How can specialty imaging businesses determine the right pricing model in this competitive market?
Drisler: We see people approach pricing from two basic paradigms. The most common is to develop a strong costing method that includes material required for the job and an accurate representation of the overhead of the operation. From there varying mark ups can be applied factoring in the competition, the product, the customer and the market in which they are working. The other method considered very effective by many in extremely tight markets is the use of value added. A simple definition of value added is price minus the hard costs for any materials or outside services required to make the product. The resulting number obviously needs to cover overheard and profit. Estimating software gives the user the ability to refine the value-added, balancing the unique considerations of each opportunity against the cash flow required. Nachmany: Print service providers (PSPs) should take a closer second look at their per job cost structure, including fixed cost allocation, to understand if they
