The hidden overheads in every print job – Part One: Discovery
Making profits in printing means knowing where the money goes and where the costs are in making it. Dave Bell runs the slide rule over an average printing transaction and comes up with some results that may surprise you.
I have a printer’s price list in front of me. It’s advertising 500 by four-colour business cards for less than $20. Is this a loss leader just to get business? I make the call. “No,” he assures me. “I make money on every job. “
The secret is of course that he gang prints these cards so that he can print them 20 up on a single printing plate. This way a job that was sub $20 becomes part of a $400 job.
The question we need to ask next is, “How much money can you make on a $400 job?”
Well, the most you can make of course is $400. However, if you subtract the cost of labour and materials, on the industry average, then your profit is about $80. This $80 then has to go to pay your overheads so you probably end up with something around a $5 profit.
At this rate any cost savings you can generate will turn into fairly large percentage improvements in profits. At Quote & Print we are always looking at ways to reduce the administrative overheads on each job, particularly on smaller jobs.
The biggest admin overheads on small jobs are at the beginning when you do a quote. If you have a hit rate of three to one then you end up doing three quotes for every job. This is probably equivalent to 30 to 60 minutes of your estimator’s time.
The next step is converting that quote into a job and checking it. Again this may take 10 to 15 minutes.Getting and checking the PDF file again may take anywhere from 10 minutes to an hour.
Once the job is going through the factory the customer or sales rep will want to check on its progress. This may take 10 minutes time of both your factory manager and your sales rep. Once the job is finished it needs to be invoiced. Again producing, checking and posting an invoice will take another 10 minutes.
Finally you need to process the payment once it arrives, another five to 10 minute job. If you’re an average print shop doing 300 jobs a month, this time can easily exceed 300 hours a month.
This is roughly equivalent to two full time staff members or in dollar terms a cost to you of roughly $120,000 per year. If you think there has to be a better way, you’re dead right.
Next week I will show you some of the new software that we are completing at Quote & Print, how it works and how you can dramatically reduce these costs. This software will be launched at PacPrint05.
I would be interested in any comments that you may have on these figures.
You can contact me at comment@quoteandprint.com.au
Take care,
Dave Bell
Making profits in printing means knowing where the money goes and where the costs are in making it. Dave Bell runs the slide rule over an average printing transaction and comes up with some results that may surprise you.