The easiest way to reduce anxiety over producing consistent quotes is to use tools and resources that ensure you don't miss the important parts of pricing your jobs.
Start by calculating your labour burden - what it actually costs to cover your shop and field rates. This requires you to do a little homework.
When I owned a sign shop, I created a labour calculator with my CPA (certified public accountant) to help me examine all the costs needing to be covered per labour hour. Rent, lights, insurance, etc., all have to be calculated along with the hourly salary rate per person, then additional mark-up for your profits.
I would review this with my CPA at least a couple times a year to make adjustments as needed.
Once you have a solid hourly shop rate, you can calculate your cost of materials, equipment usage, and the time it takes to complete the job.
At first, one of your experienced fabricators or installers might be able to help estimate the amount of hours needed to complete the job. As you grow however, hiring a dedicated estimator will help ensure your jobs stay profitable.
If you have good relationships with your suppliers, ask them to help you calculate the amount of materials needed for a particular job, or how long it will take to run the printer or router to complete fabrication. This data will help you as you learn to gauge this for yourself.
Quoting tip:
Another helpful way to test your pricing is to order signs from wholesalers. It is important to have relationships with quality wholesale shops as a backup to fabrication bottlenecks anyway.
If a banner costs $100.00 (£82.45), you should be able to double that amount and divide it by the number of square feet to get a solid retail per square foot price.
Electric signs might not be able to be doubled, but you can ask your wholesaler for a detailed estimate to help ensure you quote their products correctly in the future.
Lastly, whether you use a spreadsheet, accounting software, or sign quoting software, it is important your method be consistent. Again, you deserve to make a profit, so make sure you have the right tools to understand your costs and mark-ups.
2. Get the details right the first time.
No one likes a change order. An email request for a sign often fails to take into account the hidden but necessary components of fabrication and installation, such as detailed site surveys, hours of design and engineering, permitting research, colour samples and so on.
If you underestimate the process, your shop will be forced to either honour an underbid quote or convince your client to sign a change order because you missed an important detail.
Quick example:
A few years back, my shop installed a channel letter sign using bracing that was designed to be bolted to the backside of the parapet wall.
I failed to measure the depth of the wall to the deck correctly, a mistake that cost our company over 10K to build new bracing from the deck, which involved cutting the roof membrane, on-site welding and getting everything reengineered.
In other words, it was a nightmare that could have been avoided had I asked for a set of detailed drawings from the architect before presenting the quote—a rookie mistake that my client refused to pay for. My shop blew all the profit on the job.
Arenella warns against working too quickly as miscalculations could happen, which could prove to be costly for your business
These mistakes aren’t limited to large electric projects. Miscalculations can happen with banner sizes and frames also if details aren’t accurately collected.
A good first step is to start with solid survey techniques for gathering information, including detailed survey checklists, file and photo storage (not just your email inbox), team tasks and a solid quality assurance (QA) plan to double check everything is done correctly.
Haste is your enemy, and a lack of a good system to ensure everyone is on the same page will lead to lost productivity and profits.
3. Same service, different customers…2 x the profit!
The market is filled with bargain hunters that have little or no understanding of your processes. Being completely transparent and straightforward about your pricing can feel scary at first, especially when you are just starting out.
When providing a quote, try to include every cost, evaluate every possible situation, and provide an estimate that is as close to your final price as possible.
That sinking feeling that you are going to be too expensive and miss opportunities is hard to shake, but remember that bargain hunters rarely make good clients in the long run.
When you charge enough on a project to do it right you will start to attract better customers because you can afford to do quality work. Plus, clients rarely reject quotes based on price especially when you take the time to understand what they are trying to accomplish.
Clients that trust your commitment to them are usually willing to share their budget and be flexible whenever possible.
Be clear and quote exactly what you promise to deliver. Have confidence in the quality of your work, and the courage to protect your profit. Clients will always appreciate your willingness to work hard for them and will want to reward you for helping them reach their goals.
