In the print world, profit is built on pricing accuracy. Yet many print businesses underestimate their costs, leading to under-quoting and poor margins that make it hard to keep a business sustainable.
Understanding how to calculate the real per-unit cost of your print media – and how to present it transparently to customers – is essential for ever print business. In this article, we’ll break down the full costing process, including waste, trimming, storage, spoilage buffers, and tiered media options, so that next time you quote, you quote right.
Why you’re underestimating print media cost
Of course you’re factoring the obvious expenses into your print media pricing: sheets, rolls, ink, finishing etc. But there are lots of hidden costs that are easy to overlook and easy to omit from the quote as a result. These include:
- Waste from setup, colour calibration, and test passes
- Trimming margins required to achieve the final size
- Shipping costs for incoming materials
- Storage and handling costs, including damaged or aged stock
- Spoilage allowances (especially for long runs or difficult substrates)
- The effect of premium vs standard media on workflow
How hidden costs affect your profit
Print shop profit models tend to fall somewhere between a high volume, low margin 5% and a low volume, higher margin 40%. Let’s assume your shop operates at 20%.
Let’s also assume your quote is based on a per-unit cost that only factors in obvious and highly visible print media costs. You then add a one-off fee for staffing, premises, energy etc. Then you add a 20% profit margin and present that to the customer.
If you haven’t factored in any of the hidden print media costs we explored above, every bit of waste, spoilage and shipping will come straight out of your profit. The per-unit cost you quote will be artificially low. And instead of a 20% margin, you’ll be making much less.
How to calculate the real per-unit cost of print media
Use this formula to make sure your print media pricing leaves nothing out:
Per-unit cost =
(Material cost + waste cost + overheads + shipping + spoilage) ÷ sellable units
Let’s break those elements down:
Material cost
The paper, vinyl, board or other substrate you’re printing onto, which you’ll typically cost in sheets, rolls or by the metre. This is the one element you’re almost certainly pricing into your print media costs already, but remember to quote the final cost (that is, including shipping).
Waste cost
There’s at least a bit of waste in almost every job (end rolls, machine warm ups, calibrations and test prints etc), and you should be factoring it into your quotes.
The simplest way of doing this is to add a percentage to the amount of material you’ll use – perhaps 5% for standard paper. Maybe 10% for textiles, vinyls and boards.
This will be slightly different for each print shop, so create your own table of waste surcharges depending on media.
Overheads
Beyond the cost of print media, there’s a whole other set of costs involved in keeping your print shop running. From lease costs (including storage) and energy bills, to broadband, equipment, software and staffing, you’ll need to make sure they’re all accounted for in your pricing. There are several ways of doing this, but here’s the simplest way if you tackle lots of different projects of different lengths:
- Estimate available billable hours. For example, 40hrs per week x 50 weeks per year (assuming a couple of weeks shutdown at Christmas or for holidays) = 2,000 hrs.
Deduct an amount (typically 20% – 25%) for non-billable time = 400 – 500 hrs, leaving 1,500 – 1,600 billable hours.
- Divide overheads by billable hours. So, £50,000 annual overheads divided by 1,500 billable hours = £33.33 per hour.
- Add this to the hourly rate for each job.
Shipping
You’ll want to pass on the full cost of shipping, but for fairness, and where projects only require part rolls, you’ll want to divide shipping costs by the amount of material used.
Spoilage
This is a surcharge for the unexpected. Most print shops tend to underestimate the cost of misfeeds, smudges, jams and customers making the sort of minor changes that add time and cost but make it difficult to formally charge them extra.
A realistic buffer should be at least 5% for standard media, more for complex substrates.
How to present print media cost in customer quotes
Transparency matters, but there’s such a thing as oversharing. You shouldn’t need to breakdown all the costs identified above in your quote – it could create confusion and you don’t want to encourage negotiation on every last element of cost.
So to keep things clear but simple, we’d suggest:
Media type/grade
e.g. “PVC coated mesh 200gsm for outdoor signage.”
Cost allocation
“Includes waste and spoilage protection.”
Unit or batch price
“£X per unit” or “£X for quantity X, inclusive of finishing.”
Optional upgrades
Offer alternatives:
“Mesh with liner – add 5% to total.”
“300gsm substrate – for increased strength and durability, and reduced wind load – add 5% to total.”
Turnaround implications
Highlight if media choice affects speed of delivery.
How to tier media for improved profitability
You’ll see in the above quote that the end of the quote introduces upgrade options. Tiering is an important factor in boosting your profitability, but it’s also important to give customers the option of choosing higher grade substrate or finishing techniques.
Never assume they won’t pay more. Often, they’ll welcome the fact that you’ve displayed a range of alternatives and given them a choice.
In addition to the price difference though, it’s important to:
- State the benefit of paying more: for example, what’s the value to the customer in choosing a higher weight material?
- Be clear about any impact on turnaround times: if a more complex substrate will affect deliver times, be clear about this upfront.
Talk to Soyang
Want to make your print business more profitable? Talk to us about how we can help make your print media pricing more competitive.
