Big Picture - May 2020 - 12

extreme vinyl

Price Check

How and why you should assess your pricing and profit structure. | by Matt Richart

BIG PICTURE

May 2020

hope you're keeping your head up during these tough
and unfortunate times. We're dealing with uncharted
waters and every day brings a new challenge to both our
business and personal lives. COVID-19 has opened our
eyes here at Digital EFX Wraps. Not only in regard to
how we're dealing with this pandemic, but how we're going
to handle things differently moving forward.
This downtime, or reduction in workflow, has allowed me
to dive back into our pricing and profit structures. I assume,
like us, most graphic companies are dealing with a decrease
in business. I also assume some companies may be realizing
they've been undercharging for their services and products.
When revenue and cash flow become tight or short, it can
expose weaknesses in your business structure. That said,
this is the perfect time to actually see what you've been
charging your customers. We try to go over our design,
production, material, installation, and management costs
every six months, if not more frequently, to make sure we're
staying profitable. When we first started our business 16
years ago, these goals and pricing structures were not in
place. It was as if we were operating in the Wild Wild West.
We were just happy to be open and finally running our own
business. In one of my previous columns [see page 12 in the
January/February 2019 issue], I discussed our sixth year in
business when we analyzed our pricing, only to find out we
were leaving too much revenue and cash on the table. It was
a very humbling experience that wasn't pleasant, but was
necessary for our growth.
I realize this may seem like common sense, but it's
always good to peel back all of the layers that go into your
pricing structure. Everyone's business is different, but we're
all dealing with the same components, save for a few
products or services. We try to break down our business into
segments or departments. Some of these departments might

DESIGN
Design and custom layouts take time and are one of the most
important aspects of our business. Before, we would simply
set an hourly rate or give our clients a basic artwork fee
package. We finally had to pull back the curtain and see what
was really involved in a customer's artwork process. Now,
we've created an artwork form that explains our process, lists
our pricing based on the project, explains how payment
works, and leaves space for them to sign off on the design.
Paying your designer is just one portion of your overhead. We
also look at what we spend per month for our Adobe subscription for all four designers, our cloud service, templates,
artwork subscriptions, and upgrades to our computers.

MATT RICHART is the co-owner of Digital EFX Wraps, a full-service,
one-stop shop in Louisville, Kentucky. Matt leads country-wide demos
and training sessions on how to sell, market, design, and install for
the wrap industry. Follow him on Twitter @digitalefxwraps.

require more labor, more administrator time, more material,
or a specialty film that requires mark up to your client. It's
also a great idea to look back on scenarios or previous jobs
you felt weren't as profitable as they could've been. We've
had projects we thought were priced correctly, but when the
dust settled we realized we didn't charge enough for our
design time, our square footage was off, and more material
and labor was required.

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Big Picture - May 2020

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