Estimating offset printing cost

[arossetti]

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.

How can you say cost is cost but then disregard a sunk cost like a printer lease payment?

 

[AP90]

How can you say cost is cost but then disregard a sunk cost like a printer lease payment?

I think there’s a couple points being missed here.

1. That lease payment is for a digital printer and digital jobs. I think we can all agree the job I posted is in no way a digital job.

2. Your assuming that throwing it on a digital press and getting 0 profit on the job the client is still going to give you the job. I can tell you I pay jusy about half of what just paper and clicks would cost me to print the job digitally. For jobs that are a couple hundred $$, no biggie, you do that on a big enough job and your talking big money. The profit on this job can cover our lease payment for the month. You can’t just go with utilization. We could utilize our digital equipment for this job. We would loose money. That does not help the bottom line.

 

[arossetti]

1. That lease payment is for a digital printer and digital jobs. I think we can all agree the job I posted is in no way a digital job.

I don't disagree that an offset press is probably more profitable on average but I also think there are digital presses who would run this work. You have to look at the economics of each operation. HP10000 is a different digital printer than a Xerox 1000.

Your assuming that throwing it on a digital press and getting 0 profit on the job the client is still going to give you the job. I can tell you I pay jusy about half of what just paper and clicks would cost me to print the job digitally.

I never mentioned your job specifically, I just said running a job internal at your cost versus outsourcing it and putting a 30% markup on the invoice the choice is easy for me. I'll run it in-house if I have the capacity. I never said this job should run on your equipment.

 

[kansasquaker]

How can you say cost is cost but then disregard a sunk cost like a printer lease payment?

Because a sunk cost isn't a variable cost. When somebody says 'cost' they mean variable cost. I'm not saying that fixed costs don't matter, just that they don't matter when calculating the variable costs of a single job - which is the task at hand. Google 'sunk cost fallacy' for more information.

 

[arossetti]

Because a sunk cost isn't a variable cost. When somebody says 'cost' they mean variable cost. I'm not saying that fixed costs don't matter, just that they don't matter when calculating the variable costs of a single job - which is the task at hand. Google 'sunk cost fallacy' for more information.

What's your BHR on your main press and how did you calculate that?

 

[_socket]

The way I see it you could save 75k on clicks by using the volume to drive down your overall contract. It's not a lose because volume and efficiency go hand in hand. In any case it sounds like you have a very fair price currently with your trade printer @ .024 per 4/4 letter sheet including finishing.

 

[arossetti]

If a Delta Airlines didn't manage their utilization rate as closely as they do how long do you think they would be in business? Minutes on the ground cost them thousands of dollars, but should they not consider that a cost?

 

[kdw75]

Just for reference. We use 5,000 impressions as the cutoff from digital to offset for 4-color work.

 

[AP90]

If a Delta Airlines didn't manage their utilization rate as closely as they do how long do you think they would be in business? Minutes on the ground cost them thousands of dollars, but should they not consider that a cost?

You are correct, Delta does manage their utilization rate closely. They also outsource some of their flights to other carriers in their alliance. You can book a flight from ATL to Paris through Delta but it is operated by Air France. Im sure Delta has a play sitting around they could use for the flight, but it is easier for them to outsource and make money that way. Same thing we all do in the printing business. Sure, I could throw these jobs on our digital press and double my cost for it vs outsourcing to someone who prints its offset, but why do that? You said it helps the bottom line. I can tell you and extra 40k in profit a year helps the bottom line.

 

[arossetti]

You are correct, Delta does manage their utilization rate closely. They also outsource some of their flights to other carriers in their alliance. You can book a flight from ATL to Paris through Delta but it is operated by Air France. Im sure Delta has a play sitting around they could use for the flight, but it is easier for them to outsource and make money that way. Same thing we all do in the printing business. Sure, I could throw these jobs on our digital press and double my cost for it vs outsourcing to someone who prints its offset, but why do that? You said it helps the bottom line. I can tell you and extra 40k in profit a year helps the bottom line.

You are referencing co-share routes, and we are reaching the limitations of where this analogy would work. Net profit after all expenses is what I'm interested in, part of that 40k needs to go to building, admin, marketing, utilities, insurance, and any other non-revenue generating departments. Until you know how much of that 40k contributes to those items you do not know your net profit, just gross.

My point in all of this is you need to know your net profit for jobs going out and being produced in. Otherwise you are comparing net/gross; apples/oranges.

 

[TomPrint]

The calculation of offset costs is complicated since it depends on many factors.
To get an idea, Heidelberg sells cheaper presses if you commit to buy them consumables. Look at the link, they sell the cost of the sheet at £ 0.018 per sheet for an annual consumption of 12 million impressions.
At this cost you have to add the amortization of the machine, electricity, labor ... although you have a discount of 30% on the price of the machine.

In our small print shop, we work in 40 "our machine has free time and we still subcontract some offset work ... The reason? Other printing presses offer us printed sheets cheaper than we can buy special papers. that they buy directly from a manufacturer and we from an intermediary, the price of paper will not be the same to you as to the one who buys hundreds of tons a year.

One option may be to buy the post-press handling equipment and do the work. The machinery is cheaper and you will find more and better offers if you only ask for printed sheets. This is how we started.

https://www.printweek.com/print-wee...erg-details-impression-plan-subs-model-for-uk

 

[_socket]

There you have it. Heidelberg CS 92 for 680K (plus CTP system cost) and .025 per 24x36. With 8 signatures up you only need 9 runs. With a total of 31500 impressions per job your approx imp cost would be $800. I guess Heidelberg is throwing in ink too? But running three jobs a month only puts the press at 10% utilization per impression contract. I really like the DI concept. Looks like Presstek is back in the market trying to make change the bad taste? : http://www.presstek.com/mydi-training.htm

 

[arossetti]

There you have it. Heidelberg CS 92 for 680K (plus CTP system cost) and .025 per 24x36. With 8 signatures up you only need 9 runs. With a total of 31500 impressions per job your approx imp cost would be $800. I guess Heidelberg is throwing in ink too? But running three jobs a month only puts the press at 10% utilization per impression contract. I really like the DI concept. Looks like Presstek is back in the market trying to make change the bad taste? : http://www.presstek.com/mydi-training.htm

Hell he should get 9 printers then he can run them all at once and the cost is still only $800.

 

[Manafaith]

Many good points on here about Jumping in to the Offset World if you are currently only Digital. The cost would be "extreme" to say the least to jump in to Large sheet offset + Pre-press + Bindery. I believe you are 100% correct that the 3500 books you are referencing is not a Digital Job (to be cost effective) and that offset is the way to go....wouldn't really matter if you were paying 3 cent clicks or 6 cent clicks, the math just just isn't there. Personally I would say in your current situation that outsourcing has all the benefits and and none of the risk. We have both digital and offset and have seen a dramatic decrease over the past 5 years in Offset press production and a major increase in the digital realm. Just my opinion but it sounds like you are just fine right where your at.

 

[TheProcessIStheproduct]

Ahhh, another opportunity to bash HP, someone said you could run this job on indigo 12000, let’s do the math:

72 pages = 9 sigs
3500 sheets per sig and 2 sides 3500x9x2=63,000 impressions
63000 x .09 per = $5670 check to HP

screw sunk cost, at 1.3 million press payment you are on the hook for $20,000 a month lease payment, so please someone explain to me how this is a “digital job” debate, even at 750 quantity I am still running this job offset any day of the week

 

[AP90]

Alright guys, so we've established that its not worth diving into with a new press, prepress, bindery and all that good stuff. Yes, I understand that a new Heidelberg and new muller martini will set me back $1 million. Lets be logical though. All I hear from offset guys is these things are tanks, they run forever, etc. So lets be realistic and say I pick up a used 4 color press. Im guessing to make it economical id need a 29" press correct? What I don't understand is why a lot of presses out there are only 14x20 or there abouts. Seems like it would take forever to do any type of magazine printing over say 16-20 pages. Maybe Im wrong though. I don't know offset stuff. But in all honesty, isn't there enough used equipment out there that if I save up, pay cash for, and take part of my profits from my outsourced offset jobs to pay for a pressman that I could get into offset. Its not that I just want to produce my own stuff, it just gives me the ability to bring more offset jobs into our company. I mean its hard to go out and pull clients from people when im having to pay what they end up paying for an offset job. I know there are ways of doing it, but I sell to a lot of print buyers.

So, is there any way it is economical to run say a GTO 52 or a DI, a duplo 3 tower system, and produce 3500 magazines that are 68 pages?

 

[Manafaith]

A 52 will only give you the ability to print 4 Page Sigs so on the specs you stated earlier you would be looking at 144 Plates which would be quite expensive if you were going head to head against a 29 or a 40. You can definitely find very inexpensive Used offset equipment and the market seems to be flooded with it. A good place to watch is Thomas Auctions.... I have seen some amazing deals on there for used equipment. I believe I saw a 2000/2002 ish 5 color komori 29 inch sell for around 70K a few month back. I have seen used Darts for as little as 800 bucks and Big Stahl Folders with Right angle attachments are a dime a dozen on that site. If you are trying to build your business up in to the offset world, you have a market for it in your area and you do it the right way without taking massive "new equipment loans" I don't think it is the worst idea in the world.
I think the only person that can make that decision for you and your company is you. You know your market and your needs and what it might take to get to the next level to build your business. Opinions are just that.....opinions!

 

[dabob]

Alright guys, so we've established that its not worth diving into with a new press, prepress, bindery and all that good stuff. Yes, I understand that a new Heidelberg and new muller martini will set me back $1 million. Lets be logical though. All I hear from offset guys is these things are tanks, they run forever, etc. So lets be realistic and say I pick up a used 4 color press. Im guessing to make it economical id need a 29" press correct? What I don't understand is why a lot of presses out there are only 14x20 or there abouts. Seems like it would take forever to do any type of magazine printing over say 16-20 pages. Maybe Im wrong though. I don't know offset stuff. But in all honesty, isn't there enough used equipment out there that if I save up, pay cash for, and take part of my profits from my outsourced offset jobs to pay for a pressman that I could get into offset. Its not that I just want to produce my own stuff, it just gives me the ability to bring more offset jobs into our company. I mean its hard to go out and pull clients from people when im having to pay what they end up paying for an offset job. I know there are ways of doing it, but I sell to a lot of print buyers.

So, is there any way it is economical to run say a GTO 52 or a DI, a duplo 3 tower system, and produce 3500 magazines that are 68 pages?

AP . . . while its true that some of the presses out there are built like tanks some are not - and you get what you pay for . . . more important than buying the equipment is getting the experience to use it . . . press work is one thing, bindery another . . you could probably get a handle on the CTP issues pretty quick, IMHO you need to get somebody that is well versed in the industry and has been for years because you are talking about machines that are not state of the art "green button" machines. My "newest" presses are of a vintage 1978 and being Heidelbergs and having been properly maintained they preform wonderfully, but it's our pressman that makes them sing. The last time we bought a press we flew our pressman to the location and had him check the machine out and make sure it would do what we wanted, I didn't even go because my current knowledge on that subject is woefully short, I haven't run a press for 20 years now . . . I know what they do very well but can't make them do it anymore.

Get yourself an expert and take his advice! Oh and one more thing, I remember telling my brother that we don't need to worry about floor space for the press . . . its where you are going to put the paper that is going to go into the press and once it comes out . .. takes 3 - 4 x the footprint of the press . . . just sayin

 

[craiglpress]

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