Quoting Jobs

[AP90]

Hey guys, I've been having pretty good success so far getting jobs that are put out for bids from design companies.

What I'm wondering is if all of you smaller shops out there do a standard margin profit on each job, if you bid each job for just a set amount of profit each time, of if you bid based on market prices.

I put in a bid the other day for a job that was about 20% less than what the cheapest Internet site quoted, and didn't get the bid. It's not loosing the bid that bothers me, I'm just wondering what standards you guys use when putting in bids like this.

 

[TLPSfremantle]

um, i would say don't.
Don't use sites like this. Its terrible. Who are the other companies bidding? What is their print quality like? Everything comes down to the dollar rather than the quality of work. I dont know of any even half decent designer who would auction a print job on a site like this.
A lot of this stuff is just garage printers who have a poorly maintained old machine in their garage, producing shoddy work and undercutting everyone else. Or, it's cheaply imported work. For me it puts pressure on legitimate print shops who do know what they're doing and can produce good work.
No offence and i know when push comes to shove you'd rather have the work than not. But seriously, for me its up there with print brokers. Shocking. .

 

[AP90]

um, i would say don't.
Don't use sites like this. Its terrible. Who are the other companies bidding? What is their print quality like? Everything comes down to the dollar rather than the quality of work. I dont know of any even half decent designer who would auction a print job on a site like this.
A lot of this stuff is just garage printers who have a poorly maintained old machine in their garage, producing shoddy work and undercutting everyone else. Or, it's cheaply imported work. For me it puts pressure on legitimate print shops who do know what they're doing and can produce good work.
No offence and i know when push comes to shove you'd rather have the work than not. But seriously, for me its up there with print brokers. Shocking. .

Maybe I wasn't clear enough in my post or you took it the wrong way. I'm not on some site just Taking any bids I can. These are local (1 hour away) design and advertising firms that are looking for high quality print. They just send out their jobs to the local printers to bid on.

I mentioned that I looked at some online printers (psprint, uprinting, ect) for pricing and was able to offer an even lower price.

I'd just like to get more information on how you guys quote a job when you definitely know there's going to be multiple bids on it. Maybe some of you don't change a thing and I understand that too. Some might just take jobs to take jobs and make very little to break even on stuff like that just to keep relations good. That's what I'm wanting to know.

TLPS, if your advice is don't accept jobs like this, then thank you for your advice, but I'm looking to keep the press running and money flowing in, not to mention building strong relationships with print buyers/brokers.

 

[TLPSfremantle]

right, sorry. your initial post sounded like you use the online print bid sites. I'd still be curious as to how a company or printer can make money on an order that is more than 20% below what you're bidding? keeping relations is good, but if you're doing the job and breaking even, those aren't really relations i'd like to keep. . . At a push if im quoting on a job that i want to get for the sake, then i make sure that i'm covered for the work and then i make enough to have the job printed again if anything goes wrong. Not sure what percent that is, it would vary job to job.

as for money flowing in, i cant see how the money would be flowing if you're having to bid so low?

 

[gordo]

Hey guys, I've been having pretty good success so far getting jobs that are put out for bids from design companies.

What I'm wondering is if all of you smaller shops out there do a standard margin profit on each job, if you bid each job for just a set amount of profit each time, of if you bid based on market prices.

I put in a bid the other day for a job that was about 20% less than what the cheapest Internet site quoted, and didn't get the bid. It's not loosing the bid that bothers me, I'm just wondering what standards you guys use when putting in bids like this.

Some things to consider (culled from experience as a buyer and seller of print - and PIA/GATF and other studies):

Most printshop market leaders realize about 5%-8% profit.
The average printer realizes about 1%-2% profit.
Most printshops don't really know or understand their cost of business and hence do not know what their profits - if any - are.
Profit leaders do.
A lot of print pricing as reflected in quotes are tactical (e.g. as you said "I'm looking to keep the press running and money flowing in, not to mention building strong relationships with print buyers/brokers.") i.e. the quotes have nothing to do with profits or margins.
Buying work through low-ball pricing does not build strong relationships with print buyers/brokers. It's just a printer's race to the bottom.
There's no such thing as a market price for printing since it is a service not a commodity.
Print buyers don't buy on price alone - it is often not even the main criteria for awarding the job. That's the lesson that FedEx learned that made them a success in delivering mail when pundits said that the Post Office was already doing that job at a much, much cheaper rate.

Think I'll stop here as I don't want to explode.

 

[kdw75]

Pricing will drive you crazy, if you try to compete with everyone else. A printer that is notoriously high on some jobs, might be the cheapest on brochures. Another that is dirt cheap on flat work, may not have a bindery, and will be the highest on pieces requiring folding, creasing, binding etc. You have got to set your pricing based on your costs. Now the down side of this, is that you may be leaving money on the table, so once you figure out what you have to charge, you can bump it up until you notice work slowing. Certain high maintenance clients will be happy to pay a big premium for always having you available at a moments notice, to solve whatever last minute catastrophe they are having, so you can, and should adjust your pricing to make up for all the time you spend holding their hand through projects.

And of course, if you don't have the right equipment for the job, you are always going to be higher, and make less. We bid on a project package for a University that totaled around $70K. I bid it very cheap, just to fill in some of our slow times, and see if it would be worth doing again. When they released the bid results, we were the cheapest printer in town, but only by a small margin. Another forum member, who has a print shop about 80 miles away, also bid on it, and by having larger presses, was able to win the bid. That doesn't bother me in the slightest, because I see the logic. What kills me is when a printer, undercuts you a huge amount, and you know they have the same equipment. You tend to think they know some secret, but in reality, they are just losing money on that project, for any number of motives, mistakes, or ignorance.

Some clients get bids as part of a procedure, and don't even get bids from anyone else. They just want to make sure your price fits in their budget, or isn't more than they expected. Sometimes you are only bidding against yourself, and that is another case where you can be leaving money on the table if you try to compete with the cheapest guy around.

Another thing to think about, is that many print shops have large clients, that aren't looking for the bottom dollar, and keep their doors open. Everything else that comes in is just icing on the cake, so they can afford to make much less on those types of jobs if they want to. Everything is so dynamic with local print shops, but the ones on the internet, who post their prices, tend to rely on massive volumes, and limited options.

I know I rambled on, and hope you found some of it useful.

 

[MailGuru]

Buying work through low-ball pricing does not build strong relationships with print buyers/brokers. It's just a printer's race to the bottom.
There's no such thing as a market price for printing since it is a service not a commodity.
Print buyers don't buy on price alone - it is often not even the main criteria for awarding the job. That's the lesson that FedEx learned that made them a success in delivering mail when pundits said that the Post Office was already doing that job at a much, much cheaper rate.
Think I'll stop here as I don't want to explode.[/SIZE]

Interesting topic. Gordo's got it right. IMHO, responding to RFP's (Request For Proposal's) is bad for both the RFP originator, and, the Responder. Since this is not the main topic of this thread, and, I'd be willing to bet you that there will be a lot of discussion on this topic, I'll post my "Con" stance in the "Education" forum. Hopefully, others will post a "Pro" stance.

-Best

MailGuru

 

[AP90]

Thanks for all the info guys. And when I priced it out, I priced it at 20% lower than what an online company could do it for. I found out someone ended up pricing it well below me. But in all honesty, I got greedy when quoting this job. Its actually pretty simple for me to quote jobs like this as the only cost factors I have for these jobs are my clicks and paper cost, and then whatever I decide its worth my time to do the job. I consider myself very privileged that I have a situation where I can operate like this. Honestly, I should have just been happy with a less profit on these quotes but I did get greedy. And learned that you can't always base printing cost off of those big online shops either.

 

[Stephen Marsh]

Its actually pretty simple for me to quote jobs like this as the only cost factors I have for these jobs are my clicks and paper cost, and then whatever I decide its worth my time to do the job.

A cost-plus MIS system or business consultant would tell you what the cost rate to run the machine actually is in order for you to meet the expenses of running your business (before making a profit). You might be surprised. You may also wish to have an accountant go over your P&L sheets.
The key is working out the hourly cost rate, which will include both direct costs and indirect cost components. More here:

http://accuramis.com/why-the-correct-rate-is-important-c-316.php

http://accuramis.com/what-are-my-cost-rates-c-317.php

http://accuramis.com/cost-rate-calculator-i-5057.php

http://accuramis.com/rates-analysis-c-310.php



Stephen Marsh

 

[AP90]

A cost-plus MIS system or business consultant would tell you what the cost rate to run the machine actually is in order for you to meet the expenses of running your business (before making a profit). You might be surprised. You may also wish to have an accountant go over your P&L sheets.
The key is working out the hourly cost rate, which will include both direct costs and indirect cost components. More here:

http://accuramis.com/why-the-correct-rate-is-important-c-316.php

http://accuramis.com/what-are-my-cost-rates-c-317.php

http://accuramis.com/cost-rate-calculator-i-5057.php

http://accuramis.com/rates-analysis-c-310.php



Stephen Marsh

Thanks for the info. But we installed the machine for another division of our business. We are a small family owned business. I run the printing division. We have all the overhead for the machine covered by our other divisions printing needs. We do not have a building payment. We have spread out the machines lease and electricity over printing from our own printing. And our electricity only went up $20-30 a month.

Since I run the printing the division, i have an agreement that after clicks and paper cost I get to keep the profits from extra jobs that come in.

 

[PricelineNegotiator]

Thanks for the info. But we installed the machine for another division of our business. We are a small family owned business. I run the printing division. We have all the overhead for the machine covered by our other divisions printing needs. We do not have a building payment. We have spread out the machines lease and electricity over printing from our own printing. And our electricity only went up $20-30 a month.

Since I run the printing the division, i have an agreement that after clicks and paper cost I get to keep the profits from extra jobs that come in.

Lol, so this is the high end digital press version of the guy that runs offset presses in his garage and already has his overhead covered. You lucky bastard.

 

[AP90]

Lol, so this is the high end digital press version of the guy that runs offset presses in his garage and already has his overhead covered. You lucky bastard.

Yes that would be me. Your not gonna to start a movement to get me kicked out of the forum are you? Lol

 

[cosmo]

Most printshop market leaders realize about 5%-8% profit.
The average printer realizes about 1%-2% profit.

Most idiots would run at 1-2% profit, they shouldnt be in business. (im talking printers here, not huge corporations)

Stephen points out a good system, cost+, but you also need to think of activity based pricing, used together they are 2 good methods of figuring out whether or not you can or are making money.

 

[lantz_xvx]

Hmm, this is interesting to me. We're not a large shop, neither in bodies nor revenue. We're also young, but our net profit has gone up every year we've been in business. Of course, we're an LLC so we each get screwed on taxes, but that's another thread entirely! Our client base has also become more solid, more diverse, and higher quality. We still do get the occasional client that only cares about the price, but our primary market cares more about our structure and our values (we're worker-owned, and union). There are only a handful of times where we have had to match a lower price to win a job.

I handle the pricing and use a spreadsheet to work up estimates. It's all based on the specs, obviously, but we have all our costs covered, including paper, ink, clicks if it's digital, consumables, production labor and bindery labor. I've also calculated our Overhead Per Hour and that gets added to each job. So the longer a job takes, the more overhead it covers. After all that is calculated, we add our profit markup, which typically yields us around a 40% margin. I also have some calculations that show our COGS and labor as a percentage of the total, just to get a feel for how cost effective we are. All this considered, there are times where we still beat most other shops in NYC. This tells me that the prices of those items could stand to go up, but in general, we're pretty close to what else is out there, unless a shop is so large they have more people working more efficiently. But that's not a direct competitor, as their scope and market share are much larger than ours.

As far as those online print places, forget about it. Most of them aren't even real print shops, they just farm work out, either to highly automated factories where a human being rarely touches the job, or to China. They're willing to undercut real printers because they make it up in volume. It's the same pricing model that Amazon uses, which is how it drove the final nail into the pre-made coffins of so many brick-and-mortar bookstores back in the day.

There are definitely people here to are far more experienced than I am, so I am willing to hear feedback and learn. But my advice would be, price everything to your costs. If your overhead is covered and you can just do jobs more cheaply, you have an advantage. Don't get greedy and price jobs super high, just look up what the market will bear and stay in line with that. There will be times where you're either too high or too low, and your profit margin will likely fluctuate depending on the product. Know what your breakeven is and what your desired profit margin is. Keep it consistent, don't price things willy nilly according to whatever you feel like. If you have a system and you follow it, you will be much better off. Of course, be willing to make adjustments as necessary, there are always curveballs in life. Sometimes you want to use a product as a loss leader, or you want to give a client "preferred pricing" in order to get regular monthly orders from them, etc. Be flexible, but not reckless.

Hope that helps,
- Lantz

 

[gregbatch]

One number that has been fairly rock solid over the years is cost of goods sold. Profitable shops have been at 29.X% for years. So, as a quick check if you add up all of your clicks, material costs, etc. and multiply by 3.45 you should be at or above that number. Too much below that and you probably don't have enough to cover overhead. Of course, it's best to know your real numbers, but if you don't a quick check is better than no check at all.

ADD: We don't cut prices for new customers. Price shoppers will go to the next guy if he's $5 cheaper. You can't win with a price shopper. We will do everything possible to help a good customer stay under budget for a project, short of giving it away. Price to stay in business. Dazzle them with service and performance. The price won't be so important.

 

[davarino]

Biggest challenge in pricing is to get the costs right.

An intrinsic part of that challenge is that you are trying to put a money value on intangibles and uncertainties. "Will it REALLY take 80 hours on the machine and if it comes in will we destroy any relationships we have spent years in building and..."

Pricing seems to be an art. And so is COSTING. Neither truly is a science, no matter what R.H. Porte thought a century ago.

What is safest is to keep your shop running running running on as little cost as you can possibly pay and take work that flies through at a price that makes you feel REALLY good and pays you and your employees well and covers the occasional mess up. And that, because I give you no numbers, is an art. Those who believe in metrics die by metrics.

 

[craiglpress]

Knowing your BHRs is the foundation for estimating your out-of-pocket costs to support your pricing decisions. BHRs are the hourly cost rate in which you must sell your equipment or services in order to break-even or recover your out-of-pocket costs. Some organizations make the mistake of using rates from publications or use outdated rates.The primary goal of BHRs and the Cost Rates Advisor is to recover 100% of your expenses with the production hours you sell to customers. Cost Rates Advisor does this by distributing all of your expenses (wages, leases, depreciation, supplies, utilities, insurance, etc.) among each piece of equipment or cost center; and then recovering those expenses based on the equipment production hours you expect to sell.
Inaccurate rates can cause you to:

• Price without a clear understanding of your true costs
• Overprice and lose beneficial and profitable work
• Sell orders below your cost and lose profits
• Be deceived by your estimating and costing figures

Try CostRatesAdvisor.com Budgeted Hourly Cost Rates Software For The Printing And Packaging Industry

 

[minch]

snippety "What I'm wondering is if all of you smaller shops out there do a standard margin profit on each job, if you bid each job for just a set amount of profit each time, of if you bid based on market prices." snip - having tempted at many different types of commercial printers, copy shops and implants my experience is that winning jobs has little to do with price - its to do with the amount of value you add to their project.

Simple example person wants a flyer to promote something. They have not researched their market properly, they have not defined who their customers will be, where they will be and why they are going to buy this product. So first off you have some gentle discussions on these topics and add value with your technical & commercial experience. Finally you add some graphic design. Yes you are now the most expensive, but you do not have any competition.

If the prospective customer does not go for this then they are not worth having.

It takes courage, but it works.

Add value.