“The biggest mistake many businesses make is to believe that price alone drives sales.” — Elizabeth Wasserman, Inc.com.
I read Ms. Wasserman’s article titled “How to Price Your Products” this morning, and if you know anything about me by now, you know it inflamed my passions. She very accurately describes the processes required for pricing products accurately and consistently. I think we all know a lot of what she says to be true; however, in the sign industry, our products just don’t fit the cookie cutter model of pricing – which means every time we price a job, it’s a real challenge to pull all the variables together and get our prices out the door on time.
Why are you in business?
I mentioned a couple of months ago that I was involved in a discussion on an online forum where one of the posters essentially said that he felt he was ripping his customers off if he made a great profit on his work. This continues to mystify me because the whole reason we are in business is to make money. Sure, we love our work, the interactions with customers (well – most of ‘em ), and the time we spend actually creating graphic arts for sale. At the end of the day, though, our whole reason for being in business is to take home a profit that allows us to save for retirement, put the kids through college, take vacations, and ultimately secure our lives. Otherwise we’re in business for all the wrong reasons.
Relationships are built many ways. Don’t build yours on price.
I’ve said it before and I’ll say it again, your price should never be the foundation of your relationship with your customer. You see, relationships are built on a foundation. As long as that foundation – the key element that makes up the core of the relationship – remains stable, your relationship will remain solid.
This means that if you build a relationship based on delivery – getting signs done quickly and delivered on time, every time – or build a relationship based on outstanding quality – knock ‘em dead gorgeous sign work every single time – your customer will pay a premium for those services, and won’t leave you unless that changes. On the other hand, if the relationship is based on your cheap prices, you will lose the customer when you raise them unless you do some serious salesmanship.
It never pays to be afraid of your customer’s reaction to price. If your customer thinks your price is too high, it just means you haven’t done as good a job as you should have selling them on it. People want to feel like they are getting value for their money – and if you provide the best price/value ratio to them emotionally, you’ll sell them higher priced work every single time.
Don’t leave money on the table.
Sign pricing is a challenge. Every time we have to quote a job, we have to think through the work carefully and try to price accurately. I remember long before I wrote EstiMate, I’d stare up at my “calculator on the ceiling” and think along the lines of, “okay.. 4×8.. that’ll cost about $90 for the board.. should take me about an hour and a quarter to cut and apply the vinyl… painting the board will take 15 minutes… so about $125 in materials and 1 1/2 hours of work… $200.”
Then I’d remember I needed to fill the edges of the MDO and prime the sucker. After I’d already quoted the customer the price.
The heart of solid, consistent pricing is knowing your costs and having everything together so that you can get a proper price to the customer quickly without having to worry about things like me forgetting the priming of the board. Once you really understand your costs, you won’t be afraid to charge what you have to. I’ll say that again. Once you really understand your costs, you won’t be afraid to charge what you have to, because you will realize that in order to make money you just can’t underprice and make it up on volume!
Try an experiment and raise your prices.
Next time you have to quote a job for a new customer, spend some time explaining all the benefits of the sign you are selling them. Talk about successes you’ve had with similar sign jobs. Show the customer some of the best pictures of your work. Then, quote a higher price by 20% than you normally would have and in the same breath promise the sign quickly and back it with a warranty.
I bet you’ll have the deposit in hand within an hour, because customers like being treated that way. They can say to their friend / business partner / significant other, “I’m getting a great sign for my business, and that guy’s gonna do an awesome job on it. He even says so-and-so’s business tripled after they put in a new sign he made!”
That’s the power of salesmanship. It’s really not all about price.