Best Estimates

By now one would expect that the vast majority of quick and small commercial printers are using some form of estimating software, whether for basic pricing or as part of a comprehensive MIS package. That view is supported by some hard numbers, but also is challenged by some anecdotal evidence from the field.

“According to the 2007 NAQP Pricing Study, approximately 78% were using computerized estimating,” says QP columnist and study author John Stewart. “It got to the point where we didn’t even ask that question in the latest pricing study.”

However, QP columnist John Giles, who does prepress consulting at dozens of printing locations across the country, is not so sure. “As I travel around the country, I am surprised to find that only about half of the printing companies use a computerized estimating system,” he says. “I know it shocks the computer estimating guys when I say this, but there are still a bunch of printers not taking advantage of what a computerized MIS system will do to help them run their companies.”

Whichever the actual percentage of print estimating software users might be, Stewart goes to the heart of the matter. “Of course, to what degree they are taking advantage of these programs is another subject.”

Indeed it is. Those who do not have computerized estimating, whether they are putting pencil to paper or pulling prices out of thin air, are at a serious competitive disadvantage. On the other hand, those who do have such systems but don’t take advantage of all the features are also missing the boat.

Why Should I?

Basically, computerized estimating and MIS software provide information essential to running a quick or small commercial printing business. They provide the capability to determine proper pricing, track orders, and evaluate customers. They can give you production and accounting data to help you determine where you are so that you can determine where you want to go and how to get there. To borrow from Yogi Berra, “If you don’t know where you’re going, you might end up someplace else.”

Another reason to use such systems is profitability. In the 2007 study Stewart mentions, printing companies that used estimating software averaged $47,000 more in owner’s compensation than those using manual estimating or estimating books. That in itself should be reason enough to adopt computerized estimating. However, other advantages of today’s estimating and MIS systems seriously sweeten the pot.

What Features?

Modern MIS system capabilities can be divided into two main areas—production and accounting. Obviously, there can be other capabilities as part of the package such as online ordering, job tracking, and online proofing to name a few.

In the production arena, print estimating is the most often used capability. Other production related areas can include budget hour rates, price control, order entry, job costing, inventory, scheduling, and purchasing. Along with estimating, pricing is probably the most valuable function here. In many, many cases a computerized system can provide some eye opening pricing data. All too often, printers tend to under price their services.

In the accounting area there could be bookkeeping, invoicing, accounts payable and receivable, payroll, and financial statement capabilities. The latter of these capabilities could be both the most significant accounting capability and the most underused.

According to a paper by Eastern Kentucky University technology professor Dr. Marlow Marchant, the inability or unwillingness to track and understand financial data is a sometimes fatal flaw in the quick and small commercial printing industry. “Sadly, business failure in printing, particularly in small printing companies, has been linked to top management who are unable to understand their own financial statements and are therefore unable to take timely and appropriate action,” he writes.

While the financial elements are of vital importance there are other valuable capabilities unavailable to printers without such systems or unused by printers who have them. Among them is the ability to mine customer data for following up on reorders, building relationships with top customers, and looking for new business from old customers. Other capabilities that can be of value include tracking sales by job type or sales per employee. A falling or fluctuating SPE could be the first sign of problems that need to be addressed sooner rather than later.

Where Do I Look?

Any printer who is a member of a franchise system or a printing association can turn to those resources for some information on estimating and MIS systems. Trade magazines and shows are another avenue. Online listservs such as PrintOwners also provide a forum for printers to discuss the pros and cons of various systems and to share experiences in setting them up, troubleshooting, and support.

There also is information on the Internet. Among the Internet resources is www.printestimating.info, which has a contact list of print estimating system vendors for both large and small shops. Also Profectus, a printing consulting company, offers a free directory of business and production management software for printers at www.profectus.com/print-estimating-software.htm.

Bottom Line

So, are print estimating and MIS systems essential for quick and small commercial printers? The short answer is yes; at least for those who hope to be successful. Of course, they do require some real effort on the owner’s part to be effective.

As Giles noted in a previous QP article on the subject: “Setup for most software is easy, in terms of installation. The difficulties come with the decisions that have to be made by management. It takes time to enter paper prices and budget hour rates. It also takes time to check the prices. Some printers are shocked when they compare their current selling prices to the prices recommended by a management system. They often find that they have been lying to themselves about their profit margins and under pricing their services. Using a printing management system gives you the cold, hard facts about what your costs really are and how much you have to charge to make a profit.”

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