Pricing CNC router-cut signs and graphics

I get quite a number of e-mails each week and one of the frequent questions concerns pricing work done on a CNC router. I got an e-mail this morning that asked those same questions, so I thought it worth answering here.

Dear Sign Maker,

You asked so I’ll answer. Keep in mind these are my opinions based on my way of doing business. I believe many in the sign industry are damaging the business severely with their pricing of the work done on the high tech tools and software they buy. I have found that my CNC router can do in mere hours what previously took me days to accomplish. It can do it all much more accurately, too! My question to anyone who asks me is this: “If you can do it faster and better, does that make it worth less?”

I would argue it does not.

Historically, sandblasted sign work was commonly priced by the square foot. Twenty-five years ago [1985], the selling price was well over a $100/sq. ft. in our neck of the woods. Now, with the advent of the CNC routers, we can achieve these same woodgrain patterns (and many others) in HDU board with a machine. It can be done automatically while we do something else.

But the question to ask is “Why charge less?”

The process certainly got easier and faster but the sign is not worth less. With the precision the CNC router can deliver, I would argue the sign is worth much more.

In our shop, I like to do more with our router than just do signs similar to what I could do with a blaster in the old days. I like to add prismatic lettering, dome the face of the sign or add a subtle textured background in keeping with the theme of the sign—hopefully things that my “competition” is not doing and doesn’t want to take the time to learn.

I can easily add these features to my signs, giving them extra value while not adding much to the time nor to the cost of production. This should add more to the final price of the finished product.

We only do dimensional work in our shop. Today [March/April 2010] our prices start at $200/sq. ft., though I don’t price them by the square foot, but rather quote a finished total price to the customer. As you can imagine our prices scare away a bunch of people. That’s okay. I’d much rather do work for customers who appreciate the value of what we produce and are willing to pay for it. I don’t want to do all the signs in town—only the best ones.

Now, to answer a few other popular pricing questions:

Is router work normally priced by how much time the router takes to complete the sign? Someone once told me they charge $60 per hour for machine time.

You just spent many tens of thousands of dollars buying and installing a CNC router, plus the software and the many hours you will spend learning to operate the machine effectively. Hopefully you are now proficient and skillful. Keep in mind the machine can do things up to five times faster than you could do them before by hand.

If your CNC hourly rate is $60, you then are valuing the personal time you spent doing the same job previously at about $12 per hour, in my view. I’ll bet that doesn’t make much sense to price that low if you think about it this way.

The router takes up a fair amount of square footage on the floor, too, which needs to be accounted for, plus the electricity it uses and consumables like bits and collets. Then there’s the general wear and tear and depreciation on the machine. You’ll want to upgrade that software every few years, too. These costs must be recovered, unless you prefer to pay them out of your own pocket.

Considering the speed and precision the CNC router delivers, and the costs of having one, I believe you can charge much more per hour if you wish to price using the “pricing by machine time” approach. You would also need to know the average number of hours per week that the router is running to arrive at that figure.

Is router work normally priced by the size of the routered sign? I read somewhere that they charge $40/sq. ft.

See my comments above. We used to get well over $100/sq. ft. for our sandblasted signs. I think we should be well over that now. I had less than $10,000 invested in a complete sandblasting rig—I have way more than that invested in my CNC router setup.

How do you factor in these variables? Router-cutting graphics takes a certain amount of time, but not as much as it used to.

You used to cut everything out with a jigsaw or bandsaw. Now you use a CNC router to do it flawlessly and much faster. Does that make it worth less? I think not.

Routering a 3-D sign with 75% stepover takes more time; routering a 3-D sign with 90% stepover takes a lot more time. How do you price that?

How you build the sign and the detail you intend to incorporate into the finished sign should be figured into the ultimate cost. The way you intend to fabricate the sign affects the price.

One friend of mine likes to do everything by hand. He designs and hand carves a sign. It takes him six hours to carve it. Another friend of mine has a small router which can’t work nearly as fast as mine. His has stepper motors; mine has servos. For the sake of this discussion, let’s say that router time to make the 3-D sign on his machine takes his machine two hours. On my router, I can do that same sign in just an hour. Another sign maker friend buys the latest and greatest router on the market and is able to do this same sign in only forty minutes.

If we price by the hour and we have the same shop rate, the price of this sign goes down with each of our four shops—even though each successive sign maker has more money invested than the last. It should not work that way! That’s why pricing by the hour is WRONG!

The sign industry and most other industries around us have gotten downright silly in their pricing. As computer programs and machines have come online, production has gotten easier and faster without a doubt. Modern materials also save time and increase quality.

But with these improvements have come huge increases in the cost of doing business. A job that used to take five hours is now possible in one. The problem is that most shops now only charge for one hour without taking into consideration the increased costs.

While I would argue that the value of the product we sell has gone up, most shops instead cut the value by basing their pricing on the time to produce the sign alone. Low pricing has ruined much of the sign industry, making it very hard to generate profits except by sheer volume alone. That’s not a business model I want to follow.

This article appeared in the March/April 2010 issue of SignCraft.

Our CNC router allows us to do things we could previously only imagine. Complex forms and shapes, intricate 3D designs and a whole lot more are suddenly possible. By constantly pushing the limits of what is possible we can be on the cutting edge of the industry.

 

We use a variety of methods and tools including our MultiCam router in all of our pieces to add value to our projects. This both separates us from our competition and also allows us to charge more for our projects.

We use our CNC router to expand our capabilities and to also add value to our signs. Where we could previously only sandblast wood grain or dimension into our signs, we can now add unlimited textures instead. Textures allow us to design and fabricate better signs. While the process is unlimited and requires no more time or effort with modern tools, it still adds huge value to a sign and also should increase the price.

 

Our CNC router allows us to fabricate all kinds of projects much more efficiently than ever. In this project the sign face and the lantern were done using our MultiCam router and ENRoute software. But using faster and more efficient tools and methods than we may have in the past does not diminish the value or the price of the sign.