How much gross margin is appropriate for channel letter signage? Many customers have inquired about the correct markup amount for a channel letter set.
The basic answer is there is no correct amount for every situation - it varies from market to market. However, there is a way to tell if the amount you are quoting is in the correct range for your market.
It is your landing percentage. If you are pricing competitively, you should land between 25% and 40% of your quotations.
If you are bringing in less than that, your pricing needs to be adjusted.
Here is an example of what one market may handle – a 100% gross markup:
Wholesale sign cost: $1000
Mark up %: 100%
Sign price: $2000
Installation and permit: $450
Installed quote to customer: $2450
Other markets may require a smaller markup, like this 40% example: Wholesale channel letters cost: $1000 Mark up: 40% Sign price: $1400 Installation and permit: $450 Installed price to customer: $1850
Once you’ve sensed the ballpark markup percentage for your area of operation, keep a record of your landing percentage. If you are consistently bringing in between 25% and 40% of your quoted channel letter projects, your pricing is competitive.