraping the bottom of the barrel, their costs are controlled and most likely they have the processes streamlined for efficiency.
The sign industry is no different than any other industry.
In the typical Manufacturer/Wholesale Distributor/Dealer/Retailer model, the manufacturers set their MSRP's so they can give their wholesalers bare minimum 50-75% discount while still making 50% or MORE profit margin for themselves. Yes, even at HALF of RETAIL, manufacturers are making bank.
The MSRP has to be a price the market will bear so that means the manufacturer has to really control costs to allow themselves to make profits. We see this all the time in the auto market. People will only pay so much for a certain vehicle so the manufacturers have to control costs by laying off workers or moving operations overseas.
Trying to offer sale to the trade but charging your reseller your regular retail rate isn't fair to your reseller. They'd never be able to add markup and still have a competitive price. You'd be competing with your own reseller/dealer for their customers, and you'd be undercutting them too. Of course, if that person agrees to the price, it's all on them.
I have no problems calling other businesses and trying to work out "to the trade" pricing. One place won't do it or they act funny about it, forget them, there's a bazillion other places out there that will.
Posted by Tony Lucero (Member # 1470) on :
If I understand Jake's question...he is asking what other sign shops typically allow as a wholesale discount to other sign shops for resale. Unless you are a shop that can do every type of sign product imaginable...you are going to find a company that can produce them for you to resell to your customer. I expect to buy these products at a wholesale discounted price and mark them up to a competitive price, thus making a reasonable profit for my efforts. I satisfy my customer, who doesn't have to find another sign shop to start a business relationship with and take the chance of losing a customer.
If I have to pay close to retail from another shop, that will almost always make my marked up price uncompetitive. I'll be forced to find another source who will give me a fair discount. I generally give another sign shop a 25% discount and tell them what I would charge retail. I advise them to add on a set-up/design charge when appropriate.
This is good for all concerned. I make a modest but fair profit and so does the other guy. If I were in a position of running at max capacity and getting full retail...I would simply decline the wholesale work and refer them to another shop who could use the business. When I read responses from respected letterheads who adamantly refuse to discount their work, I assume they are in this "at capacity" level...or living in ego based fantasy world.
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That's thinking outside of the box, Glenn