Pricing


#1

Frank:

Lets say for argument sake there are no other outdoor companies to compare rates.

How would you determine the monthly rate to charge for your sign? In your example use a traffic count of 11,000 in a 24 hour period. Thanks


#2

First, I’d see what the competing media are charging, like newspapers. See how much a quarter page ad in the paper costs and compare that to what you would charge on your sign for an entire month. Also get prices on local TV and radio.

Next, think about how much product the advertiser has to sell, and then the profit margin on those sales, and compare that to what you would charge for your sign. See if the average business could make a profit with it.

Finally, call on one or two of the biggest potential advertisers or ad agencies (if any) in your market (like McDonalds and Holiday Inn) and see what they would pay for it.

Then put a price on it, market it, and see what happens. If it sells in 10 minutes, your price was too low. If it sells in two years, your price was too high. As Sam Walton said “try it, then fix it”. Eventually, the price will come to rest at the right level.