The first article in this series emphasized the importance of basing pricing on the relationship with the customer, distinguishing between those who see you as a key resource and those who buy only on price. However, it may not always be easy or for the printer to make this distinction. One powerful tool that can guide  the printer in this process is the hit ratio. 

Many firms have discovered the power of tracking their hit ratio, defined as the percentage of quotes that turn into orders. If that number turns out to be 30%, don’t take that as another example of competitors who don’t know their costs, see it as an opportunity. If you could raise it to 60%, your sales would probably double—just think about what that would do for the bottom line!

Your first reaction to this concept might be that you won’t sell printing at a loss. That would make sense if it were true, but it’s not. Selling printing at a loss means getting less from the customer then you spend to produce the work. When you get the order, you must pay the wages of the people who will do the work, buy the paper and other materials, pay for any outside work (binding, mailing, etc.), and pay commission to the sales rep. You do not have to expand the plant, buy another press, or hire someone in the front office. The reality is that what you spend is usually about 60% of the sales price. This reality is obscured by the estimating system including the things that you do not have to spend (since you already have them) and calling the total “cost.”