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Using a Price List Tool
Many businesses rely on a pricing list for their customer bids. This is especially true for new business owners who are learning not only what it takes to be a good printer, but also what it takes to be a good business owner.
By Myra Harmer and Steve Steiger, Partners, Fast Accurate Bids
Again and again, screen printing teachers advise their students to come up with their pricing based on a markup of their costs and the prevailing prices for similar services in their local area. This is cold comfort, however, to people new to the industry that don't yet know how to determine their costs and don't yet have the data on what the other companies are charging. The result is often that they grab a price list that looks reasonable and just start using it, sometimes for years; sometimes until they burn out and sell their equipment on Craigslist.
We strongly agree that businesses are best served by basing their pricing on their costs and what the others are charging. However, if you happen to be someone who is currently using a price list that you got from someplace else, or if you are in the process of looking for one to use right now, you can use a free Price List Tool to you help choose wisely.
What the Price List Tool Can Do for You
Learning and using the Price List Tool will enable you to quickly and accurately find the inconsistencies in a price list. This means that if you've been using a price list that has problems in it, you can identify your problems, fix them and confirm that you've fixed them. It also means that if you are currently looking for a price list, you now have a tool to test the promising ones for consistency and other errors such as typos and transposed numbers.
If you don't already include your screen price in your price list, you can use the Price List Tool to do this, as well, by simply putting your screen charge in a single input field. This means that it will make it easier for your customers to understand your pricing and it will eliminate any potential misunderstanding about who owns the screens after a job is done.
Finally, the Price List Tool lets you to easily update your pricing. This article explains how to use it to update your pricing for just your screens, just your printing or your prices in general. This means that you can easily do "what if" scenarios on raising your pricing, and when you are satisfied with your updated pricing, you can be assured that your new price list is consistent and error free.
Using the Tool
Table 1, the main table, is where you can enter your current price list's data. This table can be edited to adjust the quantity price breaks. It also provides a field for entering or removing your screen charges, and a field for increasing or reducing the price list prices by a percent amount.
Figure A shows what Table 1 looks like and provides tips on how to fill it out. When using the Price List Tool, there are instructions provided next to Table 1 to guide you through the process of entering the data.
As you enter data in Table 1, the Price List Tool immediately displays the calculated results in Tables 2, 3 and 4. These tables show the price per item, how the pricing changes as the quantity increases, and how the pricing changes as the number of colors increases. If you entered either a screen charge or a price adjustment, this data is incorporated into the data in Tables 2, 3 and 4.
Things to notice in the completed Table 1 (Figure B) are:
Also, there is no data entered for several combinations of quantities and colors that the printer is not willing to produce. For example, the price list implies that there is a 24 item minimum for jobs calling for more than 6 colors, a 36 item minimum for jobs calling for more than seven colors, etc.
Table 2 - The Price List: Per Item Pricing
When you use the Price List Tool to evaluate a price list that specifies an additional amount for screens, entering the amount for screens in the Screen Charge field, will allow you to incorporate the screen charge into the price list itself, distributing it based on the quantity breaks and number of colors.
The smooth color transition from top-to-bottom and left-to-right confirms that the pricing entered in Table 1 is consistent. It shows the prices on a per item basis.
Table 3 - Price Consistency Based on the Quantity Breaks
The Price List Tool calculates the numbers in Table 3 by subtracting the amount in each cell in Table 2 from the amount in the row directly above it and displaying the results. (The first row of Table 3 always shows the same values as the first row of Table 2.)
The way to assess the results for Table 3 is to read from the top of the column to the bottom for each of the columns. For example, Table 2 shows that 12 items printed with one color would cost $7.22 per item, and 18 items printed with one color would cost $5.73 per item. The resulting difference is $1.49. This difference represents the drop in the price list when moving from a quantity of 12 to 18 items.
Note that the quantity discounts are large between 12 and 18 items, continue to decline between 18 and 24 items, and taper off for the larger quantities.
There are two reasons for quantity discounts. The first is that it costs just as much and takes just as long to create the screens and set up a job for 12 shirts as it does for several hundred. So, screen printers typically provide quantity price breaks because the screen creation and set up cost can be spread across the quantity of items to be printed. The rule of thumb is that the difference on the price break diminishes as the quantities increase. The second reason for providing quantity breaks on pricing is to provide customers with an incentive to place larger orders to take advantage of the lower price per item.
Table 4 - Price Consistency Based on the Number of Colors Printed
The Price List Tool calculates the numbers in Table 4 by subtracting the amount in each cell on Table 2 from the amount in the column directly to the right of it and displaying the results. (The first column of Table 4 always shows the same values as the first column of Table 2.)
The way to evaluate the results for Table 4 is to read the data from left to right on a row-by-row basis. For example, Table 4 shows the printing cost for 12 items increments at a constant rate of about $2.54 per color and the printing cost for 18 items increments at a constant rate of about $1.32 per item. In other words, the numbers on each row for Table 4 should remain the same or within two or three pennies of the same amount.
The slight differences of a few pennies up or down on the amounts in Table 4 are indicative of rounding choices made in the price list. For example, the developer of the price list used in this article may have rounded all the prices either up or down to the nearest nickel.
Using the Price List Tool
When checking it using the Price List Tool, however, it becomes evident that there are pricing consistency errors for a six- and seven-color job in quantities of 36 (Figure G).
It turns out that the actual error is that the price list charges the same amount ($7.24), for printing either four colors or five colors on 36 item jobs. Mistakes of this nature can easily happen, as well as transposing numbers, and other price list typos. The color range feature of the Price List Tool makes them easy to spot.
Incorporate the Screen Price Into Your Price List
If you currently show your screen price separately and would like to switch to inclusive pricing, you can do so by entering your screen price in the Screen Charge field, which is just above Table 1 (Figure H).
When you enter a screen price, the amount is automatically incorporated into the resulting price list shown on Table 2 of the Price List Tool.
Increase Your Prices By a Percent Amount
Increase Just Your Screen Prices
Increase Just Your Printing Prices
The Price List Tool is free and can be downloaded from www.FastAccurateBids.com/Resources.
Myra Harmer and Steve Steiger are business partners at Fast Accurate Bids, a software company that helps apparel decorators get their customer bids done faster, easier, and with greater confidence in their pricing. They developed the Price List Tool as an advanced diagnostic test to help the subset of their customers who are interested in setting up Fast Accurate Bids to produce the same pricing they currently use.
This article appeared in the SGIA Journal, Spring 2016 Issue and is reprinted with permission. Copyright 2016 Specialty Graphic Imaging Association (www.sgia.org). All Rights Reserved.
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