cost per impression for offset press

[Morning Flight]

Hal, I am curious. Why are you not a big fan of cost+ pricing? What type of pricing do you recommend?

Value-Based Pricing, pcmodem. At least in an ideal world. In reality, most pricing for printing ends up being a mix, with Cost+, despite its warts, serving as the starting point.

We had a nice thread going on Cost+ and BHRs some years ago:

http://printplanet.com/forums/mis-erp-workflow/16733-budgeted-hourly-rates

Hal Heindel

 

[Morning Flight]

Cost+ does not exclude market based pricing, it facilitates selling at market rates.

Well, it sorta does, Stephen. Cost+ Pricing and Market (or Value) based Pricing are two entirely different animals. They're mutually exclusive, though the two can occasionally be in sync by sheer coincidence. Note that when I said I'm not a big fan of Cost+ Pricing, I included the word "Pricing." I didn't mean to imply that sellers shouldn't know their costs.

Why would you take on a job at the market rate - if you did not know your true costs and if you were actually making a profit?

You've put your finger on the heart of the problem, Stephen - knowing your true costs. Relying on BHRs for that is like expecting Jell-O to stay nailed to a tree. BHRs are driven by equipment utilization, and anyone who's been in this business for a while knows how uneven that is. One month a certain press sits idle for days, the next month we're running on overtime. In reality, few of us know how much money we made until the end of the month (or the year), when the figures are in.

My biggest issue with BHRs is that they expect us to lower our prices when business is good, and raise them when it's bad, whenever our equipment is under utilized. How much sense does that make?

Hal Heindel