Tuesday, November 20, 2007

Do Not Win the Race to the Bottom

Here is another classic Self Employment post. This time, the point is that you should pay yourself a wage you can live on. This is more important than ever, as across the board there has been a huge downward pressure on price for the past several years—don't get caught trying to win the race to the bottom. There will always be someone foolish enough to undercut your price, so set a realistic price and stick to your guns.

Self Respect, or How to Price Your Work

A respected screen printer friend of mine stopped by yesterday. She maintains a shop capable of all type of shirt jobs, but has only a 1 station press, making multicolor jobs on dark shirts very labor intensive. She would like to farm out such work to a colleague, and asked me if I could come up with a price list for her.

I took my “printing on client supplied blank shirts” list and discounted it 10% as a courtesy to her, giving her my best possible rates. At our meeting, she showed me a job that I would print at 2.35 per piece (I probably should have said 2.55). I was informed by her that the rate for the job was 1.75. Note that she didn’t say her price was 1.75, she simply stated what the job was worth (stating her opinion as fact).

Sorry! I do not live in a world where you bid super low in a desperate attempt to attract and keep clients. I don’t create a mindset for myself where market forces dictate to me that I have to work at low wages, suffering an inability to cover my costs.

I mentioned to my colleague that any job on my press has to bring a gross profit of $60.00 an hour through my door to keep the shop rolling. At least! She quipped “We don’t get anywhere near that”. Fine, that’s not my problem. It is her problem, and she was trying to sell it to me. I wasn’t buying.

When setting your prices, pay yourself a rate you are comfortable with. Remember, there is always a market for quality. Your power in any deal is to walk away from it.

© 2007 Steve Lafler all rights reserved

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