Hey Printers, Have You Looked at Your Actual Costs Lately?

Jared Woodard | April 12, 2023

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In light of the dual impacts of supply chain upheaval and ongoing inflation, it’s time to reevaluate actual costs at your print shop.

When was the last time you took a close look at costs in your print shop? How confident are you that the numbers you’re working from are accurate and comprehensive?

It’s no secret that the print industry has narrow margins. But if you’re working from the wrong baseline, what is intended to be narrow profits might actually be an operating loss.

There’s always pressure to hold prices steady, but sticking to those price points doesn’t do a business any good if those prices are driving them out of business.

Read on as we’ll cover :

  • The factors contributing to changing costs in the print industry
  • Why now is an optimal time to reassess the costs of your print resources and print workflows
  • How to go about examining your actual costs

Inventory and Resource Costs Are Increasing

Over the past several years, paper costs and availability have fluctuated more than at any other time in recent history. While we’re starting to see more stability of supply, prices remain elevated—and we’re still far from back to pre-COVID availability.

And, of course, paper isn’t your only cost: other substrates, ink, equipment maintenance, and repair— all of these are affected by inflation, and the list could go on.

The labor market challenges facing the print industry are also playing a role. Often it takes higher wages to pull in new talent, and your existing staff may be demanding higher pay. You can’t afford to lose them (because you run the risk of not being able to replace them), so wages go up.

To sum up: compared to 2019, costs across numerous aspects of the print industry have gone up significantly. If you haven’t looked closely at your actual print resource costs lately, you need to do it now.

COVID, Supply Chain, Inflation: Now Is the Time to Reassess

Not only is examining costs essential but now is an optimal time to do it.

We’ve seen plenty of upheaval in the last few years. Starting with COVID, moving through the ongoing supply chain challenges, and ending up in a period of prolonged inflation, print shops and customers alike have had to make adjustments to expectations.

One important thing to consider during this disruptive time is that your print shop can take advantage of it by reviewing costs and increasing prices, without as much risk of losing customers due to rising costs in other areas of their lives.

COVID Changed the Balance of Power

Before COVID, the customer had all the power, in a way. If you couldn’t meet their exact demands, they could usually find a competitor who would.

But in this same sense, COVID put printers in the driver’s seat. For the first time in a long time, print shops were able to say, “This is when I can do it; this is the paper I can put it on, and this is what it’s going to cost you.”

If there’s ever been a time to realign pricing and reclaim a healthier profit margin, it’s now—while you’re in the driver’s seat and your customers’ expectations are more malleable.

Best Practices for Examining Actual Costs

We hope by this point we’ve convinced you that it’s time to examine your actual costs. If you’re ready to do this, use these three tips to make sure you account for all your costs.

1. Estimate on Current Equipment

First, to get a reasonably accurate estimate of your costs, make sure you’re estimating print resources based on the equipment you’re using right now.

We know it can be a pain to run the numbers on a new piece of equipment and calculate its real costs. That’s why we see print shops estimating costs based on old equipment—sometimes on machines they haven’t even owned for years.

But it just doesn’t work to run estimates based on fictional equipment. Essentially, what we’re saying is: you can’t get an accurate estimate on print resources if you’re using the previous model’s data.

2. Account for Your Entire Print Workflow

Next, ensure you’re accounting for your entire print workflow. There may be areas where you don’t pass costs along to a customer (“giving away” prepress, for example). Years ago, when your shop made the decision to do this, those costs were buried somewhere else (such as plates covering the cost of prepress).

But over time, print workflows change. So do your real costs on the things you’re “giving away”— and on the places you buried those costs.

Let’s stick with our prepress/plates example. When the raw material cost of plates goes up, then the margin you used to bury prepress costs gets thinner—and could even disappear completely. If your corresponding rate for plates didn’t adjust, then you’re no longer accounting for your entire print workflow.

3. Reevaluate Your Hourly Rate

Last, take a close look at your hourly rate. It was a good estimate at one time, but how much have your operations upgraded since you last calculated this rate? Beyond increased print resource costs, are you accounting for overhead like office staff or IT costs, or higher employee pay?

Avanti Slingshot™ Supercharges Your Cost Estimating

Slingshot™, the modern Print MIS from Avanti Systems, is the foundation of a modern, data-driven print shop, and it supercharges your capability to estimate actual costs of your print resources and operations.

With dozens or even hundreds of jobs in the pipeline at any time, printers must know:

  1. Where each job is in the print workflow
  2. How much each job will cost to create

Avanti Slingshot’s Job Costing and Tracking module is a one-stop resource for both: it gives you information on jobs past and present, along with real-time insight into job costing/tracking, job profitability, invoicing, and more.

The result? You gain complete managed print service visibility, from the shop floor to the executive level. You can calculate real costs instantly and respond with confidence to customer questions.

Best of all, these cost estimating functions barely scratch the surface of what Slingshot can do for your print shop. It also delivers unprecedented automation, maximizing efficiency and boosting profitability.

Ready to conquer your costs? See how Avanti Slingshot™ delivers cost visibility and outsized ROI with a custom demo.