What Competing on Price Really Looks Like

SO, YOU WANT TO sell more signs? A prospect contacts you and gives you specifications. You use your sign management software, or your spreadsheet, or your own brain and work up a price. The prospect immediately retorts, “Can you do any better?” and you auto reply, “OK, I’ll take 10% off” then WHAM! You got the job.

Before you start celebrating your magnificent feat of salesmanship, better ask yourself if you can really compete on price.

Do you have a lower cost model than your competitors? More productive employees? More automated equipment? Pay a cheaper price for your supplies? Have lower rent and other fixed costs? Use a proprietary process that allows you to make the same signs as your competitors at a much lower cost?

Yeah, me neither (except for the more productive employees, who cost more, and therefore, don’t allow for realistic discounting).

Let’s look at the 10% you were willing to take off of the original price. What is the net profit at your signshop? If it’s 20%, you should consider yourself to be doing pretty well. Yet here you are, just cutting that number in half. Tsk tsk.

There are other things to consider before you decide to jump into the “low-price vendor” space (that is, when you “bid” on a job, you will be the lowest price and “earn” the project). Do you have better equipment than, say VistaPrint? No? Then you can say with 100% certainty that there will always be another company offering a lower price. How can you compete with that? And why would you want to?

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Additionally, do you have enough margin in your quoted price to account for errors? In the printing industry, if we mess up a flyer order, the cost to fix it is miniscule compared to the magnitude of messing up a sign project. That should keep you up at night.

Are you including graphic design in your estimate? You know your prospect isn’t giving you a print-ready file, is he? He’s giving you a 10-dpi image that he wants blown up to 48 x 96 in. with no degradation in quality. And you know he’s gonna make changes. And move up his deadline. And wait until the last minute to approve it. And the cost of the substrate has gone up since you last ordered it, nibbling away at your margin. And, oh yeah, he needs it shipped, so you’ve got to get some expensive packing material, so UPS doesn’t butcher the poster in transit. And you’ve got to insure it, so that costs more. Ka-ching ka-ching ka-ching. There goes your remaining profit, taking the last train to Clarksville.

There are about a million things that can go wrong with any particular sign project, and giving that 10% discount is like walking a tightrope over a flaming pit of loss.

There are many, many other ways to compete and sell more signs than trying to be the low-priced vendor. These ways are more fun, more rewarding, more profitable and more rational. We will look at some of them in upcoming columns. Until then, work on streamlining your processes, cross-training your staff and beefing up your quality-control efforts. All of these will come into play with your next steps toward more robust and confident sign pricing.