Pricing Questions

 

Help with Pricing

 

Posted: 20 Dec 2005 05:32 pm

 

If someone could please help me set up this program for my brother's shop in Florida, it would be greatly appreciated. I am completely new to printing and I am trying to set up Morning Flight. Is there someone out there kind enough to walk me through it? I do not understand all the terminology, and I have no idea what to charge. Our current prices are too high and I don't want to go too low.
. . . . . Christine
Joined: 20 Dec 2005  Posts: 9

 

Never let it be said that we walked away from a challenge! Christine, first things first:

1.What kind of equipment does your brother have?
2.What are his bread-and-butter products, the things he prints most often?
3.How do you know your prices are too high?

Setting up Morning Flight is easy, but finding the right price level for your brother's business, that's going to take a little more work. Here is one thing you ought to do before working with the program: Have someone call five of your brother's nearest competitors and ask for a simple quote on some of the things your brother prints regularly. Say a one- and two-color stationery package, or envelopes and sell sheets (there are going to be five printers in Florida who'll hate me for this!).

Once you have the quotes, come back to the forum and we'll be happy to walk you through setting up Morning Flight for your brother's print shop. All the best, and Happy Holidays!
. . . . .  Hal Heindel

 

Hal, I PM'd her and gave her some starting points. I'm confident once she gets other estimates and has some idea what her market will support she can get a grasp with MF.
. . . . . Craig Hofer
Loris Printing  Joined: 05 May 2005  Posts: 79  Location: Sandusky, Ohio

 

This is the list of equipment in our shop:

AB DICK 360 WITH A T-HEAD
AB DICK 360 1- COLOR
AB DICK 9810 W/ A T-HEAD
POLAR CUTTER 25"/36"
PADDY WAGON
PAPER DRILL
VARIOUS SHRINK WRAPPERS
METAL PLATE BURNER
SILVER MASTER COPY TO PLATE
FOLDER TRI AND HALF 11"/17"
25" LAMINATOR
HP INDIGO 1000 DIGITAL PRESS
HP DESIGN JET 5000 PS LARGE FORMAT PRINTER
IOLINE VINYL DIE CUTTER
COIL BINDER
COMB BINDERS
KLUGE SET FOR #
KLUGE SET TO DIE CUT
BRAUSE HAND FED DIE CUTTER
MOLL POCKET FOLDER (HAND FED) WITH DIAL-A-STACK ATTACHMENT
HEIDELBERG WINDMILL FOR DIE CUT AND #
XEROX COPIER

 

Here are the quotes I received:

500 LETTERHEAD 1/0
72.16 - 32.75 - 80.00 - 30.91 - 70.36 - 71.47

500 LETTERHEAD 2/0
131.30 - 87.00 - 140.00 - 76.00 - 128.00 - 136.88

500 #10 ENV 1/0
66.60 - 42.76 - 80.00 - 50.41 - 84.11 - 112.18

500 #10 ENV 2/0
96.60 - 75.50 - 135.00 - 82.00 - 138.00 - 177.59

500 1/0 BC
38.00 - 40.00 - 40.00 - 32.00 - 52.05 - 29.00

500 2/0 BC
62.00 - 65.00 - 50.00 - 48.00 - 52.05 - 67.00

3 PART NCR 1/0
148.10 - 122.95 - 140.00 - 133.08 - N/A - 162.87

3 PART NCR 2/0
178.00 - N/A - 205.00 - N/A - N/A - N/A

 

Twelve companies were called for quotes. Six responded, three of which had to be reminded the next day to send me an e-mail. (I used our personal e-mail account, the neighbor's phone, and a cheesy accent. I had a lot of fun with this part!) The N/A are things I asked to be quoted on, but was not.

As far as our bread and butter products for the AB Dick's, it's Letterheads, Business Cards, Envelopes, and Business Forms. On the Indigo it's Business Cards, Post Cards and Brochures (short runs). Our prices in this area seem Ok but I'm not sure how to get them into the Morning Flight program.

The letterpress shop is always hopping and we have prices for those items. We are the only full letterpress shop in the County. We might be the only Indigo shop as well.

I know our prices are too high because if we are not chosen for a job, I always ask the customer what they based their decision on so we know where we can improve. They always say price. That, and the staff has openly admitted that they don't know how to quote very well.

I should warn you that I'm blonde, left-handed, and Polish. So I will be asking a lot of questions. Thank you. Thank you. Thank you.
. . . . . Christine

 

Hi Christine,

I see you've done your homework (and had fun doing it!). There's no surprise in the wide range of prices you were quoted - from $32.75 to $80.00 for 500 1-color letterheads - or in the response to your queries. When we did the same research for our own print shop, we had one employee tell us "I can't quote you on that. I only work here." Really?!

Judging by your list of equipment and from what I gathered on your web site, the Indigo 1000 is your heavy iron. There's a new version of Morning Flight coming with improved digital capabilities, courtesy of Craig and Automan. I'll let you know when it's ready for downloading. Let's tackle the digital pricing then.

Blonde, left-handed, and Polish works for me, Christine, so feel free to fire away with your questions. Before you do, though, let me know what you're currently charging for 500, 1000 and 3000 1- and 2-color letterheads, say on 24 lb white Classic Laid. I should have asked you that earlier.

After Christmas, I'll crunch some numbers to come up with suggested offset pricing. Your letterpress would be treated either as postpress (if it involves die-cutting or stamping of an offset or digital product), or merchandise.
. . . . .  Hal Heindel

 

The staff here had been using the formula - paper x 4 plus 15.00 per plate.

1 Color / 2 Color

500 77.62 92.62
1000 140.20 155.20
3000 390.60 405.60

What does CTP mean for plates? What is a washup? What is cut Bond in cut and drill? What is the difference between Pantone, HKS, Focoltone, and My System? How do I know if it is a one-price paper or multi-price? What is a makeready? I thought it was the sheets we use to set up a job on letterpress. Does the term have other meanings? Thank you again.
. . . . . Christine

 

Hi Christine, and thanks for the pricing info. I'll take it from there. As for the definitions:

CTP stands for computer-to-plate. This can be anything from a souped-up laser printer that can burn polymer plates, to a $50,000+ dedicated platesetter. The idea is to have the desktop publishing done on a computer and go from there directly to plate.
A wash-up is what you charge to clean the press after running color ink. Light color wash-ups  cost more because you generally have to wash the press twice, once before the run to get any dark ink off the rollers, and once after.
The reason MF specifies Bond for cutting and drilling is because it usually takes twice as long to cut or drill Cover. On the type of cutter found in a small shop, you can cut 500 sheets of Bond in one lift, but only 250 sheets of Cover. Once the program knows what you charge for Bond, it can calculate the cost for Cover.
PMS (Pantone Matching System) is the color matching system we use in the States and in many countries abroad. HKS is favored in Germany, Focoltone (FOur COLor TONE) is found primarily in the Pacific Rim, and My System is what's left when nothing else fits.
There will be an entire page explaining the different categories of paper on the PrintFire web site by this weekend.
Finally, Makeready. It can include the paper you use to set up the press (although that's usually referred to as startup waste or setup sheets), but makeready commonly pays for the time it takes to adjust the press before you can start printing. In digital printing, for instance, Morning Flight defaults to 5 minutes for Makeready and 5 sheets for Startup Waste.

Hope this helps.
. . . . .  Hal Heindel

 

Hal and Craig,

Thank you for the information. You have no idea how much you are helping me and my family. You have been the most responsive to my pleas for help, and I can't thank you enough. Sincerely,
. . . . . Christine

 

Hi Christine. Hope you had a nice holiday. After analyzing your prices and comparing them to what your competitors are charging, then to Morning Flight default prices (which generally follow the national average), you were right . . . you do have a pricing problem. In some cases, especially for 1-color and for the higher quantities, you're probably not getting much work. Your 1-color letterhead price for 3,000 is more than double the national average!

Your 2-color prices are more in line, but here too, some adjustments are in order. While your 1,000 price is fine ($155.20 versus the MF price of $146.45), your 500 price is much too low ($92.62 versus the MF price of $124.40), and your 3,000 price way too high ($405.60 versus the MF price of $233.10).

The problem, basically, comes down to the pricing formula you're using. Paper x 4 plus $15.00 per plate is quick and simple but has little to do with your actual costs. That formula means that if you're printing 1,000 1-color letterheads on $35.00/M Strathmore Writing, you would charge $155.00. The same job on $6.00/M Hammermill Fore Bond would only bring you $39.00, yet you're doing exactly the same amount of work. The only difference is $29 for the paper.

There's more. Printing 500 catalog sheets with 60% ink coverage would take at least four times as long to set up and print than 500 letterheads with an ink coverage of less than 10%. Not to mention the extra waste. That's if you would even consider taking a job with that much coverage in that low a quantity - Ok for digital, but a killer for offset.

The kind of paper you're printing on (writing or text versus cover, and uncoated versus coated) does have a small effect on cost, but not nearly as much as ink coverage.

My advice is to deep-six the "Paper x 4 plus Plate" formula as soon as possible. Don't even try to align Morning Flight prices with what you've been charging in the past. Use MF defaults for new quotes and new customers, maybe increase the hourly press rate for the 1-color press by 10%. For reruns, check the previous order. If the price was much lower, raise it in increments so you don't risk losing the customer. If it was higher, why not leave it that way for the time being. Provided you're confident that your customer will stay with you at that level.

. . . . .  Hal Heindel

 

I have set up the system with the standards you gave me and it has been working out well for us, but we are getting a few numbers that are questionable. I think we are overthinking the situation. On business cards, if we are printing 1000 cards, under quantity do we put the # of sheets used or the # of cards. The same question regarding NCR; the paper price is per 1000 sets, is it the same in the estimating screen? We are getting some pretty high numbers on these, but when I figure it out manually using paper cost and press time it is significantly lower. Also why do 250, 500, 1000 biz cards all cost the same for the paper? Thanks, Christine.
. . . . . Christine

 

Hi Christine, glad to see you're making progress with your pricing. The quantities you enter in Morning Flight are always for the end product, not for the press sheets. To quote 1,000 business cards printed 4-up, you would enter 1,000. To quote 1,000 3-part NCR sets, you would again enter 1,000.

 

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Click on the white product panel in the Quote screen (where the cursor changes to a camera icon) to see an itemized price list. That list will make it easier to compare MF pricing with your manual calculations and will also show you where you think MF may be too high.

The reason paper costs for 250 business cards are the same as they are for 1,000 is because Morning Flight assumes you can't buy paper in partial reams. A single 250-sheet ream of 8.5 x 11" card stock yields 2,000 cards. You can get around the 250-sheet minimum if you select My in-Stock paper. Here too, clicking on the white paper panel and then clicking on the up-arrow to change quantities will give you a better look under the hood.
. . . . .  Hal Heindel

 

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