Easy Math to Determine if Vehicle Wraps are Right for Your Business

by Deborah Scott on June 18, 2015
 Wrapping Your Vehicle(s) is an Investment in Your Business

VehicleWrapping your vehicle(s) is an investment in your business.  A break-even calculation defines when an investment will generate positive returns.  This is a valuable calculation that can help you assess whether wrapping your vehicle is a good choice for you.  And it's easy!!

Mathematical Explanation of Break-Even

The break-even for a new vehicle wrap is calculated quickly and accurately with the following formula: 

BE = WC / GM 

BE = Break Even
Break Even is the number of new customers you need to attract to your business to pay for the cost of your new wrap. 
WC = Wrap Cost
Wrap cost is just like it sounds, the expected cost of your vehicle wrap.

GM = Gross Margin
Gross margin you earn for each new customer (or units sold)  (For break-even calculations financial analyst typically calculate Gross Margin as Variable Revenue - Direct Variable Costs.)  

See the examples below to see how valuable and easy this calculation can be.

number_1_V2.pngExample 1 : Contractor Services

 

A roofer considers wrapping his vehicle. How many new customers would he need to attract with his vehicle wrap to break-even (pay for the wrap)?

Wrap Costs = around $3000 for full van vehicle wrap
Gross Margin per new customer = $1000 in gross margin
BE = WC / GM
BE = $3,000 / $1,000
BE = 3
This contractor would need to attract only 3 new customers over life of vehicle wrap to break even on the cost of the wrap.  The wrap will last 5+ years so that is less than 1 new customer per year
Any additional customers after that would all result in a positive return on investment.  
3 new customers = break even (the wrap pays for itself)
(that's less than one new customer per year)
5 new customers = 60% return on investment  
(that's only one new customer per year)
10 new customers = 300% return on investment  
(that's only two new customer per year) 
As you can see, vehicle wraps are one of the smartest investments you can make in your company.  It looks too good to be true, but it is. Check out this article about why vehicle wraps are unmatchable relative to other marketing options here.

number_2.pngExample 2 : Specialty Retail Store

 

A specialty juice store owner considers wrapping her car.  How many new customers would she need to attract to her local specialty shop to break-even? (pay for the wrap)

Wrap Costs = around $2000 
Gross Margin per new customer = $2
 
BE = WC / GM
BE = $2,000 / $2
BE = 1000 unit sales over 5 year life of vehicle wrap
BE = 3.8 unit sales per week

This shop owner would need to attract enough additional customers to sell 1000 additional units to break-even on her vehicle wrap.  Any additional ice cream sales inspired by the vehicle wrap would all result in a positive return on investment.

3.8 new customers/wk = break even (the wrap pays for itself)
(that's less than one new customer per year)
5 new customers = 30% return on investment  
(that's only one new customer per year)
10 new customers = 260% return on investment  
(that's only two new customer per year) 

The vehicle wrap should last 5 years or 260 weeks.  That means he would need about 3 and a half new ice cream sales per week.  Based on his baseline volume of business he can use judgment to assess whether this is an achievable target for this investment.

The Numbers Look Even More Attractive If You Look More Closely

This model does not take into account repeat or referral from the new customers you acquired.  Assuming your new customer becomes a regular or sends their friends, the return only goes up.

Other Considerations

When you ask yourself whether you believe your required break-even volume is reasonable consider the following:

  • You can use your vehicle as a billboard by parking in strategic locations or in front of your store
  • If your target market is local you will have extraordinarily efficient reach with your brand message
  • While impossible to measure, your vehicle graphics are always working to build your brand
  • Non-profit organizations may adjust the formula to compare to their costs of acquiring new members, students, donors, etc

 Finally, these examples calculate break-even using a general estimate of a full vehicle wrap.  While full vehicle wraps have the biggest impact on the road there are other options available when using your vehicle for advertising.  Partial wraps (sides and/or rear of vehicle) can have a big impact for fewer dollars.  Precision cut logos and lettering can also give you a great return for a low price.  

We want to make it easy for you to make informed choices about wrapping your vehicle.

Click here to download your free vehicle wrap break even calculator

Vehicle Wraps Break Even Calculator Riveting Wraps

We are here to help you make the best choice for your business vehicles.  We believe great visual communications make great things happen, especially when done with responsibility and integrity for your business.  For more help making smart choices about wrapping your vehicles check out  What to Ask Before You Wrap .  We are here to help you grow your business, so give us a call at 425-368-5007 or email us at hello@rivetingwraps.com.   We look forward to working with you!

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The professional vehicle graphics team at Riveting Wraps is committed to delivering quality products and services to meet our clients' needs and goals. Learn more about the Riveting Wraps DifferenceGive us a call today at (425) 368-5007 or email us at hello@rivetingwraps.com. 

Topics: Wrap It Right, Vehicle Advertising Smarts

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