I have a question about quoting. I have my own very good system to quote, where I add overhead, incremental costs, and production costs, materials, and add a 40% markup.
My problem comes when a customer asks to break down costs on a quote.
I have seldom had a customer request that. But in a quote for a wedding invitation which is foil stamped and has envelopes with liners the customer is asking for a break down and separate quotes for the invitations and the envelopes.
I understand the desire of having different quotes to see if something is being costlier than budgeted maybe they’ll slash it.
But how do you do a breakdown? Do you reveal actual costs and explain that a 40% markup is added in the end?
I feel it’s really tiresome to do separate quotes and specially a breakdown, I still don’t know how to handle it. Specially since the customer answered my e-mail saying we want a breakdown of everything.
How would you approach this?
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For this and any other particular customer can’t you take your price on each individual item and add your 40% to it separately?
paper $5.00 + 40% =$7.00
envelopes $7.00 + 40% =$9.80
But how do you account for the overhead and incremental costs, and production costs?
I mean, how to do that equation. I’m sorry, I’m not great at math, and mom used to say I’m not great at common sense either.
I don’t really know how you personally figure that.
I have my own press pricing that basically covers all that. Then I will add in anything additional I need to acquire to produce the job over and above what I normally have in house.
You say you already have a good system so you should be able to break it down rather easily to some degree and have it come close to what your final figure is that you would normally give out.
Most of your overhead should get built in as the cost for press time and composition time. You are likely to get called out if you try to make stock a profit center, but there’s no crime in having washups at double the actual labor input (so $15.00 per color washup). Press time and composition time are the most variable components of a job and are the parts where you are most likely to get it right (or wrong).
You should charge stock at the full cost of acquisition, including shipping and handling to your shop and cutting to press size. Post production bindery is a seperate item.
So a broken out bit might look like this:
Design: 2 hours $75.00 hr $150.00
Plates/imposition 3 @ 35.00 105.00
Stock 100@ 30 cents each $30.00
Printing, 3 color (PMS 123.
3 color washups 45.00
Ink mixing (x 3) 30.00
Press time (2 hrs x 3
@ $80.00 hr) 480.00
Shipping (best way) 20.00
The customer is paying for your skill, experience and imagination. If they are buying on the basis of price, they will probably be trying to cut the cost of the project down. You can offer alternatives, but you also may have them walk because they don’t want to pay what you are asking… it happens.
Please note that the numbers above reflect nothing of what I might charge, or what others should, but it does provide the detail a customer may be seeking when they wonder “where is the money going?”.
Can I e-mail you to further discuss some points about how I quote?
There’s nothing wrong with marking up stock if you’re doing it because you buy a carton at a time/store in shop and also need to convert it or make it ready to print.
Envelopes need to be opened, closed.
Paper needs to be trimmed to parent sheet size, then trimmed again after printing to final size. There is handling and storage that goes on in the interim.
It is acceptable to mark up 25-40% for this, and your customer can be made to understand this easily. Add to that shipment costs.
Personally, instead of marking up the paper, I charge for guillotine hours and/or envelope labor etc.
I just itemize everything on a quote anyhow, though, that is required for a job;
I have a chart/workflow that shows what initial color setup costs for the minimum run count,
then I charge for guillotine hours,
and finally packaging/shipping estimate if they need it.
This minimum run charge changes to reflect amounts (add 30% per double the original amount past the setup), but otherwise I do not explain that it covers press packing, press maint. fee, ink fee, etc. and break it down that far.
For each line item I need to set up outside of whatever original gang, there is a run charge; so on and so forth.
It’s pretty easy, this way, to make quotes for 10 items or 2, and transparent enough that people understand it, but I still get quote questions from folks. A customer yesterday did not understand why it would take 6 runs and why it was so costly to print some 2/4 cards, said he had quoted his clients 1.00 a card for 250 cards (HAHAHAHAHAHA) and that my 2K estimate for a multi-stock duplexed ultra-thick card probably ‘wouldnt fly’. Well buddy, thanks, that’s why you ask for general pricing before like 4 specific quotes for a spread of designs. And we had worked together in the past~!
Why do I tell this story? Because it is actually easy for me to requote and took less than 5 minutes to set up his pricing after breaking down his job, and generate 6 estimates in PDF format.
I told him to ask around and find out where he could get that price for such a small run, and then sent him back another quote for 2500 cards that was more on the money, and explained the costs and time that would go into his project, but I still don’t think they’ll come back because of the cost.
It’s important that the customer gets a fair price - but what’s equally important is that you’re making enough money to justify being in business.
We set up our pricing by first determining how much money we wanted to make for the year. Then we estimated our capability for output. How many jobs could we bring in and complete to our standards in that time frame? What would it cost to complete those jobs and save money for expansion?
Once we had those numbers, it was easy enough to figure out what each project would have to bring in. So we made a massive spreadsheet imagining every printing scenario. 90% of the requests we receive fit into one of those predetermined scenarios, so it’s very easy to quickly provide an itemized estimate.
Of course, the market will determine the accuracy of your pricing. So you have to routinely compare your pricing to what others are charging, and adjust if necessary. Though it’s probably not good to be the cheapest, because it’s a race to the bottom for everyone else. Letterpress is way too inefficient for a lowest-bidder pricing battle.
But I don’t think it’s right to reveal all of your costs and apologize for the markup - your goal is to provide a satisfactory product through skilled labor and hard work and be rewarded for it.
If the customer doubts your pricing methodology which is based on sound logic and research, you certainly wouldn’t want them critiquing something as subjective as your printing work! If you’re friendly and your pricing is sound, they will come back or determine the value of letterpress is not for them.
Mike has pretty much hit the nail, in my opinion, except for set up costs per color [maybe I missed it!] This way your % is built into each portion, not at the end as a mark up. As everyone has stated, you are charging for your talent and skill as a craftsman for a high quality, one of a kind product. More and more people are seeing and feeling this!
No, I didn’t break out the make-ready costs. I wouldn’t bother to do so since it is an unavoidable element of printing a form—hence is written into the press time. One could also tie wash up and ink into press time, but that starts to make the press time element of the work look inflated.
Were I running a simple one or two color job, then I might break things out as much, depending on the sophistication of the client and how much margin I am trying to build into the job (margin required for experimental or PITA work).