How to Calculate Prepress Pricing

The end of the year is quickly approaching and my recommendation for printers selling design and typesetting services is to raise your rates. Everyone else raises their selling prices for products and services at the end of the year, so why shouldn’t you?

Most printers haven’t looked at their typesetting and design pricing in a while. When paper prices go up they plug new prices into their computerized pricing program. Click charges and supply prices go up, so new prices are introduced. Since the only cost with typesetting and design that really goes up besides overhead is labor costs, many printers fool themselves to think their hourly rate is covering the increased costs because it is higher than the designer’s wages.

 

Realistic Calculations

What is your hourly rate for typesetting and design? $40 per hour? $60? $75? $100? Can you prove that is what you are charging?

Too often designers are blamed for the poor typesetting and design sales. I constantly hear printers say, “I’m charging $75 per hour and the design person is only producing two hours of billable work each day. I guess he’s just sitting around the rest of the time.” A closer look will show the work is being sold well below the hourly rate. The designer can’t control the price that is charged for the job. He is working hard, but the sales staff isn’t charging enough for the work.

To see if you are making money with typesetting and design, do a quick calculation. How much did you bill this month and how much did you pay in wages and benefits to the designer/typesetter? If your sales are at least twice the wages and benefits, you are just breaking even. Make sure you aren’t inflating the figures with plate charges or other non-design production costs.

To make money, the owner and production manager must manage and monitor the typesetting and design work, and not let the sales staff give it away just to get the print job. When management focuses on typesetting and design selling prices, sales go up.

 

You Set the Rules

A print shop can easily establish practical pricing for common typesetting and design work. There isn’t any need to use an hourly rate if you aren’t going to monitor and collect the time on each individual job. Printers should set prices for standard types of work. What is the normal price for an envelope and long should it take? What is a normal selling price for a four-page newsletter and how much time should be budgeted for it? Once the common prices and time estimates are set, the production manager and designer work together to make sure the work is completed on time and with a profit. This requires both of them to review each job before it is entered into production and to communicate throughout the day about the work.

 

Charge for Changes

Printers also need to charge for customer alteration. Too many printers allow customers to make wholesale changes to a proof without penalty. The customer changed his mind from the original instructions and now wants to try another idea. This is billable time and the customer should be charged. You wouldn’t redo a print job if the customer decided upon delivery that he wanted red ink instead of blue. You did the job according to the original specifications.

When the customer changes the specs, you change the price. The designer should report all author alterations to the production manager on a daily basis so they can be added to the invoice.

Charging to deal with customer-created files and charging more when they require major corrections will improve profitability. Just because the customer gives you a file doesn’t mean it will print correctly. If it is wrong, you must fix the file to get it to print. Successful printers charge at least a 30 minute minimum to open and review any customer file.

Printers can make money with typesetting and design. Every day printers produce the typesetting and design work created by freelance graphic designers who are making a profit. All the printer has to do is stop using design as a loss leader and actually charge what it is worth.

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