Is 600% markup too much?

[Cresent City Kid]

I have a side business doing graphic design and offering printing. I buy the printing from a local wholesale printer. My day job is at one of the wholesale printers here in San Antonio, so I get to meet some of my competitors. Yesterday, a guy comes in and goes on a 5 minute tirade about how people like me are not charging enough for full color business cards. "I see their ads on Craigslist charging $25 for 1000 cards, I charge $60 and if they don't like it I tell them to go to Vistaprint! We should all stick together and make a good profit margin."

The 1000 full color business cards he's charging $60 for cost him and me $12.95. I rounded the 600% but you get the point. I get that my time and my design work have value and I shouldn't be hesitant to charge a fair price for them, but at a certain point you're just adding to the price to gouge the customer and I think this guy has past it.

I have been thinking about getting out of this business for other reasons, like that it's not eco-friendly and becoming more and more obsolete. This episode yesterday has pushed me closer to this decision. I don't even want to be in the same business as this guy. Thoughts?

[stevenleser]

1. Depends on what the other costs of running the business are

Rent, electricity, heat, light, salaries, insurance, etc.

[Cresent City Kid]

7. For me the costs are negligible

I do this from home and the only real cost is the printing. I could understand if there was commercial rent, employees etc. but the way this person was talking it seemed as if he had no qualms about charging a high price for no other reason than to make the money.

[taught_me_patience]

2. Depends on volume

Volume x gross margin = gross profit. Charge the amount that will maximize gross profit. If you can charge $60 and your volume doesn't suffer, then go for it!

[DirkGently]

3. I don't think a high markup, alone, is unethical.

Price-fixing, if that's what $60-guy was suggesting, is. But small-volume, custom work may require a high markup to get by.

And design work, in particular, is often undervalued. A designer I know has remarked that people often think that with the advent of computerized publishing, anyone can design a good piece of communication or advertising, but that's not really true, is it?

The first thing is always to think of what you need to charge to be in business doing the particular thing. Can't charge less than that, or you can't offer the product or service. Beyond that, your work may be more valuable if your skill level, or the quality of your product or service merit it, seems to me.

[Cresent City Kid]

9. I agree that the design field can be under valued

mainly stemming from how design for printing in particular is not understood, even by some in the field. I would rate myself as technically sound since I process art in prepress, but not as super creative as a designer so somewhere in the middle. But what the person in question was suggesting was price fixing.

[tech3149]

18. Agreed. I worked in the repair business

One way I cut cost and increased profit was to mass buy components. It was a major investment up front but the mark up was about 600%. The alternative was to buy locally at 10 to 30 times the cost and then add in the cost of picking up the parts. With a modest bare bones workforce it was a no brainer. My customers got equal or better value and quicker service than any competitor could provide. The income wasn't substantial but it helped through the lean times.

[flamin lib]

4. The guy is suggesting price fixing. That's illegal. nt

[kelliekat44]

5. That's why we need profit controls. But then...that's capitalism. nt

[CBGLuthier]

6. he might be charging too much but I think you are certainly charging too little

Does 12.95 cover the cost of the ink and electricity and eventual replacement of the equipment? If it takes you half an hour to design a card you are making 25 an hour which sounds good but for the self-employed, not so much.

I got burned out on what I used to do for a living primarily because I did not charge enough to make it worth it. I made over 400 instruments over the course of five years and was probably clearing about twenty bucks an hour or even less for my work. I finally had enough of it and have moved on to other things.

[Schema Thing]

8. ok, so what IS your time and design work worth?

[snooper2]

10. ask Cisco

I crack me up

[intaglio]

11. You are considerably undervaluing yourself

With a new order, how long do you spend on the design, the advertising, getting the approval, the accounting, the ordering of the printing, the collection and the delivery? If you really think about this then you probably spend an absolute minimum of 4 hours on each new order. After things like power, consumables, telephone line, internet charges and everything else, you will be paying yourself a lot less than $3.24 per hour.

Consider the case of someone who does craft knitting. A very fast knitter can complete a simple sweater design with a little bit of pattern in 3 x 8 hour days (including blocking). If a high quality yarn, say silk/merino worsted weight, is used then materials cost is $200 so should they only charge $225 for all that work? Of course not; they will charge a minimum of $500. Many craft knitters charge by the yard of yarn, so at 20 cents per yard that is $600

[DesMoinesDem]

12. That's up to the customer to decide.

If they want to pay a 600% markup then it's not to much. If it is too much he'll go out of business.

[Xyzse]

13. I guess it depends on the costs, particularly start up.

If people buy that crap from him, then good for him.

Me, the ones I have are very bare bones but with nice paper.
All it has is contact information without my name.

I write mine in calligraphy, in front of someone, then hand them the card.
Needless to say, I don't really do that often, since I forget to bring cards regardless.

[conservaphobe]

14. If people pay for it, the answer is no.

The only time a business owner should be concerned about markup is if it has a detrimental effect on sales.

[LWolf]

15. It depends.

When you've paid out all your costs, including equipment, utilities, your time, etc., you should charge enough to make a decent living. So I guess it depends on volume.

[Dr Hobbitstein]

16. It really all depends...

$25 for 1000 cards is a really LOW markup if your cost is only $12.95.
I, myself, usually go with a 150-200% markup on most of the products I make (I make handbuilt effects and amps for musicians), although I have a few products with a 300+% markup due to the pain-in-the-ass it is to build them.

Not only do I have to make back what I put into it financially, I also like to get paid for my time.

[WinkyDink]

17. Don't be a hero.

[NCTraveler]

19. How much time does it take to do set-up?

Not including materials, I would think than an hour of time would be used for set up, printing, and planning delivery. I clearly have to be wrong on that if you are charging 25. I don't know why you would do it if that were the case. It is also only a 600 percent mark up if you consider your time to be worth nothing.

[Cresent City Kid]

20. I appreciate everyone's input

I would agree that I could probably get more for my time. When I started I put in a flat rate for design and came in a little higher than some other local independent brokers and scaled back just a little on the price. It is a little tricky to set a price in printing. The consumer knows what a good price for milk is but doesn't really know what goes into printing.