"Printing For Profit"
Can Be More Than a Myth.
Success in the printing industry is dependent on many factors. Sales, marketing, quality of craftmanship and customer service are obvious.
All entrepreneurs know that “nothing happens until a sale is made”.
Even the dumbest owner knows that with 50,000 printing companies in North America alone a certain level of workmanship and customer service is necessary to retain customers.
Knowledge based pricing and how it affects the profit of individual companies may not be as obvious to many commercial printing company owners. Appropriate management software, knowing your costs, accurate estimating and how to price is absolutely necessary for the long term sustained profits that a healthy company must have.
Preparing accurate estimates is possible only if you have current and correct costing information. If your selling prices do not provide for the recovery of all of your operational costs (rent, taxes, office supplies, management salaries, overhead expenditures and all the other not so obvious expenses) your company may not show a profit, even though you have what you feel is an adequate mark up on the direct supplies and labour plus a contingency factor for overhead and profit. This last item profit is the nourishment that every business needs to thrive and grow. Without profit the business dies.
Having accurate Hourly Rates is the key to financial management in the printing industry and is the first step in developing a business philosophy that will move your company forward on a profitable course. These rates reflect a recovery of your true costs of doing business. When you know the exact sources of all of your organization's operational costs an operations plan can be developed from knowledge not guesswork.
Computer Assisted Estimating (CAE) has made it easier to eliminate many of the mechanical errors that were once the nightmare that all printers faced. A good CAE program will have built in Artificial Intelligence to determine the best way to produce each and every job. At the same time a manual over ride should be easy so that oddball variables can be properly assessed.
Estimating is step two in the sales process. This critical point in the sales process is more often than not the point that determines whether a job is won or lost!
Production standards are measured in real time and are easily obtained and monitored. A Management Information System (MIS) with meaningful and understandable reports can be useful.
Whether your production is up to or exceeds industry standards is another topic that you must deal with. The development of The Job Definition Format (JDF) is proving to be extremely valuable in increasing production efficiency.
While it is convenient to say pricing is market driven this is something that is almost impossible for an individual printing company to determine. When a printing company has Hourly Rates reflecting true cost recovery and the best CAE system and/or MIS available it can have a great knowledge based starting point.