Sign Shops and Print Companies need to pay special attention to the prices of the products they offer. This is due to the fact that if the price is not right from the customer’s perspective, then the orders often times get rejected. On the other hand, from a business perspective, the prices should cover the costs involved in the printing process, and being competitive relative to other companies prices in the marketplace.
There are various costing techniques that are being practiced in various industries. The print industry generally use two different pricing strategies to price a print job:
Competitor-based pricing is focused on setting the price of a product with reference to direct competitor’s prices. Businesses use this method in order to retain their customers and stay competitive.
Cost-based pricing provides a fair view of the costs incurred by the business for a particular print job. In this method, businesses adds a specific profit to the cost of the product to determine the sell price.
Following are some of the challenges faced in each model:
- Every business is not the same size; they might differ in physical size, number of workers, etc, hence their cost of producing goods cannot be the same.
- Based on the geographical location of the business, the overhead costs may differ.
- Based on the production process and production run, the variable costs of material and labor would be different.
Therefore, if a business considers only a competitive pricing strategy, it may end up losing in producing a job, as the costs might be higher than the sell price.
- Even though business may not lose money on any one job, they might lose a customer because of the competitive nature of the industry.
- This model does not take into account growth based companies, where you can make money off of each client in the long run.
- This model is not geared to react to the other factors such as market trends.
Though, this strategy is more realistic and reflective of the dynamics of running a business, it can put a company at a disadvantage in a market where there are many competitors.
The right way to do pricing is to use both of these strategies.
Here are some of the feature of Pricing in Ordant:
- Ordant can calculate the actual cost of materials, labor and overheads that go into the products.
- You can then set up markup based on any factor; such a press runs, sheets required, total area of the job and so on.
- You can set up rate codes for different company types. So each customer’s price can change depending on how competitive you want to be.
Overall Ordant is a Print MIS that can help cut your costs down by making the whole system more efficient, which in turn can help make your prices even more competitive. Ordant is a hybrid system, that uses both of these strategies, and helps you in setting all the prices correctly. You as a business will be at a better position to meet your competitor’s prices if you are fully aware of all your costs and the margins available.
Call us today to schedule your free demo.