Accurate pricing is critical to the success of any business, especially the printing industry, where profit margins are historically lower than other industries. Your challenge is to price jobs competitively and then make a profit on the job. Your dilemma is constantly changing cost factors.
It is critical that the hourly rates reflect current: indirect costs, direct costs, manufacturing costs, material costs, outside services, overhead, mortgages, rent, sales cost, salaries, productivity rate (number of hours a profit center is operating by day, week, and month), and any other costs.
We can solve your cost accounting problems by implementing a two-part program custom-designed for your company that will assure that all the elements of the process are prepared logically and with the eyes of a printing expert.
The first step is to develop actual costs for each profit center (operation). By working with your financial personnel, or you, we can build a foundation for Actual Costs for each operation in your plant. We will also create a spreadsheet for your company that will build the accurate pricing by factoring in every single cost your company incurs.
Once you get a handle on your actual costs, you will need to make sure that all production workers are recording their time accurately. Whether you have computerized shop floor data collection, a time clock, or hand-written work sheets, it is critical that all time spent on every job be recorded accurately. All time records should be checked daily to make sure “someone didn’t log-out at the end of a job” and all time is accounted for.
The second step is to create an accounting and billing process that takes the data collected from the shop floor data collection, determine the overall cost of the job (including special costs, shipping costs, stock, special inks, etc.), then compare it to the estimate. If the estimate is higher than the cost, you have made a profit. But you’re not through yet! You also have to identify other sources of income such as overtime, overruns, author’s alterations (AA’s), additional proofs, delivery costs for those extra proofs, multiple deliveries, etc. By adding those additional costs to the estimate price, you might turn a 2% profit into a 15% profit. Too many printers fail to include the additional charges and are failing to realize their true profit.
Graphic Consulting Group can provide all the services you need to create accurate cost accounting and basic hourly rates. We can also help you select computerized software that can help facilitate the process.
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