Production: How to Correctly Bid on Commercial Work to Achieve Profitability

By: Jerry Simpkins

The importance of getting a commercial quote right cannot be understated. It can mean the difference between your commercial venture being a success or a miserable failure. Taking everything into account and being 100 percent accurate is essential.

Focus on the goal, which is to make money. A lot goes into this: filling press time (a.k.a. making money), utilizing downtime of your labor force (a.k.a. making money), or pressure to meet budget goals (a.k.a. making money). Any way you slice it, the goal is fairly obvious.

Now, how do we get there?

Many years ago, I worked in operations at a newspaper in the Midwest. We put together a plan to profit from our commercial division. Before digital media, the conventional source of revenue for many newspapers was printed products. With a decline in circulation and the constant challenge on advertising revenues, we boldly jumped in to commercial.

Our salesperson boasted a wealth of experience quoting jobs. I soon observed his scientific approach to quoting. A customer called, he calculated paper cost, doubled it, and that was the price quoted to the customer. I became a little concerned about the accuracy of our “bidding process.”

As competition grew and we lost existing jobs on price or simply never landed them in the first place, things called for a more organized and accurate approach. We developed a spreadsheet and a logical approach to quoting commercial work.

Since that day, every shop I’ve been in has had some form of quoting geared to their specific operation. We’re all different, some shops are more capable than others, some run lower waste, some have higher labor costs, etc. Commercial printing is not a one-size-fits-all world.

Based on the particulars of your operation, you need to develop the ability to quote various offerings. Broadsheets, tabs, booklets, newsprint, hi-brite, alternative offset, enamel, stitched products, inserting and mailing operations, to name a few. Then there’s the twist of outsourcing part of your production that your shop may not be able to handle.

Basic communication with the customer on the front-end is essential. If you don’t get the facts right, i.e. what the customer is looking for, you’re at an immediate disadvantage. You can invest time on a quote just to find out that’s not exactly what the customer was looking for.

We’ve all ran into the customer who could talk faster than we could take accurate notes (or at least comprehend what they were saying). The solution is to put together a simple fact sheet for the initial conversation outlining critical aspects of the job in an easy to follow format.

 

This simple customer spec sheet can save you trouble in the long run. Taking simple notes when speaking with your potential customer can help to accurately record customer needs and correctly bid the job.

Just the Facts

Submitted by: You’re not always the one speaking with the customer. Often advertising may bring a potential job your way from a salesperson that hasn’t a clue what your shop is capable of. They have the best interest of the company in mind, but may bring in work you’re simply not cut out to do.

Job/account name: Write it down! You’d be surprised how offended a customer can be if you don’t refer to their job properly. Keep in mind that it’s “their baby” that they have nurtured and are very proud of. Call it by the wrong name in your quote and you may be surprised at the reaction.

Contact info: You’d think this would be straightforward, but it’s not. Make sure you’re speaking with the right person, hopefully it’s the decision maker.

Phone number and email/contact info: Get it now. It reflects poorly on your professionalism when you have to call back to ask something that you should have noted in the original conversation.

Then it’s time to get down to the real basics of the job.

Requested print date: Make sure it fits into your schedule. Don’t overpromise and under-deliver. If you’re forced into overtime because of the preferred print window, make sure you remember that and adjust accordingly when you’re bidding the job

Requested pick-up or delivery date: Of course this ties back to the print date/time. If delivery is needed, you’ll have to include that expense in your quote.

Upload time/date: How much time is the customer going to allow for prepress on this job?

File name: This helps you to eventually (if you sell the job) appear organized and professional. It’s not unheard of that two publications have similar names and it’s better to be safe than sorry when those files come in. Along with the quote you can email instructions to access your FTP site and where and how to upload files.

Typical page counts: You’ll need to know what you’re quoting. It’s likely the customer will want several page counts quoted (also include a check box here for self-cover or additional covers for booklets).

Press run: The customer will most likely ask for various counts. It’s normal to quote a base with additional thousands (or in some cases even hundreds on smaller jobs). This is the place to also fill in page size. If you offer flexible width webs (which most of us do), you’ll need to know this. If you don’t offer flexible widths, your customer will need to know the final page size and image area required to build pages.

Color: Customers want color and lots of it. Make sure the customer’s needs fit your press or you’ll end up with a disappointed and upset customer when they see the quote. Having this information up front is necessary to properly quote the job.

Product type/final size: Broadsheet, flexie (stitch & trim, perfect bound), tall tab, standard tab, etc. and the page size/trim size the customer requires.

Proofs: Are proofs required? If so, does the customer request hard copy proofs (off a plotter or printer) or a soft proof/digital.

Shipping instructions: If during the course of fact gathering it’s determined that delivery is required, you’ll need to get the specifics: date/time expected, address, specifics on where to drop, how the job is prepared, skidded or loose bundles, how many papers per bundle, crosses of X amount, wood or plastic pallets, boxes, shrink wrapped, etc. You’re going to need these specifics to determine material cost and delivery expense in the final bid.

A spot for “special instructions:” This of course is a catch-all. There’s always something that comes up that you’ll have to note here.

While fact gathering is imperative to achieving the final outcome, it’s just the start. What we do with this data can make or break your commercial operation.

 

This shows an example of a costing sheet to be filled in and used to bid a simple tab product. Filling it in accurately and with all the pertinent information can make the difference in profitability on a job.

Getting an Accurate Quote

I’ve used several different quote sheets; some more sophisticated than others. When it comes right down to it they’re all based on the same principal: entering the data (facts) is what’s critical.

I’ll briefly step through the information I find essential to putting together an accurate quote based on one of my favorite spreadsheets developed for bidding. Although it lacks a little something without the spreadsheet in front of you, I’m laying out the basic path below that will allow you to design your own spreadsheet. I’d also be happy to share my spreadsheets with anyone upon request.

As long as you’ve gathered all the facts from the customer that’s what is important.

  • First, select the spreadsheet you’ve developed (or been furnished) for that particular product (broadsheet, tab or flexie).
  • Enter the number of total pages.
  • Enter the number of full color pages.
  • If the product is a stitch & trim, enter the number of signatures; this ties to a formula that will roll that expense into the overall cost of the job.
  • If there are inserts or the product contains multiple sections that need to be collated, there should be an additional area to include those as well.
  • Next, calculate paper cost. As previously mentioned, you’ll need spaces for the various paper types you offer. This area requires flexibility to enter mixed grades in case the customer requests a Hi-Brite wrap around conventional newsprint or any other combination of stock. There will have to be a formula here to calculate yield for each stock. Given run length, pages and yield, it’s not hard to write a formula to accurately arrive at the cost of paper.
  • Anticipated waste goes here. Waste should be a percentage based on the make-up of the job, similar jobs you’ve run in the past, and take into account the press and abilities of your crew.
  • Next, you’ll need a formula to calculate ink cost. Normally you can base color ink (the most expensive) on approximate yield from a pound of ink multiplied by the cost per pound. Your vendor can help with this formula. Of course yield will differ greatly depending on coverage; this is often difficult to account for and using a basic yield may be your only option. If there is excessive color coverage on a job, you might want to lower your yield in the formula. Black shouldn’t vary much and can be a standard formula based on the amount of pages printed in a pound. You will also have to have a formula here driven by either spreads of process color or pages of color. Available pages (press layout) based on the quote need to be clearly communicated to the customer up front.
  • Plate cost is fairly simple. You’ll need a formula that calculates the amount of plates based on pages (black and color) based on the information you entered previously.

 

Now you’ll need to account for labor in prepress, press and mailroom.

Prepress: How involved are you going to be here? Are pages just passing through to plate or do photos need toning, pages sized, etc.? If you’re the customer’s prepress department, make certain to charge accordingly by having a labor cost that represents the average hourly rate of your prepress department with benefits.

Press: Include set-up time and running time (after that the next set-up goes onto the following job). Multiply average hourly rate with benefits by the number of individuals you’ll need on press.

Mailroom/other: If the job is a stitch & trim, insert, prepared mail, etc. that needs to be taken into account and charged for. You also need to account for catching the job off press and stack-down.

I’ve found one of the most challenging numbers to come up with is overhead. We all have it and someone needs to pay for it. Utilities, management expense, service contracts, sales expense, etc.—the list goes on. How we account for overhead is a tough number to hit and people differ on what percentage to apply here. You can either decide on a reasonable percentage (say 10 percent) or actually go through the process to arrive at it more scientifically (which can be daunting). Either way, you’ll have to include overhead somewhere in the bid.

Your roll-up/summary should now take into account all of the above costs. This is your expense number/total job cost.

The final piece of the puzzle is arriving at a reasonable margin for the job. This can be a simple formula that allows you to enter the markup percentage desired and shows the dollar amount made on the job along with the final price that will be presented to the customer.

Throughout this process it is important to keep in mind that quoting a job is a double-edge sword. On one side, you need to take into account all costs associated with the job to ensure profitability and that you haven’t made a mistake that you could end up living with for a long time to come; and on the other side, if your quote has errors or you’re unrealistic on margin, you could end up not landing the job at all.

It’s competitive out there and most of us have figured out commercial printing is a way to capitalize on downtime, keep the presses running and when done right provide a decent revenue stream. Accurate quoting is instrumental not only in selling the job in the first place, but also to the long-term profit (or loss) of the company.

Jerry Simpkins is vice president of the West Texas Printing Center with Morris Printing Services, LLC in Lubbock, Texas.

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Published: April 17, 2017

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