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How Much Value Does a CNC Machine Bring to a Sign Business?

The answer is two-fold, as explained in this month’s “Ask Signs of the Times.”

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How much value does a CNC machine bring to a sign business?

Bringing a CNC machine — presumably a router — into a sign business adds two types of value: dollar and perceived. You can calculate the dollar value of routing jobs you outsource (which we trust you are doing first) versus jobs to be done in house. Compare the profit margin for outsourced jobs to the expected profit margin for in-house jobs, less that job’s share of direct expenses (loan or lease payment, operator costs). While the expenses for in-house work should be largely “sunk costs” for periods of time (per month, for example), the sales volume is key to making this work. Obviously, the decision to invest in a CNC machine is based on increasing that type of business. You should be able to roughly calculate the dollar-value difference.

Less measurable is perceived value, but it can lead to increased business. As customers or other shops without CNCs themselves learn about your new in-house service, their perception of you will be that much more a full-service company, doing well enough to expand into new areas. Success breeds success and so on; perceived value helps. Just make sure you are really confident of a growing market before cutting that path.

What are the average rates for two employees in a boom truck?

This question originated from Ohio, so we have asked two Brain Squad members located in the Buckeye State to answer. Carl Heinlein, Cincinnati Custom Signs (Cincinnati), charges $165 for one employee in a boom truck with each helper an additional $105, so two would be $270. This is for a “Tier 1 customer” (i.e., not discounted). For maintenance, his standard service call is $325 for the first two hours of service. Any additional time needed is charged in half-hour increments at $175/hr.

Karrie Brock, Fastsigns of Toledo and Maumee (Toledo, OH), charges $200.75/hr. for one employee in a boom truck, plus $136/hr. per helper, so two for $336.75 (not discounted). For maintenance, her standard service call is $407 for the first two hours, $100/hr. additional, per half-hour increments. Charges in other parts of the country may vary.

Is it better to offer many different services or find a few that are profitable and stick with them?

It depends on what one considers “better.” Let’s start with “more profitable.” Logic dictates that offering many services allows for more potential business. Offer more, sell more — all things equal. But all things are rarely equal. More services may require more employees, or at least more training. More products mean more materials to work with, more inventory and more equipment. Are you adept at all of them? Some services and products will wind up being more profitable than others.

Perhaps “better” means better market share or reputation or sustainability for the business. Focusing on a few services that are profitable reduces the risk of taking on less profitable work, provided there’s enough work for the few services you offer. If you do these few things very well, you could dominate the market.

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