Tip of the month by Chris Cochrane
Prices and Markups

This month my tip comes to you from Paradise.  Not that small area at the top of Lake Wakatipu, (that will send some of you looking for your atlas or road map) but from the country the locals call Paradise, Papua New Guinea.  It is true that the SP lager is one of the best in the world when consumed locally, but Paradise? You will have to go and see for yourself.

One of the interesting things I’ve noted over the years is the way machine rates are nearly always rounded.  So for instance a folding company will charge $10.00 per 1000 for folding A4 to DL and perhaps $12 per 1000 for folding A3 to DL but almost never do they charge $10.11 per 1000.  When it comes to rates for printing machines the rounding is even more pronounced with rates almost always ending in 0 dollars or sometimes 5 dollars (i.e. $80, 85, 90 – but seldom $84).  Often these rates are then marked up by a percentage.  Again common percentages at 10, 30, 35 etc. (I’ve seen numbers like 18 I don’t believe I’ve ever seen 37 - 35 or 40 yes but not 37).

Yet despite this, most printing companies will be concerned if a wash up is charged or not.  Consider a job that requires say 6 hours machining at $50 per hour plus allow for and extra colour wash up of  one quarter of an hour – total cost $312.50.  If however the rate was $52.50 (half way to the next “natural” price of $55.00) the price would $315 without the wash up or $328.12 with it.   While it is obviously not right to omit any item of cost from a job it is also important to keep the prices in perspective.  It could be more important to review the rate for your machines than to change the items of cost you want included in a quote.

Add to this the mark up in Printcost, both on an individual department basis and on an overall basis on the job.  Do you know if the mark up is being applied to all items included in the quote?  I’ve found that often the estimator knows but the company manager does not, and yet it is the manager that is setting the guidelines for what the mark up should be.  I don’t know whether the mark up is applied in your instance to (say) paper – this can be changed on a quote by quote basis.  There is a mark up screen on the quote form and on that you can enter the mark up on each department plus tick a box to apply the overall mark up to each department.  When you apply both mark ups the percentages multiply up so that if you have a 20% mark up on a department and apply an overall mark up of 15% on top of that the total mark up is 38% (not 20 plus 15 = 35).

Strangely the rounding of rates is almost unheard of in PNG. Rates like $95.11 (I’ve used the $ sign but they use K for Kina) are far more common than $95.00.

As they say in Paradise – Lukim u bihain or as I like but far less commonly heard Lukim u bihain u pela pukpuk (translation next month – but points given for any suggestions).

If you want to comment or suggest a topic for ‘tip of the month’, contact Chris on email cc@printcost.com


“We first installed Printcost in 1995 when the company had 35 staff, since then various modules have been added to keep up with the increasing requirements
of the company, which now has 100-plus staff. One of the biggest benefits I get from Printcost is the KPI reports. It used to take
us one hour per day to compile the spreadsheet, but now ePrintcost does it all automatically and sends it to me wherever I am in the world."

Fred Soar, Soar Printing, Auckland, New Zealand