Faced with accelerated competition and economic growth challenges, profitability remains top of mind for all print shops around the world. From offset printers to flexible packagers, adaptable pricing strategies and estimate accuracy impact the bottom line and put pressure on printers to evolve.
The problem is, not all printers understand the costs they manage every single day. Without the right integrated print technology in place, many companies have no way to track job performance and struggle to see where they are making money—and where they are draining resources.
The bottom line is that your pricing is a direct reflection of value, and it influences the quotes you send to your customers, the estimates you create internally, and the final product you deliver. If your prices are too high or the quotes are too complex, you’ll scare away customers. Alternatively, if your prices are too low and your estimates are riddled with inconsistencies, it’s your production team and profit margin that suffers.
In sharing the importance of pricing and estimating in the print industry, we hope to shed some light on how to improve your pricing strategy and estimating process through modern print MIS and ERP technology.
The process of setting a price is driven by the need to maximize revenue, cultivate growth, and earn higher profits. It’s not an exact science, especially for printers, and there are different pricing strategies that you can use.
Market or competitive pricing is based on the average pricing in the market. This is beneficial when you’re trying to capture a larger audience while still making a profit. Dynamic pricing is a model used to determine product prices according to demand. This approach requires frequent price changes but can lead to higher returns based on seasonality.
When determining the best pricing strategy for your print shop, you need an understanding of cost breakdowns to see which jobs are profitable and which ones are not. Unfortunately, many printers do not have full visibility into the total cost of a print job. Even though they do it every single day, they may not have the right systems or technology in place to track, manage, and optimize their pricing and estimates. To paint a better picture, here is a quick overview of all the costs included in an average print job:
Once a printer estimates all of the fixed and variable costs, the next step is to figure out how to measure the cost of each job. This can be done by either measuring hours of production (BHR) or the number of impressions, also known as the “click model.” BHR has been used for decades, whereas the click model was only introduced back in the 90s. To measure the total cost of a print job, printers can use one cost model or a combination of both.
Before technology advancements, increased demand, and heightened expectations came in to play, print estimates could take a week or more to produce. When a customer requested multiple quotes with pricing estimates for several different unit counts, it took a significant amount of time and energy for an estimator to track down all the information and final pricing required for the sale.
Today, the first estimate the customer receives is most likely going to be the one accepted—if it looks reasonable. In a recent blog, we talked about common print estimating mistakes that add up. Relying on outdated fixed pricing and not charging for unseen extras or overhead costs are costly repercussions for a print shop in the long term. These problems can all be solved with an integrated estimating solution or print management information system (MIS). But there’s more to the story than just estimates.
If you’re looking at the bigger picture, your profits are being destroyed by mistakes, errors, and inefficiencies from the initial sales call to the production floor to delivery. There are production inefficiencies when substrates are changed out several times a day. There is excess inventory that might never be used. All of these areas are causing you money during every single job, and you don’t have the operational visibility to see where the real problems are.
The more manual interaction you and your staff have with pricing and estimating, the more opportunity for error. And errors in the early stage of customer service can be disastrous, causing you to lose money on the job—or even worse, to lose the customer.
So, what’s the solution to producing more accurate estimates and maximizing your profits? A properly configured MIS/ERP solution includes the flexibility and functionality you need to centralize information flow, support your pricing strategy, and analyze your profitability. If you have never heard of print MIS/ERP, get introduced to the technology here.
Consider this: instead of an estimator running around trying to source the latest pricing tables and talk to different departments, they have an integrated print MIS/ERP system that gives them instant access to all the necessary information to build a precise quote. The estimator creates an accurate estimate with up-to-date shipping preferences, agreed-upon pricing levels, inventory that might be on hand, previous work done for that customer, etc.—and the customer receives a well-informed quote promptly. You’re not only the first company in the door with a quote (so you get the business), but you’ve also structured your pricing so that you make a healthy profit margin on the job in question.
A cloud-based print MIS/ERP solution with backend functionality to support your financials can give you this control over your pricing and estimating. Without the worry of potential errors, your team can reallocate their energy towards increasing profit margins and expanding your business. Let’s dive deeper and explain 5 ways that an integrated print MIS system can specifically help you price print jobs to maximize profits:
Growth can be hampered before it begins if your critical business operations systems aren’t supporting you. Separate systems that don’t work with each other will not help you in an industry that’s as competitive and innovative as print. If you’re noticing increasing delays or a drop in profits, now is the time to make a change.
Centralized print MIS/ERP software can significantly impact your print business and bottom line. By bringing together your print operations in one system and providing insight into your costs and performance, you can save time, reduce the potential for error, and experience a smoother overall operation. To learn more about the technology and the benefits of print MIS/ERP software, start reading our introductory whitepaper here:
You can also reach out to the Clients First Print Solutions team directly with any questions you may have. We’re here to help you assess your existing pricing and estimating processes and find strategic solutions to areas of your print business that need improvement.