Your Sign to Raise Your Prices ft. Eric Roethel
Eric Roethel, Co-founder of Sign Badgers, stopped by the podcast to discuss determining your pricing. We talk about Eric’s journey into business ownership as well as how his pricing has evolved through the years of printing signage. Josh and Eric dive into the importance of knowing your value, testing pricing, and the value of customer relationships as well in this episode.
Learn more about Sign Badgers here: https://www.signbadgers.com/home
VO: Let's get geared up for startup success. Join Josh's. He interviews knowledgeable guests from all corners of the entrepreneurial world and gets the answers to the questions you've been asking. Get ready to learn something new on this episode of From Idea To Done.
Josh: Hey everyone. Welcome to our next episode. I'm here with Eric Roethel from Sign Badgers. Eric, thanks for joining us.
Eric: Hey, thanks for having me.
Josh: Yeah. Why don't you tell us a little bit about your business what the problem is that you solve and who you provide solutions for.
Eric: Sure. So I like to say that Sign Badgers is a small sign shop that works on big things. So what I mean by that is any given week we're working with multiple local customers from anything ranging from a graduation banner, stuff like that, a yard sign all the way up to national companies where we're providing equipment, decals different signage products to their various locations across the country. So in one note, we're meeting and greeting people in our front reception area and the other end, we're shipping stuff all across the country. So that's kind of what we do on a weekly basis. I'd say our bread and butter is in the wide format printing aspect of the industry which means to the listener, a lot of banners, vehicle graphics, window graphics different vinyl medias printed and mounted to different substrates to make exterior signage, interior signage. We do a lot of braille ADA type signs too.
So we have that type of equipment. And I'd say that our best problem that we solve is a lot of times when a customer will come to us with a product or project they kind of know the general outcome of what they want as well as maybe a budget that they're hoping to work within. But it's kind of like, unless you're in the industry and you're working with the stuff all the time, they don't exactly know those steps on how to get there, what different medias could be put together at what different price points. So our team is really good at working with the customer to come up with the best solution. I'd say that that's where we've found our real good point with customers is working with marketing teams and stuff like that, primarily as an extension of their team to help them with projects that they're working on, events that they're working on within their company. How do we get you the most bang for your buck, basically?
Josh: Cool. So if my business wants to promote itself in some sort of a visual way, signage, I can come to you. You guys can help point me in the right direction.
Eric: Exactly, yep.
Josh: I don't know what I don't know, but I know that I need something on the outside of my building or my vehicle wrapped. You guys can help me understand all the technical pieces to that.
Eric: Exactly. Just as it is with you. I'm sure people don't know what they're talking about. They have a general idea, I'm sure of what they want from you, but how do we get there?
Josh: Exactly. It's we, we know the outcome we want, but we don't know the path.
Josh: Yeah, exactly. Well, that's cool. Tell me a little bit about your origin story. How'd you get started in the industry and how'd you end up taking that leap into business ownership?
Eric: So I'm originally from Detroit Lakes, Minnesota, which is about an hour outside of Fargo, North Dakota. I came to the area to go to school at NDSU. I went for accounting and finance. My plan at the time was to get my CPA or CMA get into mid-size to large firm and work my way up with experience and whatnot.
Josh: Obviously from,
Eric: Yeah, it always is a straight line, right? Yep. You get right where you're headed.
I got a good overview on the entire process. I would say from there, when I left the plan was again, still to CPA, CMA wanted to get in, get experience in that kind of thing. I did some more construction painting in the meantime. And then like you mentioned, twists and turns. I got offered to help out at this really brand new startup at the time called Signs for Work with a buddy. And so I thought I'd take the jump and I know for a lot of people, one of the questions is like, how do you make the leap or the leap? At the time, it was a hundred percent timing for me. So if I had to make that decision now, it would probably be a lot different. Knowing how it's turned out is different. But at the time, I was not too far outta college. I was married, but didn't have any kids I was supporting. So the decision was pretty easy, honestly. It was okay if this doesn't work and in a few months or a year or even two years, if I'm back at square one, well, I'm at square one to begin with here. So I haven't lost a whole lot, but I feel for people who are further on and wanna make that jump. Cause even now if I had to do that, I don't know if I could do it honestly.
Josh: It's a scarier point when you've got the mortgage and kids and real responsibilities versus, well, if we don't go out to eat this month, we're still gonna be okay.
Eric: Right. Yeah. There's something about being able to start young where you don't have to look as much at the practical things and yeah, I can't imagine having to make that decision now. Obviously I know it's, It's been fun, it's been exciting, but there have been a lot of financial hardships and stuff like that as there are for a lot of business owners. So
Josh: When you don't know what you don't know, you're kind of blind. All the things going on in business as you grow and you learn.
Eric: Exactly. Yeah.
Josh: So it's easier to take that leap early on. So I absolutely agree with you. Yeah. Talk a little bit about kind of your product lines, your business, your pricing, your target demographics. How have any of those evolved since day one when you said, I'm gonna take the leap, we're gonna go into business together let's go figure this out together.
Eric: So a lot of it I guess the overall trajectory of it has been a process of finding our focus over time. When we started out, it was across the board, so we were initially 80% of what we did, as funny as it sounds, was we made dog collars. So we had a big customer that we did a bunch of their production and embroidery and sewing for their dog collars. So it sounds like we hopped in and started this sign business. Well,
Josh: Step three profit.
Eric: So I'd say the real foundation of the company was when we decided that, or when we realized that you don't just wake up with 20 orders in your queue or whatever. And so it was basically like, Oh crap, we gotta go find anything and anything. So if you needed it, we would sell it to you. We were changing out flags on flag poles. We were
Josh: I remember those days of I left my job and I think I had 18 grand in revenue the remaining three quarters of the year. Sure. You're trying to figure out in the world to do, and I tell a lot of entrepreneurs at that stage, you gotta focus, but it's like you don't know what to focus on. You don't know where the money's gonna come from.
Eric: Exactly. Yeah.
Josh: What have you learned about that, where you were to are now? What advice would you go back and give yourself?
Eric: So I think a lot of it is just staying true to or finding a direction and sticking to that direction. You can always pivot the direction, but if you're trying to spread yourself in 360 degrees at one time, like you said, it's just everything is reactionary. You're not able to move forward at all. And so we were trying to had a smaller team, and so we always had good people, but we were trying to be everything start to finish as far as sales production, customer service, install follow up, accounting, all that stuff. And so it was just this hamster wheel of we gotta find work to work on. And then when we finish those jobs and we push 'em out, it's like, Oh crap, now we need to fill the bucket again.
Josh: Yeah, it's easy. Hindsight's always 2020. It's really easy to look back and say, Oh gosh, we shouldn't have done that. But when you're looking forward, it's all opportunities. They're all shiny objects. I look at this and I wanna talk about pricing a little bit, and I always look at pricing, whether you're a SaaS company and you're trying to price out your monthly costs, Sure. To your customers as a hypothesis How did you first approach your pricing model? So talk back to the days I know the client you're talking about with the dog collars, we were also a partner with them for a while. Talk about how you looked at pricing, your services, your products, What was your kind of pricing model?
Eric: Sure, So speaking at that time, it was like we just discussed with the business as a whole, the pricing was also very shoot from the hip. So number one I would say is we definitely undervalued our time that went into things. So the labor aspect of it, especially on the install side, but both value-wise, the value of basically valuing ourselves and our experience as well as the amount of hours that we thought things would take because we weren't efficient and we weren't able to be organized, things always took way longer. An install that was supposed to take two hours, well, we had to run to Menards or a hardware store, and then we had to go back two weeks later to check this and eventually it's a six hour overall install and we went backwards. So
Josh: So you take your hard cost, your materials put a margin on top of that 20%, who knows what it was. So you mark up your cost of goods and then you come in and say, We think this is gonna take us four hours to do the install. Would you fixed fee that for the customer or
Eric: We would at the time. Yeah.
Eric: So that's something I'm sure we'll talk about lessons learned, but that's definitely something we've tried to change in house. So some of those variable costs as far as just giving a range for installation time, stuff like that to the customer. And there were a lot of things too where sometimes in those situations where we were shooting from the hip, we came in high. And that was surprising because the majority of the time we were very undervaluing what we did. And we even had customers at the time You guys really need to raise your prices. And when you hear that, it's like, oh, easy for you to say. We were kind of in our own heads as far as I can't exactly pull the term for it, but the imposter syndrome feel like you're not quite supposed to be there yet. And so if you don't value yourselves, how can you portray that to the customer, I guess, honestly.
Josh: Yeah, exactly. And with having multiple service lines and trying to do dog collars and hanging flags and all this stuff, that must have been really hard to figure out how to normalize your pricing or your expenses as well
Eric: Exactly. And a big thing too that we always fell on our face with is because it was so go onto the next thing, we didn't really have any priority on I guess tracking previous quotes and tracking things that we've done with customers. So every time I was starting from square one, we got this new job, let's bid it. It's kind of similar to what we did here. How do we get to that price again? I don't know. Let's start all over and try to find it out. So that's been a big one too that we've tried to on. But
Josh: Yeah, we went through something similar. We would try to fix fee and then we would try to just say, Our weekly rate is this. At the end of the day, our customers, were looking for a price for what this is gonna cost. And in our world, custom software is infinite dollars. There's no stopping point to it.
Eric: Sky's the limit.
Josh: Whatever features you want to add. And so I think the lessons I learned coming out of this was it's about communications and managing the expectations.
Josh: Did you guys find something similar as you started to evolve your pricing models?
Eric: Absolutely. So I guess one of the bigger lessons that we've learned is that communication and just being super upfront with the customer about, Hey, here's the price of this. Does that look in line with your budget? If not, we can work the back end of things. So that's the good things. If we, as we've gotten more experience in the industry and in production and knowing three different ways to make a similar style of sign, good, better, best type of thing,
Eric: we kind of preempt stuff with that of, Hey, here's a quote for something that we think you would like. If that doesn't fall in line with what you're looking at or what your budget says, let us know and we can rework the options, rework the materials, stuff like that to make something that fits with you. Because otherwise, if you go in and say, Here's the cost, and they say no, well that's end of discussion right there. So
Josh: Yeah, it's a sales and pricing that's is a delicate balance between the science and the art and being able to read where they're at, what they're really needing, what they're not saying. Yeah. What are some of the other lessons learned that you had along the way from your growth of the business? And
Eric: So I remember I was just talking to someone about a job that we did early on that was a pretty big job with what's now one of our bigger customers. And as we're quoting it out, we're looking at this as our foot in the door, we're looking at it as, Oh man, we're just gonna blow them away. And then we come up with the price and we start talking ourselves backwards, Well we really need this job. We really need this foot in the door and all this stuff. And so where can we cut costs in our no, maybe we should mark 10% off of it. Oh, let's bump another X amount off. Well, we got the job, but we came to find out that we were basically the last company that they had come to, cuz everyone else turned them down. It was a super tight turnaround, super custom thing.
And we were basically working overnight the night before Thanksgiving to get this thing done. And not to say we wouldn't have done it, and obviously they've become a big customer, but looking back at what we charge 'em for it, it's like they just wanted this to happen. They had a budget for it and here we're probably at coming in about a third of what it should have been. And I'm sure when they saw the email with the quote come through, they just laughed at each other. But
Josh: It's really easy to convince yourself that cheaper is better, but I know if I'm gonna go get a quote to remodel a room in my house or something like that and everyone comes in at 50 grand and all of a sudden I got a guy that's gonna do 10, are you gonna question the quality of is this guy actually gonna get it done?
Josh: Is this real?
Eric: Yes, absolutely.
Josh: So I definitely think value, knowing your value in the market is a big thing. How did you test your pricing to try to figure out where you're at? Cause I think we are in a similar space that when we go through and we try to sell work, if we're closing at too high of a rate too close to a hundred percent, I have found that that's almost like a signal that maybe we should increase a little bit or maybe a little too underpriced,
Eric: Right? Absolutely. There has to be some give and take. There's actually my business partner Justin and I, we joke, there's a movie called War Dogs. I don't know if I should get into this. You can cut it if not, but we'll always say it because there's a scene where these guys, two guys talk about imposter syndrome. They're bidding a job for the government, basically bidding ammunition. And this is based on a true story. And they go in to meet with the agency, they put in their bid, they're all worked out as hundreds of millions of dollars, the huge bid. And they go in and the guys are like, Well, typically we wouldn't go with someone that we wouldn't worked with in the past and we're not too familiar with you guys, but between you and us, you came in so far under what everyone else did, you know got the job. And they go Just for us, how far under did we come? And the guy's like, I shouldn't even tell you, but it was like 50 million. And then they cut scene to them in the hallway just screaming and punching the lockers.
So we felt like that's in certain situations definitely. But as far as knowing how to close without closing everything and feeling like you are too low I kind of put down a few different things that we've done to improve on that. First is an internal system that we developed that is basically a Google sheet spreadsheet. It pulls all of our materials in and also calculates the stuff that we used to leave out. So we got anticipated waste on jobs because there's always that, there's always gonna be mistakes, stuff like that. As far as splitting out the types of labor, like I said, labor was our biggest thing that we used to undervalue. Now we do split it up as far as so there's artwork and design that goes into projects that we used to not even factor for. There's more standard labor, which is something that most people could jump in and do.
So cutting trimming banners, popping out stickers, stuff like that. But then there's also the real specialized stuff. So running the machines, running the cncs custom building certain custom projects and stuff like that. And then especially on the install side of things, that's definitely where we used to undervalue our time. Cause that is a very specialized thing. So that sheet has done very good. The biggest thing with that is just making sure that our prices that we have in there are up to date. Because especially this last year, I don't know if you've had to deal with it a whole lot, but they're huge supply chain issues. And so between shortages with certain materials, which thankfully were able to pivot around and make work we had some of our materials go up three x four x insanely where we were looking at catalogs. We'd have customers order things that we had priced out in a catalog for them and we realized we were going backwards just by them placing the order
So making sure that that stuff is up to date, especially this year has been a big thing big learning point. We still do custom projects, but primarily outside of our bigger customers, we stay in our lane. There's a lot of times in the past where even if we as a sign shop weren't set up the best for a certain type of project, we would try to underbid it and win it and then we would find out, okay, how do we do this at the efficiency and price that a certain sign company? A good example would be there's sign shops around town that are specialized towards exterior lit channel signs. It's their bread and butter, it's what they do. They have install crews, they have boom trucks, they have all that stuff. Well, we can bid and win those jobs and we can source the signage from probably the same places that they're sourcing from.
But when it comes to actually getting it done, it's gonna take us twice as long and cost us three times as much. So really partnering with those kind of sign shops or just directing our customers to them goes a long way because as a result of that way, we've ended up working with a lot of local sign shops. So we have a lot of good partners in the area that we either work with on jobs where we discount rates to each other for services or if we just pass on customers, they do the same back to us and it usually ends up working where we don't fall on our faces looking bad and they're happy to have the work. So that's another one. A big one too is after the fact, so after a job is done, and this could go not so much towards our industry, but this is probably across the board after you've finish something when you're busy, especially as a startup, it's so easy to go, Okay, go go go onto the next
Josh: The next.
Eric: Yeah. Yep, forget it. So it's so important for us to look back at the job even briefly, just go, okay, what could we have improved on here efficiency wise? What were we anticipating going in as far as hours install time, production time versus what it actually was? Because the more you do that, the more fine tuned you can get to stuff. There's always gonna be jobs where you end up overpricing or underpricing, but you kind of narrow in on the price that it should be by doing stuff like that.
Josh: One thing you had mentioned was kind of splitting out your timing and your Google sheet based upon what the specialty was or the service that you need to give. Do you come into different rates for those? We do types of work.
Eric: Yep. Yep.
Josh: So do you typically just use a multiplier on the cost or
Eric: We typically, yeah. So we'll use an average, I guess salary cost at that position and then determine a multiplier based on that. Otherwise, I mean otherwise you end up with certain common products that are priced out too high if you're pulling just from one labor cost and that includes the cost of someone machining a braille sign as opposed to popping out a sticker.
Josh: Sure. And I'm sure that's the ideal billable rate, but as a business owner, you're probably jumping into places where you shouldn't be doing that $15 an hour work, but you don't may not have somebody to do it. It's a exactly intended costing. But
Eric: Yeah. And that that'll happen. I mean one of the things too that I wanted to touch on is obviously valuing yourself and making sure that things make sense for you. But something that has kind of stuck with us from the early days that we feel like has been to our benefit is overall, if you're working with a customer long term, it's kind of a lot of averages
Eric: And so you have to be a little bit flexible in that as far as if they are last minute, if they need help on something, as long as it's not becoming repetitive with them and it's not something that you're being pigeonholed into going above and beyond and even doing things at cost just to make it happen for them can really benefit on the back end. And if you look at the whole value of the customer as a lot of averages, that's something that we bring up quite a bit. When typically we'd raise a stink about something like, Oh, we're not making anything on this. It's like, well step back and focus on the other 10 orders they just placed that we are making good money on.
Josh: And I think that's a good thing to call out too of this is not our normal operating procedure. We don't typically do this. You're in a bind. We're willing to help you out here and making sure that they know it's a favor and extension of we're good partners.
Josh: And we're willing to do this for you.
Eric: The more I rigid you get in that stuff. And it's great. Like I said, it's helped us so much to have processes and spreadsheets and all that kind of stuff, but the more into the data you get need to really be cautious to remember that it's all relationships. And so you might think, Okay, I'm just gonna go buy the book and everything that this thing spits out. I'm doing well. There's a big cost to rubbing someone the wrong way, or there's a big benefit to really going above and beyond for someone that always look at things from a human level
Eric: Whereas pricing can quickly become, here's what the spreadsheet spit out, boom. Send it in an email.
Josh: It's too binary.
Eric: Exactly. Yeah. A hundred percent.
Josh: Too cut and dry. Yeah. You talked a little bit too about your hard costs and some stuff kind of gone three up with supply chain issues. Do you guys typically purchase and hold inventory? Is it just in time shipping from your suppliers?
Eric: So I'd say maybe, let's see, maybe 30, 40% of the materials that we order will order repetitively or in bulk to get good pricing because they are things that we use a lot. However, a good chunk of what we do is, even if it's a standard product, it's custom materials. So different colors of substrates and stuff like that. So a lot of that stuff is just in time method which is where it gets kind of difficult with the inventory levels and that type of thing and different costs going up and down and not being available and whatnot.
Josh: So yeah, that's gotta be tricky when you're doing that and trying to get those quotes. And I mean I'm sure somebody in the height of all of this, somebody could probably sit on a quote for a couple weeks, which could really adjust
Eric: That's been a big thing too, is just setting this quote is good for two weeks or one month or three months, just have to be, Some of that stuff has to be set up from, because if you don't, it can really bite you. Like I said in the catalog, we quickly discovered when we noticed how much those prices had jumped on one order from a customer gotta from now on we're gonna make our catalogs without the pricing in them and then just linked them to a spreadsheet that we can update. Cuz stuff like that is we can't fault a customer for placing an order on a price that didn't have a set time limit. And some of those conversations can be had. The benefit is as difficult as the inventory stuff is these days with supply chain and whatnot, it's across the map. So we've had surprisingly few people raise a stink about either price increases as long as we're reasonable about it and transparent, like you said, it's all communication or even delays.
Cuz a lot of, I mean we have a ton of our vendors who they don't even know when they'll be getting stuff in stock. We place an order for something and as far as they know, it's still bouncing around on a shipping container in the middle of the sea. So they say it could be here in a week, it could be here in a month. And so that makes the conversation difficult to the customer. But you had mentioned, as long as you're communicating that up front and saying Hey, here's where we're at on this material, if you need it sooner, we can pivot. We're always able to pivot to something else
Josh: Yeah, I feel that we're, my wife and I are just at a appointment this morning getting a quote on something and in the last 18 months the price has doubled and we can't get it done until July of next year
Eric: Isn't that nice? And then I'm sure part of you is like, well if we wait till next year, price is gonna go back down or we Yeah, no, it's a weird world we're in right now.
Josh: and I do think you're right that everybody is experiencing it, people are getting it and it's another constraint that we have to deal with.
Eric: Yeah. Yep. Absolutely.
Josh: Well wonderful, I appreciate you coming in today and chatting a little bit about the business, about pricing, about how you approach things and how you've grown as a company. It's been fun to watch the journey and
Eric: Yeah, thanks for having me. As I was going through these questions, it was kind of cool to reflect because you always as a business owner, you always think you're at the bottom of the hill and you've, you've always got so far to go. You're pushing the rock up the hill all the time. But kind of reflecting on some of this stuff and thinking back is always a little fun to go, okay, we've got a long way to go, but we've come a long way from where we are.
Josh: I, I'm terrible at celebrating the wins. It's on next. Onto the next, onto the next.
Eric: Yeah. So the list ahead of you is so much bigger than looking back and going, Okay, we gotta take a minute here and go. We have come a long way. Yeah.
Josh: Well did you have anything you wanted to promote? How can people find you?
Eric: Nothing specific. We have if you have any questions as far as what we do you can give us a follow on Instagram, Facebook we're Sign Badgers. Our website too has a great gallery of what we do. We don't have a lot of pricing up on there. It's more so just a gallery of projects that we've worked on and we do post those with social media as well. If we haven't worked with you before, we'd love the opportunity. I know we're coming up on a big season. It's always spring through summer through 4th of July actually is when that's our busy season. People are always trying to get new projects done and the weather's turning good. People are excited to do stuff. So yeah, give us a shot. We're got a great team really know, knowledgeable team. I feel like the less involved been with being in the business, the better and more efficient we've become. So I dunno if that says something about them or more about me, but yeah, we'd love to work with you.
Josh: So that's a combination of the two, probably
VO: Thanks so much for tuning in to this episode of From Idea to Done. If you're enjoying the show, please feel free to rate, subscribe and leave a review wherever you listen to your podcasts. We really appreciate it and we'll catch you in the next episode.
Sign up to receive email updates
Enter your name and email address below and I'll send you periodic updates about the podcast.
The Power of 100 Executive Allies ft. Kurt McSparron
Listen to a new episode as we talk to industry movers and shakers about big ideas
Co-founder of Neil Patel Digital. New York Times bestselling author, top 100 entrepreneur under 30 by Obama, and top 10 marketer by Forbes.
Coach to high-performing Digital Agency Owners. Grown two marketing agencies from nothing to 8 figures.
Helping App Business Owners Reach Millions Of Downloads & Sales Through ROI Driven Marketing Campaigns.
About the Show
Erick and Josh talk about big ideas, companies that are winning and those that aren’t, and current events in the crazy world of software startups.
Director of People
and Nerd Culture
Sign up below to recieve bi-weekly updates and insights from our office.