Very few things in our business upset me more than the perceived value of vehicle wraps. If you look at every other marketing option and compare it to the ROI with vehicle wraps, clearly you will see that a wrapped vehicle is one of the best choices for your client’s marketing dollars. So why then do so many companies give the graphics away at such a low price? These low-ballers are likely losing money, and have made the market pretty competitive. Still, wrap films today are better than ever, the printers and inks available produce fantastic images; and demand for wraps continues to rise. This is still a fantastic market to invest in, but you need to be smart about it.
Bulk ink systems are available for just about all printers. Cost for a complete system—tanks, lines, and cartridges—is between $600 and $1,500.
First of all, you need to make sure the wraps you sell are professionally installed. Offer a realistic warranty that matches the expected life of the graphic. Remember, a failure means you own it, and you will be responsible for fixing it because most film manufacturer warranties will not cover failure due to a poor installation. Make sure you use a reputable installer to install your wraps, or take the classes such as those offered by the PDAA (Professional Decal Application Association), so that you can become a wrap master yourself.
A Hard Look at Costs
Since the standard price on the street today for wrap film is around $5 per square foot in many areas, and most companies’ raw material costs are around $10 a linear foot, the profit on wraps might seem less than what is expected from many of the large-format graphics. But you must understand that we are not all following the same recipe for doing wraps. The charts on page 60 show the costing part of the wrap so you can see how different the costs look, based on different equipment scenarios.
As you can see, the larger shops have an advantage, almost to the tune of half the cost. Now, what can you expect to make by selling a wrap, and how does it cost out?
Don’t give away your wraps. There is no need to sell wrap an unprofitable margins. There are many steps you can take to reduce overhead to get the highest ROI possible on your wraps.
Let’s use a standard minivan as an example since they are very popular for wraps. Most minivans are about 210 square feet of wrapable surface. So if you want to play at $5 per square foot, your sell price for this minivan will be $1,050. Now your cost will be as follows:
Minivan size for panels is 60" tall and four panels per side. That is 20 linear feet per side, two 6' panels at the back and two for the front bumper and hood, plus around the windshield. This is a total of 60 linear feet of vinyl. For the small shop the cost to wrap this van is about $597 for just the solid vinyl.
Let’s say you also need about 14' of window perf (at a cost of around $110). The total cost of raw materials now is $707 for a minivan that you sold for $5 a square foot for $1,050. This leaves you with a gross profit of $343.
Now you have to install the vinyl and if you do this yourself you can make money on this, but if you have to pay someone else to do the install, the profit for the install will be around $100. So in best case, assuming you make no mistakes printing, you can expect to make around $443 for a wrap. That seems like a pretty thin margin and quite a bit of risk for very little return. If you make one mistake on one panel and have to reprint just one panel you can subtract about $50. Screw up one whole side of the wrap and you are out $200! And all this is without figuring in design time.
A liquid laminator has the potential to save you money in the long run on your wraps lamination. However, many installers prefer the extra body that film lamination provides.
Now for the big boys to do this same wrap, their costs are much lower. They can wrap the vehicle for around $386 leaving them with a gross profit of $664. Plus their machines can print a whole wrap in about an hour where a smaller shop’s machine will be tied up for about four hours.
Now you can apply these same rules to wrapping just about anything, barricade wraps in the malls, floor wraps, retail wall wraps, museums, etc. You need to look at your costs per linear foot and times the job out by total linear feet to see if you are making money.
How Do You Make Money?
By now you are saying “Dave, don’t be such a downer! Tell us how to make more money with the wraps.” Okay. Here you go:
Get yourself a bulk ink system. This could reduce your ink costs by about half.
Consider investing in a liquid laminator. I’ve seen them at The NBM Show, and they run about $11,000. Sounds like a lot, but you can save $405 per roll of vinyl when you liquid coat. One roll of vinyl per month more than covers the cost of the coater. Plus you can laminate just about all your digital graphics. Some vehicle graphics installers prefer the extra body a film lam provides, but the savings may be worth it.
Learn to do your own wraps. Take one of the many wraps classes available out there so you or your employees can do your own install. After all, assuming you are paying your people $20 per hour to wrap a minivan in about eight hours, your total labor cost is about $160 for the sale. This applies to shops that can keep their installers working because if you are going to pay an installer $20 an hour to stand around waiting for the next wrap to arrive, your labor cost will rise.
Educate your wrap customers. Make sure you give your clients a “Care and Maintenance” document telling them how to maintain their wrap and what to do if they see any pealing on the wrap. You can fix an early peal of a wrap if you catch it early, but once it has been in the weather for over a year it is not an easy fix.
Sell on value and ROI. Most wrap customers are mainly concerned about getting marketing ROI on the wrap for their products and services. If you cannot show them how the vehicle will give return on their investment you have failed to make the wrap valuable. Sell the success not the price!
Don’t give it away. There is no need to sell wraps at unprofitable margins. A wrap is worth much more than $5 a square foot. Most successful companies today that make money with wraps are selling the film for $8 or more. Your market will go a long way in determining what price you can charge.
Okay, I hope you got something from this that will help you increase your wraps business profitability. Good luck, and be smart with your money. I will see you on the show floor!