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Why the Correct Rate is Important / Cost Plus - the Accura Ethos

Cost Plus - the Accura Ethos

"Cost Plus" is foundation of the Accura MIS, and is the method of calculating true manufacturing hourly rates recommended by many leading print industry bodies globally.

Using Cost Plus, each labour operation is based on an “hourly rate” that represents your true cost for a piece of equipment, operation or department. The entire component costs that make up an estimate are added together and your mark-up applied at the end to arrive at your selling price.

This method has the distinct advantage that you always know the true cost of a job BEFORE you take it on and can control your mark-up, value-added, and profit margins.

The basis of cost-plus is that your hourly rate is calculated to recover all of the running costs & overheads of each item of equipment, making no mark-up. It is therefore important that the hourly rate is calculated correctly. Set the rate too high and you may become uncompetitive; too low and customers will place business with you, but you may be running at a loss.

The Pitfalls of Not Using Cost Plus

  • You don’t know your true cost when estimating, so cannot judge how much you can discount and still make a profit.
  • Profitable jobs end up subsidizing non-profit making work.
  • You may take on repeat work using out-of-date costs, charging the same price as a year ago.
  • You cannot record actual times costs from the factory & compare with estimate, because you have nothing to base them on.
  • Rates can & should fluctuate geographically – If you are in London you cannot charge the same as a printer in Newcastle (and make a profit).
  • You end up keeping prices the same year-on-year because they work, you can’t change them because you don’t know how much to alter them by.
  • Financial accounts show if you are making a profit, but you don’t know where.
  • You cannot calculate value-added (gross profit) on a job-by-job basis.
  • You find out when it’s too late that you lost money.
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