The Art and Science of Competitive Bidding

Every print services provider knows the drill – quote too high and you risk losing the job – quote too low and you risk losing money. Balancing these risks requires both art and science. Nowhere is this balancing act more challenging than when estimating complex color jobs.

For many print providers, the three-variable quote equation is:  cost plus target markup plus or minus a "gut factor" based on current demand and available capacity.

The "gut factor" takes away a percentage of the markup when the market is slow, and increases the markup when demand is high. Printers use varying levels of tools and analysis to come up with each of the three variables in the main equation. Some refer to static pricing books, some create sophisticated spreadsheets and others may use commercial estimating software tools that use many variables to estimate the costs of the job and add a designated markup – but the fudge factor is always in there somewhere. That's because most people don't totally trust the cost numbers that get spit out of a computer.

Estimating will always include the "art of the gut" to some extent, but the science is getting better and better.

There's much more about the perils of competitive bidding, especially with modern inkjet printers. Even if your operations are in-house, it's worth a read to see if you're considering costs in the most complete light.