Thursday, December 1, 2011
How to make money selling wraps
Pricing vehicle wraps is generally broken down by the cost of the
graphics, installation and design. There may be a number of different
ways that you arrived at your pricing model, but when is the last time
that you checked to see if you actually are making any money?
JUST TO OPEN THE DOORS
To know if you’re making money selling vehicle wraps, or any signs for
that matter, you must also know what your shop overhead is. This is an
important step you cannot afford to skip. If you determined your
overhead a few years ago, it’s probably time to do it again.
This is often easier said than done and to fully explain the process
would be an article all unto itself. I suggest doing a little research
to see what resources (checklists, forms, etc.) are already available.
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Figure out your business expenses and production hours to determine your hourly labor rate.
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There are also a number of computer programs developed specifically for
the sign industry. These programs will often walk you through a
step-by-step process to help you determine your costs.
In a nutshell, you need to determine how much your rent, utilities,
employees, insurance, advertising and other expenses cost you. You also
need to know your costs on materials and production supplies. Then you
need to figure out how many actual production hours your shop actually
works. Not just the time you open the doors, but the time that is
actually spent creating a product that is making you money. The hours
worked, coupled with expenses, will help you determine where to set your
hourly rate to be profitable.
GRAPHICS
Wraps are time consuming. Even when you get really good at them, they
will typically take longer to produce, from start to finish, than most
printed signs. You can make money at them, but you need to know your
costs at each stage of the pricing structure. Figuring out your overhead
helps you determine your hourly labor rate. Next, you need to look at
material costs.
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Take the time to compare
material costs among reliable suppliers to be sure you are paying the
best possible price. Take time at the front counter to review the
customer’s budget and expectations, and walk the vehicle, pointing out
obstacles and artwork placement.
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Most sign companies I’ve talked to charge for the graphics on a wrap by
the square foot or square meter. Determining what your price per square
foot or meter needs to be cannot be solely based upon what the
competition is charging.
Take the example of cheating off your schoolmate’s test; how do you
know that they are right? Your competition may be undercutting both the
industry and themselves and will be out of business in six months, do
you want to join them?
Make a chart of all the vinyls and laminates you use on vehicle
wraps—cast materials, calendared materials, perforated window film and
optically clear laminate. What is your cost per square foot on these
materials? If it’s 54" material, do you realistically print the full 54"
or do you average 48"? Take that into consideration.
Once you have your list, check with at least two of your suppliers and
find out what they charge for the materials. Are the materials generally
in stock? Does the company have a delivery truck or will you have to
pay shipping? Many suppliers are willing to offer a price cut on a
material to be competitive—often you just need to ask.
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Be aware of your competition
and what they are charging, but base your wrap pricing on your shop
overhead as well as current market pricing.
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Here’s where the competition can come into play; do a little detective
work to see what a handful of the local competitors are charging per
square foot. Toss out the obvious under-cutters and use the information
to see if you are charging enough or too much. This should be strictly
used as a checks-and-balance for your company.
Once you have your costs, you will know what you need to charge to make
a profit. Once you know what the competition is charging, you know what
you need to charge to be competitive.
Make sure you don’t price yourself out of the ballpark, but more
importantly don’t undercut the competition for the sake of trying to get
every job. You’ll end up doing more work for less money and will miss
out on the true profits. Not to mention, you’ll annoy the competition
and likely put yourself out of business.
INSTALLATION
There are many factors that come into play when quoting the
installation of graphics. This is one reason we don’t quote wraps over
the phone.
It’s important for customers to understand the level of skill that is
necessary to do a high-quality job wrapping their vehicle. Educating the
customer on the process of wrapping a vehicle, and physically walking
around the vehicle with them, is an effective way to explain your skill
and expertise and to develop a working relationship.
Selling a vehicle wrap goes beyond just the costs of materials. You are
also selling your experience. With this experience comes quality and
durability.
As you walk around the vehicle, point out obstacles to the customer and
let them know how you typically tackle them. Will emblems be removed?
Can you remove mirrors, lights or other obstacles to get a better
install? Point out rubber window seals and moldings and explain how
graphics are typically trimmed around them.
Some companies I have talked to price their installations by the square
foot, while others price a flat fee. Typically both approaches also
take into account vehicle obstacles, concave and convex areas and other
time-consuming factors.
We’ve wrapped enough vehicles that I can generally estimate the number
of hours it will take to do a wrap based upon the vehicle type and
amount of coverage. This takes into account the obstacles, so we charge a
flat rate based on the total number of hours.
To determine the cost-effectiveness of offering wraps, you need to also
ask yourself a few questions. Does my company do enough wraps to be
efficient installers? In the amount of time we spent wrapping a vehicle,
could we have made more money doing other jobs? Do we foresee the wraps
portion of our business growing, which eventually will make us more
efficient and profitable? Would further educating our installers in a
wraps course be justified?
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Your design pricing should
be based on how much artwork is provided, how much you will need to
create custom as well as the complexity of the vehicle.
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Box trucks are relatively
easy to design and install and are a great type of wrap to pursue as you
build up your wrap installation skills.
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DESIGN
The amount of time spent designing vehicle wraps can vary. How much
artwork is the customer providing that is useable? How much has to be
recreated or purchased? Does the customer have a clear idea of the
design direction or are they completely “open”?
Some sign companies choose to include design as “part” of the wrap
without breaking it out. Other companies, like ours, have a flat
starting rate to create and fit artwork to the customer’s vehicle.
However you determine your pricing, you need to make sure you’re taking
into consideration your hourly shop rate and you are accurately
charging for design. Customers need to pay for your expertise.
Be sure you quote a rate and explain how many revisions that includes.
If you go beyond the included revisions, be sure the customer is clear
on how much the extra design time will cost.
Like installation, this is a good time to show the customer why design
costs extra. Provide samples of your work, including other wraps.
Explain to them the basics to effective design and specifically how you
plan to make their design effective.
The design process is also a great time to build a relationship with
the customer. People love to talk about themselves and business owners
love to talk about their companies. Get your customer talking.
Building a relationship is often more important than price. If the
customer trusts you and realizes that you understand their budget and
goals, then they are more likely to pay more for your services.
Cost-cutting strategies can help your business be profitable with wraps
and all types of signs. If you offer wraps, be sure you’re making money
doing them. Don’t offer them just because everyone else is.
Look for ways to be better, faster and more efficient with your labor.
Couple this with competitive material costs and you are well on your way
to being a profitable wrapper.