Estimating offset printing cost

[AP90]

Hey guys, we currently only have a digital press at our shop. We have never done our own offset work. since we have plunged into doing our own digital work, we have created a lot more opportunities. Currently we outsource $120k/year in offset booklet work, or that’s what we’re charged at least. Do you think that’s even enough to consider bringing offset booklet work in house? I have often though about a DI press, but with plates for a 80 signature booklet would be astronomical correct? So since most of the booklets we print are 36 and up signitures we would need a 40” press correct? I guess I’m just wondering how I should go about finding actual cost of the jobs we outsource to see if we should even look at making the plunge. But I do think if we have offset available to us in house we can pick up a lot more business.

 

[arossetti]

No, that isn't enough revenue to support a 4-color press. You would need at least 5x that number IMO. Platesetter, RIP software, Press, Pressman, (does your current bindery equipment accommodate a 29" press sheet), Learning Curve, etc. I would think anything less than a 29" press wouldn't be economical compared to digital.

Not to mention that means the press will be idle for 95% of the year with only $120,000 worth of work.

 

[_socket]

Market is pretty aggressive for just straight printing. Cost is not the only factor to bring things in house. Turn time, quality control etc etc. I'm sure part of that cost is labor related for the booklet making. I'm surprised you don't just add an inline booklet maker and go digital with it? Equipment typically is cheaper than labor in the long run. DI is the best small format press in the market, but it has it's problems. Run length / ganging is really the determining factor in what size / format / cost.

 

[AP90]

Market is pretty aggressive for just straight printing. Cost is not the only factor to bring things in house. Turn time, quality control etc etc. I'm sure part of that cost is labor related for the booklet making. I'm surprised you don't just add an inline booklet maker and go digital with it? Equipment typically is cheaper than labor in the long run. DI is the best small format press in the market, but it has it's problems. Run length / ganging is really the determining factor in what size / format / cost.

Thanks for the answer. We would love to run them digitally but they’re too large of run. We have 2 monthly runs that are around 72 signitures and run lengths of at least 3500 quantity. There’s just no way to do them digitally. Plus other magazines that are in the 3-4K run amounts.

 

[kansasquaker]

I second what arossetti says. You need a lot more revenue. I like to think of offset pressing in terms of the digital pricing model. I assume you don't have a full-time, dedicated operator for each digital press. If so litho press, including the operator, will have a lease payment of roughly $10,000 per month (assuming a $250k press). You will have a setup cost for each job that will $5-10 * the number of plates. Your click cost on an 8.5x11 will be roughly $0.002. Depending on the number of setups, your capacity will be roughly 200,000-600,000 impressions per month in an 8 hour shift.

Lumping the operator cost with the capital cost allows you to think of it like a digital press, with the exception that you have to add in for plates. There are other pressroom costs, and you would have to buy and maintain a RIP, etc. They're relatively small compared to the items above. If that model works for you, it could be worth investigating all the details.

 

[gordo]

Sit down with your current print supplier and perhaps one or two others and negotiate a contract with them based on the volume of work you’ll be bringing in.

 

[_socket]

Add a second digital press for this overflow? Maybe I'm wrong, but 3-4k isn't that great of a spot for offset.

 

[AP90]

Add a second digital press for this overflow? Maybe I'm wrong, but 3-4k isn't that great of a spot for offset.

In straight printing terms it isn’t. But on. 72 signitures booklet it is. It would take 21 continuous running on 2 presses at rated speed to complete the job. Not to mention the $6100 in click cost alone to run the job (assuming .049 color click).

 

[arossetti]

In straight printing terms it isn’t. But on. 72 signitures booklet it is. It would take 21 continuous running on 2 presses at rated speed to complete the job. Not to mention the $6100 in click cost alone to run the job (assuming .049 color click).

If you don't have the 21 days you need to outsource it. $6000 in clicks is about 100x cheaper than starting an offset operation.

 

[_socket]

I'm assuming you meant hours, not days. I highly doubt the shop you're taking it to is turning a completed job in 21 hours. You're click cost is double what it should be. Even if you went with a small press you're going to be burning plates for 21 hours straight.. no way will you bring in a 29" for just these few jobs. The way I see it you'd have $800 in just plates plus hours of plate making time vs paying a tad over 3k in clicks and min labor because everything is inline.

 

[jrsc]

We are an all digital shop and would do those jobs all day digital. I'm assuming it's all color. I think your first problem is you need to get your click costs under control, then maybe it will make more sense.

I agree with everyone else that investing in offset for these isn't the way to go. You would be much better off using the extra volume to negotiate your paper and click costs. You will need a lot more than a press also, especially if you get a 40 inch. I bet all your finishing equipment is geared toward digital. So in addition to all the prepress stuff mentioned above you now need a cutter that can handle those large sheets, a large folder with all the extra pieces to fold down signatures of that size, stitching equipment that can handle folded signatures and do 3 knife trims at the end. Offset is a totally different world. If you are good at digital, focus on getting better at it and getting your costs down.

 

[AP90]

We are an all digital shop and would do those jobs all day digital. I'm assuming it's all color. I think your first problem is you need to get your click costs under control, then maybe it will make more sense.

I agree with everyone else that investing in offset for these isn't the way to go. You would be much better off using the extra volume to negotiate your paper and click costs. You will need a lot more than a press also, especially if you get a 40 inch. I bet all your finishing equipment is geared toward digital. So in addition to all the prepress stuff mentioned above you now need a cutter that can handle those large sheets, a large folder with all the extra pieces to fold down signatures of that size, stitching equipment that can handle folded signatures and do 3 knife trims at the end. Offset is a totally different world. If you are good at digital, focus on getting better at it and getting your costs down.

Thanks for the info guys. I’m not sure if there’s any misinformation on this, but we currently are doing just fine digitally. We push 250k clicks through a month. These are simply jobs that we cannot do monthly. Idk what type of click cost you guys are on, but there’s no way to compete and be profitable on a job like this. The paper cost and click cost of a 3500 72 page 8.5x11 booklet is huge. We are currently getting a good deal on our outsourcing, I was just wondering how to figure the cost to print it offset.

To those that have mentioned printing the jobs digitally, I have no urge to print them digitally. They’re way too big and the cost is 2x more than what I can get them printed for on offset. But to those that think my click rate is high and I need to negotiate better paper cost, go ahead and run the numbers printing one of the jobs digitally. You’ll find it can’t be done competitively.

Specs:
quantity-3500
pages-72
finished size- 8.5x11
paper- 70# gloss text
4/4

 

[arossetti]

Wait, 72 pages or signatures?

 

[easiprint]

But to those that think my click rate is high and I need to negotiate better paper cost, go ahead and run the numbers printing one of the jobs digitally. You’ll find it can’t be done competitively.

Specs:
quantity-3500
pages-72
finished size- 8.5x11
paper- 70# gloss text
4/4

I agree AP90 - I'd love to know how people could print this digitally cheaper than outsourced litho.

 

[AP90]

Wait, 72 pages or signatures?

Sorry, 72 pages, not signitures.

 

[arossetti]

I agree AP90 - I'd love to know how people could print this digitally cheaper than outsourced litho.

Now we are getting into the weeds a bit but I could bet that a 0% margin in-house job contributes more to your bottom line than an outsource job with a straight 30% markup.

 

[AP90]

Now we are getting into the weeds a bit but I could bet that a 0% margin in-house job contributes more to your bottom line than an outsource job with a straight 30% markup.

Are you being serious? You think it’s better to run a job in house and make nothing than to outsource a job and have a 30% profit on the job? Sorry but that’s not the way we do things.

 

[PricelineNegotiator]

Are you being serious? You think it’s better to run a job in house and make nothing than to outsource a job and have a 30% profit on the job? Sorry but that’s not the way we do things.

I think he didn't say it exactly how he meant it, but I agree with you. Not having your machine tied up to trade dollars for dollars, on top of employees being paid to do work that amounts to dollars for dollars work means that you can't make money doing other things, therefore making a tiny bit of money by outsourcing and freeing up your time to do more work is infinitely more profitable, by probability.

 

[arossetti]

I think he didn't say it exactly how he meant it, but I agree with you. Not having your machine tied up to trade dollars for dollars, on top of employees being paid to do work that amounts to dollars for dollars work means that you can't make money doing other things, therefore making a tiny bit of money by outsourcing and freeing up your time to do more work is infinitely more profitable, by probability.

No I said it the way I wanted to say it. If you are not at 80%+ utilization of your printers each month then yes I would run the job in-house at 0% and contribute more to the bottom line. My 0% in-house margin is an all inclusive rate; if you just slap 30% to your outsource quote how much of that contributes to admin/overhead?

I would suggest doing some research on manufacturing accounting if all this comes as a shock.

 

[kansasquaker]

My 0% in-house margin is an all inclusive rate; if you just slap 30% to your outsource quote how much of that contributes to admin/overhead? I would suggest doing some research on manufacturing accounting if all this comes as a shock.

That seems really convoluted. Cost is cost. Utilizing a sunk cost does not save you any money. (e.g. I paid $5 to rent this movie, so I'd better watch the whole thing or I'll be losing $5). Amortizing sunk costs into production costs is a valuable mental exercise, but don't confuse it with reality.