Knowing your true out-of-pocket costs is a vital consideration when pricing work. Considering the industry's competitive and unpredictable environment, prices that are off just a few dollars can have a substantial impact on winning orders and making a profit.
CostRatesAdvisor gives your organization's greater confidence when pricing jobs by providing a clear understanding of your "true costs". It tells exactly how much you must charge for your equipment and services in order to recover costs, and more importantly, make a profit.
Having better information will sharpen your pricing and significantly increase sales and production with high profit "good sales", and help to avoid the least lucrative work.
Measuring the cost and performance of your organization is a requirement for making good business decisions. If you don't measure it, you can't manage it and you can't improve it.
Cost Rates Advisor performs a detail analysis of your financials, production information, factory costs, labor costs, overhead costs, production equipment, staffing, and other elements. It will help you make decisions about:
Cost Recovery. Are you charging customers for all your out-of-pocket costs? Are there services you're providing that are not being billed? Are your prices recovering all your costs?
Staffing. Are you overstaffed or understaffed in a particular area? How would adding another shift impact costs and rates?
Equipment. Do you have equipment that is underutilized and non-profitable? How would new digital press impact costs and rates?
Your estimating and costing software depends on accurate budgeted hourly rates for estimating, job costing, sales analysis, monthly work-in-process reports, and other essential functions.
Cost Rates Advisor analyzes your financial and production information and calculates budgeted hourly rates for your equipment and services. It gives you the rates needed by your MIS/ERP software for estimating, pricing, and tracking job costs such as Enterprise 32, Avanti, ePace, Monarch, Tharstern, Accura, Printreach, Radius, Microsoft Dynamics, and other software.
If your cost rates are flawed or outdated, so are your estimates and costing reports.
Cost Rates Advisor benchmarks your labor, factory, and overhead costs to thousands of rates from other printing and packaging organizations. Compare individual cost centers or compare your entire plant. Determine why your prices are higher than the competition on certain quotes and lower on others. Are your labor costs driving up prices? Or maybe it's your overhead costs?
Inaccurate budgeted hourly rates (BHRs) can put a printing company out of business as one company found out the hard way. Quality Printing* is a sheetfed, digital, and large format printing company with 75 employees located in the Midwest United States.
The budgeted hourly cost rates they used for estimating, pricing, and job costing was indiscriminately updated over the years. When they finally updated their rates...Read The Full Story
Budgeted hourly rates (BHRs) are necessary to accurately and confidently estimate, price, and cost orders, so that you can be more competitive and profitable. They are a best practice used by the printing and packaging industry for over 100 years.
BHRs are the hourly cost rate in which you must sell your equipment or services in order to break-even or recover your out-of-pocket costs. Some organizations make the mistake of using rates from publications or use outdated rates.
The primary goal of BHRs and the Cost Rates Advisor is to recover 100% of your expenses with the production hours you sell to customers. Cost Rates Advisor does this by distributing all of your expenses (wages, leases, depreciation, supplies, utilities, insurance, etc.) among each piece of equipment or cost center; and then recovering those expenses based on the equipment production hours you expect to sell.
Inaccurate rates can cause you to:
- Price without a clear understanding of your true costs
- Overprice and lose beneficial and profitable work
- Sell orders below your cost and lose profits
- Be deceived by your estimating and costing figures
If you're reading this, you probably already know that developing BHRs is a time consuming and often dreadful process; finding and gathering the required information, determining how to allocate expenses, and getting management approval on the new rates. This is the main reason why so many companies neglect to update their BHRs on a timely basis. Nevertheless, accurate BHRs are essential for estimating, sales, costing, and ultimately profitability.
We know the pain. For over 25 years, our consultancy had been calculating hourly cost rates for our customers using substandard software and homemade spreadsheets. We needed a more robust tool, flexible enough to handle the unique needs of any printing or packaging company, and easy to use. So we developed Cost Rates Advisor.
Cost Rates Advisor will:
- Give you an accurate picture of your true costs so you can confidently and strategically estimate, price, and cost jobs
- Ensure all of your costs are fully absorbed and accounted for in estimates, quotes, job costs, and accounting reports
- Confirm that 100% of your expenses are recovered in the production hours you charge to customers
- Help you be more competitive on the desirable profitable work, and avoid the less lucrative work
- Provide a catalyst for measuring the performance and cost effectiveness of your organization
- Determine the rates needed for your estimating and job costing software (Enterprise 32, Monarch, Avanti, EPace, CRC, Radius, Globe-Tek, Printsmith, Franklin, etc.)
CostRatesAdvisor will calculate Budgeted Hourly Cost Rates for any of the following:
Equipment and services: prepress, design, proofing, sheetfed presses, web presses, flexographic presses, digital printers, large format printers, screen presses, high volume production printers, extrusion, inspection stations, rewinders, cutters, folders, stitchers, perfect binders, collators, folder gluers, die cutters, foil stamping, embossing, grommeting, sewing, cellophane windowing, film laminating, drills, shrink-wrapping, handwork, fulfillment, warehousing, hand assembly, kitting, packing, delivery…
Businesses and processes: lithographic printing, digital printing, large format printing, flexographic printing, label printing, packaging, folding carton printing, corrugated printing, UV printing, newspaper, publication printing, POP printing, banner printing, sign printing, screen printing, rotogravure printing, in-plant operations, mailing, prepress trade, finishing trade, photography studio…
You will need to enter or import the following information:
- Equipment list or cost centers, available production hours, and square foot occupied
- Assets list with equipment investment costs and depreciation - fixed assets
- Company expenses typically from an income statement or operating budget
- Employee list with annual wages and benefits
- Allocations of employees, expenses, and assets (overhead, occupancy, department, or cost center)
This depends primarily on how organized and available your information is. If your information is available, the average size company can take between 2-5 hours to import or enter the information, set up the allocations, and finalize budgeted hourly cost rates.
Cost Rates Advisor gives you the flexibility of allocating costs a number of methods manually or automatically using built in industry formulas.
Company Sales & Administrative Overhead Costs - Managers, salespeople, office employees, office furniture, supplies, advertising, utilities, automobile expenses, and asset depreciation can be allocated as indirect Sales and Administration Overhead costs. These expenses are automatically allocated to each cost center proportionately based on the cost center's direct expenses.
Building Occupancy Costs - Building leases, mortgages, building repairs & maintenance, real estate taxes, maintenance employees, and other building expenses can be allocated to Building Occupancy. This determines your building occupancy cost per square and are recovered based the square feet assigned and occupied by each cost center.
General Factory Overhead Costs - General Factory Overhead can include a plant manager that oversees all of manufacturing, a scheduler that schedules the plant, maintenance employees, an air conditioning system, general factory supplies shared by all factory departments, and a paper trim waste and bailing system. These expenses are automatically disseminated to each cost center proportionately based on the cost center's direct expenses.
Department Costs - Supplies, shared equipment in a department, department supervisors can be allocated to a department as direct manufacturing costs. Department costs are automatically disseminated to each cost center in the department proportionately based on the cost center's direct expenses.
Cost Centers Costs - Equipment operators, helpers, repairs and maintenance, and equipment asset depreciation that are specific to a cost center can be allocated directly to that cost center as direct manufacturing costs.
Cost Rates Advisor includes easy to understand online help screens, a Quick Start Guide, and a detail Users Manual to help you setup, maintain, and implement your cost rates. You can also contact our expert consultants for advice or questions through our online Support Request Form.
We also offer more in-depth one-on-one professional consulting for an additional fee. This includes printing industry expert consultant assigned to your account, personal phone consultations, advice on best practices, what to include and exclude in your rates, a review of your finished cost rates, approaches for implementing new cost rates, and more.
The Cost Rates Advisor has the ability to import data from software products like EFI Pace, Enterprise 32, Avanti, Printsmith, Monarch, Radius, Franklin, QuickBooks, Microsoft Dynamics GP, Sage Accounting, and other products using the Data Import Wizard. The Data Import Wizard has Import Spreadsheet Templates and field mapping functionality that enables you to import income statements, payroll information, fixed assets, cost centers, and other data from a spreadsheet or a .csv file directly into the Cost Rates Advisor database.
The industry best practice is to update your hourly cost rates at least every 6 months or anytime there are increases or changes in expenses, equipment, staffing, utilities, and other expenses. This will help you constantly recover out-of-pocket costs, forecast profitability, manage your company, and improve your bottom line.
The Cost Rates Advisor runs on a secure SSL-protected website with 256-bit encryption, providing one of the highest levels of security and authentication. Your financial and personal information is encrypted and protected so other parties cannot gain access to your sensitive and confidential data.
You can cancel your subscription at any time, regardless of the reason, and you will no longer be billed for future charges associated with your subscription.
Absolutely! You're in full control of what plan you would like and you can easily upgrade your account from within the account manager dashboard.
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