What price point for ads?

[ed22]

Hi everyone. Just about to start up a new business (hence time!) and would really appreciate some advice, from any business in the High St ... restaurants, bars, shops..and tradesmen. The concept is to provide an advertising medium to assist local businesses to grow.

The publication idea is of a voucher booklet (think A5 square) distributed to 25,000 local homes. (the majority of the town in question) I've got an excellent graphic designer and what I reckon to be a pretty professional product; interesting design, perforations around each voucher/ quality paper etc.

What sort of price point would you consider reasonable? At the moment we're toying with £200 ex VAT
A similar size ad in the local rag costs £350.

Thanks very much!

Have tried to keep it as short as possible!
Ed


Edited to include price point/local detail
>> Edited by ed22 on Monday 23 May 02:33

>> Edited by ed22 on Monday 23 May 10:24

[srebbe64]

I think, as a starting point, I'd be inclined to work along the following lines:

1) How many prospective customers exist?
2) What percentage would enquire if approached?
3) What percentage of enquirors would become a client?

Then

a) How many clients would retain your services.
b) How many times per year would you circulate the info (and invoice the client)?
c) What is the likely client retention rate (percentage / time).

If you stick some (conservative) numbers into the above, subtract your selling and distribution costs you will see what profit (or otherwise) you will make.

So, hypothetically, let’s assume that there are, say, 500 companies in your locale worth approaching:

10% of these are interested to the point of wanting more information, this then reduces to 50. Of these 50, 1 in 3 part with money for you to advertise with them, this comes to 17 companies. Let’s assume you charge £200, this comes to £3,400. Let’s assume it’s a bi-monthly publication which equates to £20400 per annum. Take off your distribution costs (25000 X 6 = 150,000) plus printing costs (150,000 pages) and you have, on the numbers above, a spectacular commercial failure.

But, the numbers I've pumped in may be beaten. It will all come down to the total numbers involved and your conversion rates. Personally, I'd require some serious persuasion before I embarked on such a venture!

[ed22]

Cheers for the reply... Yes, with those figures it would be a spectacular failure. However, the main attraction is that the printing and distribution costs will be far cheaper than £150k; think around the £25k mark.

[srebbe64]

ed22 said:

Cheers for the reply... Yes, with those figures it would be a spectacular failure. However, the main attraction is that the printing and distribution costs will be far cheaper than £150k; think around the £25k mark.

If you read my reply I'm not suggesting that the printing nd distribution costs will be £150k. If my (pessimistic) figures came to pass then your total sales would be about £20k, from which your costs are then paid. Needless-to-say, £25k in printing and distribution costs would make it a non-starter. However, my numbers and conversion rates could be wildly out! As such, I'd need some "major convincing" if I were in your shoes!

>> Edited by srebbe64 on Tuesday 24th May 09:07

[ed22]

Indeed...... jumped the gun there a bit!

I know a chap who started a similarventure in the South West; 10 months on and he's got 120ads per edition. And seven staff, which would be a nightmare!

[B17NNS]

if you give me a spec I can give you an accurate figure for your print costs.

should help fill one black at least.

E-mail me: [e-mail]

[thepeoplespal]

A similiar ad in my locally distributed A5 booklet costs about £40 for a quarter page ad distributed to about 5000 reasonably affluent homes. I'll let you extrapolate from there.

[simonrockman]

Where do you get your "ad in the local rag costs £350" from?

Is that their rate card? If so divide by two to get the price most people pay. They might book the first ad at £350 but when the customer says no to future ads they drop the price.

Simon

[steviebee]

Simply add up ALL costs and divide by the number of quarter spaces available. Then add your profit.

Media rates have more to do with "quality" of audience rather than sheer volume, so don't get too hung up on the local rag rates.

Good luck!

[alunr]

We have one locally called The FreeBee. Send me your address via email and I'll send a copy to you, it has all the costs for advertising in there etc and I know he does alright out of it.

Oh and if you need a website to back it all up then give me a shout

Cheers

[ed22]

Thanks everybody for your replies so far (keep 'em coming!)Very grateful!

The lower price/ distribution model is quite interesting; I'll pump some figures into my spreadie later and see whether or not the magic green light comes on. Certainly would be a simpler sales proposition at £40 rather than £200.

Having said that, the town in question is very affluent; a friend of mine looked at starting a business on the high street and was quoted £70k pa as rent alone!? Does this sound likely?

Increased footfall in the shops is therefore critical and I'm wondering whether or not £200 to reach most of the local homes with their message would prove to be a modest amount in light of the overall costs.

Interesting info on local rag prices; £348 was for full colour 8.5cm by 4cm. Our ads will be larger than this (think business card size)with a correspondingly higher fee charged by the newspaper. I'm sure that this quoted rate would come down; not sure how much by though as I have another contact who has done business with them over the years and has never mentioned discounting (maybe a poor negotiator!)

My email is [e-mail]

Thanks

ed