PIA Ratio Studies and Financial Ratios DashboardA Perfect Match

Profectus, Inc., a national consulting company that helps printing and packaging organizations improve their business, announced today the addition of a Financial Analysis and Ratios Dashboard in the popular CostRatesAdvisor.com budgeted hourly cost rates software.

The financial dashboard features numerous ratios reports and graphs so companies can benchmark their figures to other companies using the Printing Industries of America’s Ratio Studies*.

For over 90 years the PIA Ratios Studies has been the printing industry’s most valuable financial benchmarking tool for strategic management, investment, productivity, and profitability. The PIA Ratio Studies are a compilation of expenses, assets, salaries, and other financial information from hundreds of printing and related graphic arts firms.

Owners, managers, and analysts can use their CostRatesAdvisor financial information as a benchmark against the PIA Ratios’ industry norms and profit leaders. Some of the ratios presented in the Financial Analysis and Ratios Dashboard include:

• Sales & Administrative costs ratios
• Direct Manufacturing costs ratios
• Payroll costs ratios
• Cost per employee ratios
• Cost center and department costs ratios

According to Profectus President Craig Press, “CostRatesAdvisor.com has come to be more than a budgeted hourly cost rates program. It’s an excellent tool for determining the break-even cost of your production equipment and services, setting prices, tracking cost trends, and now benchmarking your financials to other companies.”

Example Report

Three tiered pricing starting at just $128 for the Basic Edition up to $368 for the fully featured Enterprise Edition makes Cost Rates Advisor very affordable for any size company. To find out more about Cost Rates Advisor, visit www.costratesadvisor.com or call 1-888-868-8662



About Cost Rates Advisor
CostRatesAdvisor.com was designed by industry experts to help companies determine the break-even cost of equipment and services. It provides an accurate picture of a company’s true costs so they can confidently and strategically estimate, price, and cost jobs. Cost Rates Advisor is used by organizations throughout North America spanning all industry segments including commercial, digital, mailing, packaging, labels, large format, screen, and in-plant operations. costratesadvisor.com

About Profectus, Inc.
Profectus is a national consulting company that offers a unique spectrum of professional services with a focus on helping printing organizations improve their efficiency, cost effectiveness, customer service, and profitability by implementing best business practices and embracing technology. For over 20 years our consultants have been contributing to the success of small and large organizations throughout North America spanning all industry segments. www.profectus.com



*PIA Financial Ratio Studies are not included with CostRatesAdvisor but are available through the Printing Industries of America.

Update your 2014 BHRs today and start estimating better, pricing smarter, and maximizing your profits.

One of the most common questions printing companies ask about their estimating is:
“How often should I update my budgeted hourly cost rates?"

The industry best practice is to update your estimating cost rates at least every 6-12 months or anytime there are notable changes in your expenses, equipment, staffing, or productivity. After a company closes their financial year or creates their annual expense budget is always a good time to update cost rates. Your rates may increase or decrease, depending on what changes have taken place since the last time you updated them.

Considering the industry’s competitive environment, rates that are off just a few dollars can have a substantial impact on whether or not you win orders or make a profit. As a matter of policy, an organization should continually update their rates to maintain a competitive edge and sustain profits.

The major challenges faced by companies that don’t keep their cost rates updated includes:

• Inability to make accurate pricing, sales, and investment decisions
• Overpricing and losing valuable and profitable work, and potentially customers
• Selling orders below costs, resulting in lost profits and deteriorated productivity
• Being misled by inaccurate estimating and costing figures

Read: How inaccurate Budgeted Hourly Cost Rates almost put Quality Printing out of business.


The Cost Rates Advisor budgeted hourly rates software makes it easy for organizations to keep their rates updated.  It gives shops a more accurate picture of their out-of-pocket manufacturing and overhead costs so they can strategically estimate and price jobs. You can import data from spreadsheets, accounting software, and print management MIS software - making setup and updates fast and simple.

Cost Rates Advisor is used and proven by offset, digital, large format, flexographic, screen, and in-plant printing organizations throughout North America. Three tiered pricing starting at just $228 makes it affordable for companies of all sizes.

With Cost Rates Advisor, calculating and updating your estimating cost rates no longer needs to be a time consuming and demanding task. So update your 2014 BHRs today and start estimating better, pricing smarter, increasing revenue, and maximizing your profits.

Try it for FREE now by clicking here www.costratesadvisor.com

About CostRatesAdvisor
CostRatesAdvisor.com was designed by Profectus Inc., industry experts in the printing and packaging industry. It has been engineered based on proven industry best practices used by experts such as the Printing Industries of America (PIA)©, National Association for Printing Leadership (NAPL)©, Specialty Imaging Graphics Association (SGIA)©, and the Financial Accounting Standards Board (FASB)©. The software has built-in "best of breed" formulas, intelligence, and functionality that make it the industry's most superior product for developing budgeted hourly cost rates.
 
About Profectus Inc.
Profectus is a national consultancy that helps printing and packaging organizations improve their business by implementing best business practices and maximizing the value of their information technology investments. The company was founded in 1993 and has contributed to the success of hundreds of printing and packaging organizations throughout the United States and Canada spanning all industry segments.

How Budgeted Hourly Cost Rates almost put a printing company out of business.

Case Study - "We learned our lesson the hard way."

An essential tool for being a successful printing or packaging organization is budgeted hourly rates (BHRs). Inaccurate BHRs can put an organization at risk by making them less competitive, less profitable, and less productive as Quality Printing found out in the following case study:

Quality Printing* is a digital and offset printing company with 45 employees located in the Midwest United States. Quality Printing purchased a new Management Information System 3 years ago. Budgeted hourly cost rates were indiscriminately created in order to implement the estimating and job costing software.

For 3 years, Quality Printing continued to produce estimates and job cost reports using the original BHRs with minor changes. When they finally updated their rates using Cost Rates Advisor, they found that their old rates had significantly impaired revenue, profit margins, and growth. Quality Printing had unintentionally been deceived by the estimating figures used for pricing, and the job cost figures used to measure job profitability. Below is a summary of their findings:










Using their old BHRs, smaller jobs were being under-estimated by 4.2%. Unknowingly, Quality Printing was selling smaller, short-run work below their cost. This was causing the organization to drift towards smaller, less profitable work, which required more administrative costs and machine setups to produce orders, and ultimately lowered the organization's profits and efficiencies.

Quality Printing also found that larger, more expensive jobs were being over-estimated by 10.2%. The old rates caused Quality Printing to overprice and lose a substantial number of higher priced, more profitable quotes over the years. This also caused excess capacity and lower levels of productivity in the shop.

"The BHRs we calculated by Cost Rates Advisor has provided insight to our real costs. We have more faith in our estimates, which has helped us shrewdly price jobs, be more competitive on profitable work, and shy away from less desirable work. We're now processing less orders, but at much higher profit margins. We learned our lesson the hard way. Now we update our BHRs at least annually!" -  John, President

If Quality Printing had not updated their BHRs with Cost Rates Advisor, they would have continued to lose profits and would have eventually gone out of business.

Why Profitable Printing Companies Cost Jobs

Studies show that highly profitable printing companies implement job costing practices. Job costing is the processes of tracking the actual cost incurred to produce an order or job and benchmarking it against revenue. Job costs include labor, equipment, overhead, materials, outside services, and other manufacturing costs.

The benefits of job costing are significant. Using job costing will allow you to identify the most and least profitable areas of your business, so that you can focus on the profitable elements, and try to make the less profitable aspects of your business more efficient. It enables you to hone in on the cost performance of individual jobs, products, customers, production equipment, departments, employees, and your overall business.
   
Job Costing with Budgeted Hourly Cost Rates (BHR)
Budgeted hourly cost rates are an important component of establishing a job’s cost. Budgeted hourly cost rates are a best practice used by the printing and packaging industry for over 100 years. A budgeted hourly cost rate is your out-of-pocket cost associated with each piece of production equipment in your shop. Budgeted hourly cost rates are comprised of operator and helper wages, benefits, rent, leases, equipment depreciation, supplies, utilities, insurance, administrative costs, overhead, and other expenses.

The objective of BHRs is to recover 100 percent of your costs with the production equipment and labor hours you bill out (i.e. prepress, platemakers, presses, digital copiers, wide-format printers, cutters, folders, handwork, etc.).
  
Budgeted hourly cost rates software such as CostRatesAdvisor.com helps printing companies calculate their hourly cost rates using industry formulas and best practices.

Record Keeping
There are several approaches for tracking job costs. The simplest and least expensive method for tracking costs is to have employees write their time on the back of a job ticket or a production time card form. Upon completion of each job, multiply the hours worked by the production equipment hourly cost rate and run a total to get the job’s total cost.

A more efficient and accurate method for tracking job costs is putting computers on the shop floor for the employees to record their activities. There are over 50 shop data collection software products on the market to choose from, varying in capabilities, and ranging in price between $199 and $50,000.

Reporting
There are several key detail and summary reports a company should have for analyzing job costs.

An "Estimate verses Actual Report" is the most important job costing report. It compares a job’s estimated costs to actual costs, identifying any cost variances for each phase of a job, the profit earned on the job, and inefficiencies in estimating or production costs. The results will help you to create more accurate and profitable quotes for future jobs; or improve your production processes. An Estimate verses Actual Report will also help ensure that the customer is properly being invoiced for all the work you did.

https://www.printersadvisor.com/

 

A job costing summary report that shows cost variances for a range of jobs by product type is essential for determining your most profitable products (your niche), where you need to improve, and support future pricing decisions on similar products.

A job costing summary report that shows a range of jobs by customer will identify your least and most profitable customers and can be a catalyst for future pricing and markup strategies for individual customers.

Other Benefits
Profitable companies have experience many other benefits of implementing job costing including:

• Forecasting costs and resources necessary to provide particular services or products
• Defining sales and marketing strategies for products
• Measuring and improving the performance the operation
• Support for future equipment investments
• Identifying spoilage and defects to take corrective actions

Job costing provides knowledge that can make your business more profitable and easier to manage. When done well, it separates the profitable companies from those that struggle to make a profit.

 

By: Craig L. Press
President, Profectus, Inc.

 

To try CostRatesAdvisor.com BHR software for FREE or for more information visit our website http://www.costratesadvisor.com/

 

Including Spoilage Costs in your BHRs

Every company experiences spoilage. Spoilage is any material, labor, and manufacturing costs as a result of product either rejected by your own company or by the customer. When spoilage occurs, replacement product must be produced or rerun. The labor and manufacturing costs is already accounted for in your hourly cost rates, but the paper and other material costs is not recovered in your rates. Therefore, it is a good practice to add the material spoilage cost into your Budgeted Hourly Cost Rates (BHRs) in attempt to recover the costs.


www.CostRatesAdvisor.com