Predictability is good business
Reducing variables in the quote process can make happier customers
If a one-person print shop needs to manage its estimating process to ensure consistency, then it’s even more critical for a large printing operation to do so since it must consider many more variables. That’s not to say that every client must receive exactly the same price for the same work, but the basis for an estimate must be consistent in order to make informed pricing decisions.
Customers expect consistent pricing from their printers, otherwise they lose confidence in them and feel they aren’t being treated fairly. Customers demonstrate their confidence by not sending every job out for a competitive bid and awarding more work to one printer. These customers also don’t usually challenge the “additional costs” on their invoices. Others award large, long-term contracts—but they will do this only if they have confidence in you.
Sales reps also need to feel confident that the prices they present are accurate. For one thing, they’re on the frontlines justifying your pricing to the customers. Their livelihoods depend on winning jobs and generating revenue for the company. I know of some sales executives who feel the best way to do this is to provide pricing quickly, so they generate prices themselves, bypassing the estimating department.
How do they estimate a job quickly? They use a combination of price-lists and spreadsheets. Although this is expedient, the process and database needs to be consistent with the estimating department. What is the problem with this approach? For one thing, it likely won’t be consistent with estimating making accuracy an issue. Also, should that estimate become a job, the detailed plans and documentation won’t exist. However, who is going to tell the person in the corner office that he or she is not doing the job correctly? I’ll leave that conversation for you.
Accounting for differences
But why are there differences between estimates? After all, we’re told that if we install a computerized estimating system we should achieve consistency. But even with one of these systems, there are variances. Let’s take a look at some of the reasons for the differences and see if we can improve the situation. Not all these suggestions will be relevant for your applications, but some might.
The basis for an estimate must be consistent in order to make informed pricing decisions
check each other’s work and understand how each person plans jobs. It builds a common process and each estimator then has access to the same set of tools.
When it comes to estimating tools—price lists, versions of standards, databases, software—suppliers may be using different sets and this can also lead to different quotes. Keep in mind, too, that people can even interpret price lists differently. For example, in a digital printing price list, there can be a fee for file conversion and output. Do all individuals who use the price list apply the file conversion charge for every file, or just the first file? Are price reductions available if there are many files submitted at the same time for output? What about test and incorrectly output files, as may happen at self-service operations like Kinko’s?
Individual job costing and reviews are also important processes that fewer and fewer companies are doing. It should be common practice to complete each order and have all the costs compiled and reviewed by accounting and then sales for invoice preparation. Exception jobs should be reviewed by estimating reps so they can see the differences between an estimate and production, and close the education loop. This part of the process is the basis for continuous improvement.
In addition to all these suggestions, common training should be considered. Not all companies have the resources to send staff to Ryerson Polytechnic University, Rochester Institute of Technology, Quebec Graphic Arts Institute or another institution that has a dedicated print-estimating course, but you can create your own training program. Document your own processes or review what’s expected with ISO processes because these can provide the basis for an inhouse training program.
Bob Dale is the president of Pilot Graphic Management Services Inc., a company providing management consulting and custom training for organizations. He is also on the executive of the Toronto Club of Printing House Craftsmen. Bob can be reached at (416) 410-4096, or via e-mail at firstname.lastname@example.org.