RIT Estimating Study Reveals Critical Needs

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Getting job quotes takes so long that some customers take work elsewhere to meet deadlines. This is one of the facts learned from a study on estimating systems, released by RIT’s School of Media Sciences.

RIT’s Gannett Professor Chris Bondy & staff reviewed a variety of estimating systems & interviewed print service providers. Researchers found those sampled spent more than 2 hours on tasks related to producing a job quote. According to Bondy’s findings, “arifiQ is quite a bit further down the road than several other suppliers, in terms of turning around quotes quickly, cutting a 2 hour plus wait into a minute or two. They’ve raised the bar for the category.”

For a complete copy of the research report, go to http://printinthemix.com/research/show/124

 

[Deleted member 16349]

Getting job quotes takes so long that some customers take work elsewhere to meet deadlines. This is one of the facts learned from a study on estimating systems, released by RIT’s School of Media Sciences.

RIT’s Gannett Professor Chris Bondy & staff reviewed a variety of estimating systems & interviewed print service providers. Researchers found those sampled spent more than 2 hours on tasks related to producing a job quote. According to Bondy’s findings, “arifiQ is quite a bit further down the road than several other suppliers, in terms of turning around quotes quickly, cutting a 2 hour plus wait into a minute or two. They’ve raised the bar for the category.”

For a complete copy of the research report, go to http://printinthemix.com/research/show/124

Pricing of course is different than cost. Sure it is important to have an idea of cost but pricing is something that should be determined by what the customer in the market will pay.

If more attention would be paid to reducing costs, then pricing becomes easier to establish to attract more business. Reducing costs gives one a competitive advantage because one can have an attractive price but still have a good profit. One wins on two counts. More business you have reduces your overhead costs and increases the overhead costs of your competition.

I tend to think spending too much effort on getting a cost for a quote maybe the wrong direction for the future health of a company.

 

[michaelejahn]

Pricing of course is different than cost.

Indeed - that is precisely how the CFO and Owner need to KNOW to see if they are making any MONEY ( that and EBIT )

I tend to think spending too much effort on getting a cost for a quote maybe the wrong direction for the future health of a company.

Wait, WHAT ? Wow, I guess you are no fan of Print MIS systems or accounting ! Simple example - if I am printing something, I need to buy paper ( that is my COST ) and when I use it, i most likely mark it up some amount ( i see our customers using a multiplier of anywhere between 1.3 and 3 times markup ) and THAT is their "sell to my customer" PRICE.

This is true for ANYTHING ( Press pricing, finishing tasks, shipping ) - so, can't imagine running a business (printing or otherwise ) not tracking my COST and my PRICE.

This is one of the reasons prospect call us - they use Excel, they use quickbooks, but have to work too hard figuring out simple things like "what is my margin on this quote" - ofte, they need to know if they can match a competitive quote to win the deal, but have no idea how much wiggle room they have.

That is one of the tools most Print MIS systems offer ( like our product www.presswise.com )

Erik - I was bit surprised by your comment, as you are so amazingly analytical !

 

[michaelejahn]

"http://printinthemix.com/research/show/124"

did not see any listing of "who" was included in the "a variety of estimating systems"

and - well, i do find it interesting that RIT seems to be doing a little PR for arifiQ

http://arifiq.com/rit-estimating-sy...rint-service-providers-critical-requirements/

Robust Print MIS systems like EFI Pace and cloud based systems like Avanti Sling and our product PressWise all have the ability to quick create a quote that displays COST and MARGINS...I do not recall anyone from RIT contacting us ( perhaps they contacted a customer ? )

When i went to the site, i found this web page;

http://arifiq.com/get-started/return-on-investment/

How can entering the specification from a RFQ ( Request For Quote) take 0 minutes ?

Even a simple RFQ requires I select a product, enter a quantity, select a paper

... if i am interested in getting a EXACT price, would need to enter a shipping address ( to calculate shipping costs and taxes )

hummm ...

 

[MailGuru]

Michaelejahn, Erik has a valid point. While "cost plus" is an important part of the quoting equation, knowing about what the going market rate for a particular product or service is even more important, and, can put much more $$ in the pockets of the CFO & Owner. I can't tell you how many jobs I have quoted with a cost-plus markup (usually 30 to 50 percent) only to find out later that the prospect was expecting to pay much more than I quoted. Hey, if the man is used to, and, wants to pay $150/m for a particular job, and, my cost plus markup model comes to $40/m, who am I to make him pay less? The secret is to try and get the prospect to give you an idea of what he thinks the job is worth, and then work from there.

 

[Helene]

michaelejahn Hi! You may or may not know we are representing arifiQ. Here are the explanations I think you may be looking for:

You'd have to ask Chris Bondy which vendors he looked at.

Second, we obtained the quote from him (Chris) after the research was released.

Third: In arifiQ, the printer can see cost and margins, but the customer does not.

Fourth: There is no RFQ. When the customer (or salesperson) enters specs, they get a quote. They can make changes and obtain as many quotes as they would like. Then they can submit the quote as an order.

I'm adding an interesting additional piece of info: a designer can use arifiQ's InDesign plugin to obtain quotes while in the design stage.

Does that make sense?

Best,
Helene

 

[michaelejahn]

Michaelejahn, Erik has a valid point. While "cost plus" is an important part of the quoting equation, knowing about what the going market rate for a particular product or service is even more important, and, can put much more $$ in the pockets of the CFO & Owner.

So very sorry, but one, what i need to know as a sales person is "how much do we sell 5000 PostCards, 4/1 on 110 lb stock". Thats was an estimating system should do. Ours ( an many others ) happen to show the sales person ( NOT THE CUSTOMER ) margins, so if they are asked to see if they can do it for 150 bucks, they can see if they can. Yeah, sometimes ( to get in the door first time ) sure, they can go to the sales manager or owner and ask "can i give this away, i want permission" and of course, they can ALSO call and ask ( once they did the quote ) - "so, what is your budget" - no estimating system can possibly do that last part. it is ALWAYS what the market will bear. A quote in NYC for the same thing in Dubuque probably has different pricing.

THAT is what you need - a tool to see what it costs us to do the job, and what is "normal retail pricing" - and yeah, it is pretty important that it is correct.

 

[michaelejahn]

You'd have to ask Chris Bondy which vendors he looked at.

I can't imagine he looked at many. Most all Print MIS estimating present COST and MARGIN

when i read "Researchers found those sampled spent more than 2 hours on tasks related to producing a job quote." I immediately thought "he must be speaking to people who have some guy in the back room using some old Frankin books and using a pencil, paper and a calculator".

Second, we obtained the quote from him (Chris) after the research was released.

Had no issue with the quote. I am sure that system is impressive.

Third: In arifiQ, the printer can see cost and margins, but the customer does not.

Yea, pretty sure there are ZERO estimating systems that would generated a customer facing quote that broke out the COST and MARGINS !

Fourth: There is no RFQ. When the customer (or salesperson) enters specs, they get a quote. They can make changes and obtain as many quotes as they would like. Then they can submit the quote as an order.

SOMEONE needs to enter the specs. I get that if there is some online or "app plug-in" that fetches pricing, yeah, the customer can do that. This is not new. The PressWise storefront estimator has been around used by our PressWise customers customers since 2009.

One can even enter custom height and width, select from that print service providers paper list, ect...but while that might show an estimate, lets face it, most end users might not know they need to score before they fold a heavy stock, or what might be required to order pads and shrink wrap - so, very few of our customer expose that end user facing estimators to their customers unless they are experience print buyers or brokers.

But I digress.

I was mostly reacting to Erik and his "gee wiz wally, not sure I think this is all that important" comment. I TOTALLY AGREE with Rick that no one should have to spend a bunch of time tracking COST down - it should be something that is entered in a database and simply 'displays' in the estimator. But it is important !

Okay, that's all i have to say !

 

[Deleted member 16349]

Indeed - that is precisely how the CFO and Owner need to KNOW to see if they are making any MONEY ( that and EBIT )



Wait, WHAT ? Wow, I guess you are no fan of Print MIS systems or accounting ! Simple example - if I am printing something, I need to buy paper ( that is my COST ) and when I use it, i most likely mark it up some amount ( i see our customers using a multiplier of anywhere between 1.3 and 3 times markup ) and THAT is their "sell to my customer" PRICE.

This is true for ANYTHING ( Press pricing, finishing tasks, shipping ) - so, can't imagine running a business (printing or otherwise ) not tracking my COST and my PRICE.

This is one of the reasons prospect call us - they use Excel, they use quickbooks, but have to work too hard figuring out simple things like "what is my margin on this quote" - ofte, they need to know if they can match a competitive quote to win the deal, but have no idea how much wiggle room they have.

That is one of the tools most Print MIS systems offer ( like our product www.presswise.com )

Erik - I was bit surprised by your comment, as you are so amazingly analytical !

I am still very analytical. I didn't say, don't do any costing. I said don't do too much costing.

Costing is not a straight forward calculation. If you think it is then I think you will have a problem. Costs are dynamic, they are not things that can be pinned down with certainty. Part of the problem is the accounting methods used but I won't go into that. One will not really know what ones margins and profits are until the end of the financial period.

An attempt to get an accurate cost of a job is pointless. It will not happen. It also stresses the wrong goals.

As with the technical side of printing, the industry is also backwards in thinking about how it should run a business by still being stuck on old weak ideas. Thinking about having accurate costs is not strategic. It does little to build the company. Yes some costing is needed so you don't go broke but if your return on the investment is so thin, you are going to go out of business anyway. Margins don't have to be large if you have a lot of turnover of your capital.

I am old and have been affected by past manufacturing theory. Way back in the early days of the Japanese auto manufacturing revolution, they did not use complicated MIS systems of the kind used in the West at that time. They did not continuously calculate costs. What they did do was to drive costs down and they made their processes so consistent and predictable that they could be flexible in the quantities that they ran through their processes. The consistency and predictability of their processes was the basis of SMED. Without SMED, just in time and small warehousing volumes could not have been possible. Still in the printing industry these concepts are still not understood. They want the benefits without doing the work required for the kind of SMED that is needed.

So the basic strategy would be to understand and improve the processes so well that consistent and predictable product is made without adjustments. This brings costs down, quality up, capacity up. This lowers waste, makes scheduling predictable, reduces the worker skill requirements, delivery is faster, customers happier and business volume increase. This is the strategy I have wanted to follow for the past 30 years for printing but this industry does not want to do this. That's life.

One quick way to reduce costs is to just increase volume of work. Does not require any investment at all. How do you get more volume? Lower prices. Even this simple strategy, improves your position and makes your competitors position worse because they did not get the business and if their volumes go down, their unit costs go up.

But I believe in lowering costs by making process improvements. And IMO the critical issue for offset printers is the consistency and predictability of the ink feed. It is the critical issue that needed to be corrected before anything else could be done. It is the starting point. I have believed that for over thirty years. It was an analytical solution. Finding an accurate cost never came up in that analysis.

But what I think about this issue is pointless since the industry will believe something else.

 

[davarino]

Bravo, Erik. Or perhaps, "Bravo Zulu, Erik."

 

[michaelejahn]

Costing is not a straight forward calculation. If you think it is then I think you will have a problem. Costs are dynamic, they are not things that can be pinned down with certainty. Part of the problem is the accounting methods used but I won't go into that. One will not really know what ones margins and profits are until the end of the financial period.

An attempt to get an accurate cost of a job is pointless. It will not happen. It also stresses the wrong goals.

I agree. Until LONG after that month is over, you have paid all your bills and collected all the money you sold in that month, then and only then could you possibly begin to asses how you did, and then, it is not really going to tell you EXACTLY what to do.

I suppose my point ( during our PressWise demos ) is that "COST" is the thing you tell sales people and CSRs "please do not sell at this COST as we are not making any money" - and then - we have this concept "what the market will bear" idea of MARGINS, where we do some match and come up with the 'target" PRICE WE WOULD LIKE YOU TO SELL THIS FOR.

In digital printing, there are "click costs" ( or per impression charges ) and there are all manners of different costs related to producing a single printed sheet ( never mind all the finishing and delivery related costs ) - tough part is coming up with the "it costs me $XX to product a single 12 x 18 sheet that is 4/4

and then, even tougher to come up with what you can sell that for.

but once you have that, you surely need to be able to input that into your estimating system.