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Product Mix Examples.

For the purpose of these examples a four colour 40 inch perfecting press with a 2 over 2 capability has been selected.

Example 1:  Job A is 100M sheets of process colour one side on 100lb #1 offset enamel. Job B is 100M sheets of process colour two sides sheetwork on a 60lb #3 publication grade coated stock. Both jobs have medium coverage and scattered areas of tight register. Preparation, plates and finishing have not been included as they are irrelevant for this demonstration. With both jobs having the same percentage of margin it would be easy to presume that they have equal value to the company. However on a yield analyses we find that Job A contributes about 60% more on a per minute basis to a company's ultimate profitability.

Item	A	B
Paper Cost	100M  @$160/M = $16,000.00	100M   @$72/M = $7,200.00
Ink Cost	$750.00	$1,500.00
Total Paper & Ink Cost	$16,750.00	$8,700.00
Markup on Paper & Ink @25%	$4,187.50	$2,175.00
Press MR Selling Price	1.5 hrs @$400/hr = $600.00	2.5 hrs @ $400/hr = $1,000.00
Press Running Selling Price	10 hrs @$400/hr = $4,000.00	25 hrs @ $400/hr = $10,000.00
Conrtibution = Press Sell + Markup on Material	$8,787.50	$13,175.00
Yield per minute	$8,787.50÷690 = $12.74 per minute	$13,175.00÷1650 =  $7.98 per minute

 

Example 2:   Job A is 100M sheets of process colour one side on 100lb #1 offset enamel. Job B is 100M sheets two colour two sides sheetwork on a 60lb #3 publication grade coated stock. Both jobs have medium coverage and scattered areas of tight register. Job B also has tight side to side register. Preparation, plates and finishing have not been included as they are irrelevant for this demonstration. Again both jobs having the same margin percentage it would be easy to presume that they have equal value to the company. However on a yield analyses we find that Job A contributes about 47% more on a per minute basis to a company's ultimate profitability.

Item	A	B
Paper Cost	100M  @$160/M = $16,000.00	100M   @$72/M = $7,200.00
Ink Cost	$750.00	$750.00
Total Paper & Ink Cost	$16,750.00	$7,950.00
Markup on Paper & Ink @25%	$4,187.50	$1,987.50
Press MR Selling Price	1.5 hrs @$400/hr = $600.00	2.5 hrs @ $400/hr = $1,000.00
Press Running Selling Price	10 hrs @$400/hr = $4,000.00	14 hrs @ $400/hr = $5,600.00
Conrtibution = Press Sell + Markup on Material	$8,787.50	$8,587.50
Yield per minute	$8,787.50÷690 = $12.74 per minute	$8,587.50÷990 =  $8.67 per minute

 

As these examples show product mix in a printing company can be very subtle and easily misunderstood. An even more dramatic comparison in contribution per minute can be shown in those print shops that do a mixture of trade work and customer direct work. Contribution per minute is drastically reduced when a print broker supplies the paper and the printer is not making appropriate adjustments in either the hourly rate or paper handling charge.

Moreover it can shown that one pass through the press yields the maximun contribution, ideally one pass on expensive easy to handle paper.

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