Intuitively, you know a vehicle wrap would be beneficial to your business. It is highly economical, you would get a lot of impressions for your brand or message, and it is very targeted in reaching your local audience. But what you really want to know is how it stacks up to other marketing activities. And is it likely to bring you enough new customers to have a positive return on investment.
The answer to this question is different for every business and industry.
RainMaker Signs has put together a calculator specifically designed to answer this question for your business. The calculator allows you to input two of your own business specific numbers into a spreadsheet to determine how many customers you would need to attract to your business in order for a vehicle wrap to make sense for your business. It is based on a break-even model and here's how it works:
RainMaker Signs Vehicle Wrap Break-Even Calculator
A break-even calculation defines when an investment will generate positive returns. The break-even is calculated quickly and accurately with the following formula:
BE = F / (GM)
BE = break-even point (units sold, customers acquired, services delivered, etc),
F = total fixed costs (the expected cost of your vehicle wrap)
GM = average gross margin (sales-variable costs) associated with a sale or new customer
Example
A plumber considers wrapping his truck. How many new customers would he need to attract to his business to break-even?
Fixed Cost of Investment = around $3000 for full truck wrap
Average Additional gross margin per new customer = $300
BE = F / GM
BE = $3,000 / $300
BE = 10 new customers over 5 year life of vehicle wrap
BE = 2 new customers per year
The plumber would need to attract 10 additional customers to his business to break-even on his vehicle wrap. Any additional customers from the vehicle wrap would all result in a positive return on investment.
The vehicle wrap should last 5 years. That means he would need about 2 new customers per year. With this information in hand, the plumber can use his judgment to evaluate how likely he is to attract two additional customers per year form his vehicle wrap.
Customized Answer for Every Business or Type of Graphics
This same analysis works for every type of business or organization. For retailers with a faster sales cycle and lower margins it might be beneficial to look at how many new customers per day or week would be necessary to break-even. For subscription based businesses like gyms, using the lifetime value in gross margin for a new customer is a great denominator. Non-profits can even use this model to evaluate number of new students, members, etc needed to evaluate the investment.
Finally, while this example uses an estimate for a full vehicle wrap, you can also consider a break-even number for partial wraps or logos and lettering for your vehicle. When doing so, it is important to remember that a small logo and letters on side doors will have less impact that a fully or partially wrapped vehicle.
