Increase Profits With Accurate Cost-based Estimating

If your estimating system doesn’t consider your shops particular costs you risk profit. It doesn’t matter if the system is manual, a price book or a computer program you will lose money if you don’t accurately consider your costs.

Estimating based on your true costs protects the bottom line.
Some managers believe they are pricing some jobs below cost. In a small $500,000/yr. shop, consider the average job to be $800, but the more complicated jobs are more subject to estimating errors and they average $1000. If you price at cost you lose the normal 30% markup or $300. If an accurate methodical estimating system stops this just twice a month, you add $7200/yr in bottom line profit.

Small inequities in cost estimating create loss too. If you undercharge for pre-press but make it up in presswork, you lose on complicated short run jobs. The wrong mix of jobs could easily cut your gross profit by 10%. If only 20% of your work has the “wrong mix” a $500,000/yr. shop can lose $3000/yr:
($500,000 x 20%)=$100,000 sales
($100,000 x 30%)= $30,000 gross profit on the 20% sales
$30,000 x 10% = $3000 loss due to inequities in estimates.

Your staff should know the required production time.
If your production staff doesn’t know what their production times should be they will tend to take longer to complete their work. By just giving them a reasonable target , you can increase productivity 10%. In a small $500,000/yr shop with a 25% payroll ($125,000) PowerQuote’s job tickets with production times saves you $12,500/yr in payroll. You save more if you consider the reduction in overtime.

Accurate paper makeready calculations saves money.
If paper cost is just 14% of sales, a small $500,000/yr shop spends $70,000 on paper. Many printers overestimate their makeready to insure no reprints. Accurate makeready calculations consider each component of the jobs so that it is always the correct amount of makeready. If this reduced paper by just 5% you’ll add $3500/yr directly to your bottom line.

What happens if you don’t order enough paper?- Courier fees, press setup, makeready, and overtime payroll could easily cost you over $200 right out of the bottom line. If accurate makeready calculations stop this just once a month, you earn an additional $2400/yr. profit. This also protects your customer relationships that are even more valuable.

If we consider PowerQuote’s solutions to all of these job cost issues, the payback for your investment in PowerQuote in a small $500,000/yr shop can be less than 2 months! If we consider the improved speed and presentation of written quotes the payback time is even less.