I will definitely help you come to the best solution for you, but you must understand that if you are like me—a control freak—then you might not want to read on. Just go buy it! I have always had the opinion that it is always better to own it then rent it, but over the years I have learned a few things and I am much mellower today. My new rule is “ROI,” and if the ROI is there, then I own it. If it is questionable, then I outsource it. If the equipment is very expensive and needs to be changed out every few years, then I definitely outsource the work.
Labor is the huge issue for just about all of us. If you cannot do the work yourself, then you need to hire someone, and if you are busy enough to hire someone and keep that person busy eight hours a day, five days a week, and you can make good money off what this person does for you, then bring the work in-house. If you are not going down the road of hiring a bunch of people and dealing with the headaches of employees, then outsource your work.
WHERE THE MONEY IS
Let’s take a look at a few of my clients that are small and what they do to make money in this business. Most of them came to me before they had a printer and asked me what to do. My first question was, “Do you plan on getting into wrapping vehicles?” And if they said yes or anything close to yes, then I told them to purchase the equipment. Too many things go wrong with wraps to outsource your work. I have wrapped more than 3,100 vehicles and to date I cannot ever think of a time where I could or would want to outsource this work because I have had too many issues with wraps. My first and most common issue is the window perf. This vinyl costs more than $1.40 per sq. ft., not including the ink or lam (if you lam your window perf). I cannot tell you how many wraps I have done where the window perf was either too short or not enough printed to cover the glass. I bet more than 20 percent of the jobs! What does one do if you do not own the printer?
Plus you have one huge issue when it comes to wraps: they are without a doubt the highest risk and lowest return of any graphics you can do in our business. Don’t believe me? Well, let’s do the numbers:
• For example, 3M 180-10 costs the average printer $.90 per sq. ft.• Ink for most of us is about $.30 per sq. ft.
• 3M 8519 Luster Laminate is about $.75 per sq. ft.• Total cost per sq. ft. is $1.95 or $8.80 per linear foot.
• Add in waste of 10 percent (I am being very kind at 10 percent) now your linear cost is $9.65 per linear foot or $2.15 per sq. ft.
The average vehicle is 200 sq. ft., but this is not a real 200 sq. ft., it is only a sell number. Cost looks more like this:
• Passenger = five 60" panels
• Driver = five 60" panels
• Rear = 1 panel at 60" x 50"
• Hood = 1 panel at 68" x 52"
Total linear feet = 61 at $9.65 = $590. Now add in 15' of window perf at a cost of $7.50 per linear feet (not including laminate) for a total of $112. Now add this to the vinyl and your vehicle cost is at $702. Let’s say you are suckered into selling this for $5 per sq. ft. because the client said they can get it for this price. You sell 200 sq. ft. at $5 for a grand total of $1,000, but your cost is $702 so you end up at $298 profit for the wrap.
Now if you had outsourced this work you would have to pay their markup and would leave very little if any profit for yourself.
If you are serious about wraps, you will need to laminate your prints. Many shops have great success with roll-press laminators and film laminate. I’m a big advocate of the liquid laminator, which is a heavier equipment investment, but the liquid laminate is very inexpensive. By using a liquid laminator you can cut the above cost down by $165, so now the profit on this job would be $462. Add in the installation profit you will make if you install it yourself, and your profit per vehicle could be more than $1,000.
You cannot make this money if you had to outsource the above job.
OTHER JOBS WITH THE SAME EQUIPMENT
Let’s now look at the other jobs you will do if you had your own printer. Banners selling at $4 per sq. ft. with your cost of about $.50 per sq. ft., you can make great money doing banners. Get into trade show graphics that sell all day for between $12 and $20 per sq. ft. with a cost of around $1 per sq. ft. and now you are really making money. The average trade show client needs about $800 worth of graphics, but this $800 only costs about $160, so for a few hours work you made about $660 in gross profit. No warranty issues here, and all manufactures need show graphics.
PROPER SET UP IS KEY
Here is a typical setup I do for a number of my clients:
• Printer $6,000
• Seal 5500 Laminator used for $12,000
• Safety Speed Panel Saw $3,200
• Onyx Rip $4,500
• Roland 64" vinyl cutter with Flexi $5,800, connected to the Onyx Rip computer
• Glass Light Table $6,000
• Misc. items $5,000
• Total expense: $42,500
So I am clear about having your own equipment, you must do it right. Do not think you can get a $1,500 laminator, skip the panel saw or light table, or do not get the vinyl cutter and expect to make good money. This will not happen. You must set up your shop properly or you will find you are working way too many hours for way too little money. The above setup is ideal for a true production shop with two people.
One of my clients in his first year sold $122,000 in large-format graphics with a cost of goods of $36,000 for a gross profit of $86,000. This same client outsourced about $200,000 per year at 30 points. His outsource business brings in about $60,000. Total business model with one full-time and one part-time employee, he was able to take home from his large-format part of the business about $50,000 in his first year.
I believe that a combination of in-house graphics production and outsourcing is the perfect combination for a successful graphics business.
Good luck, and be smart with your money, and I will see you on the show floor!