The Print Outsourcing Calculator helps print service providers make informed decisions about whether to produce a job in-house or outsource it to a trade printer. By considering both direct costs and time constraints, the calculator provides a clear recommendation based on specific situations. Use it to evaluate complex print and mail outsourcing decisions as well as other printing and bindery services.
Start by inputting the numbers requested. It calculates and updates automatically. Or scroll down for a quick start guide and more details on the calculator.
Quick Start Guide – Print Outsourcing Calculator
To get started, enter the following information in the input fields.
Basic Usage
1. Enter your production costs
– Your hourly labor rate (including overhead)
– Estimated time to complete the job
– Cost of materials
– Vendor’s quoted price
– Shipping costs from the vendor
2. Provide time-related information
– Customer’s required delivery date
– When your production can begin
– Vendor’s promised turnaround time
3. Equipment availability
– Indicate whether you have the required equipment
– If not, enter any equipment rental costs
The calculator will instantly display:
- Total in-house production cost
- Total outsourcing cost
- Cost difference
- A clear recommendation with explanation
Recommendation Categories
Calculator recommendations fall into one of three categories:
Green: "Produce In-House" recommendation (with cost savings explanation)
Blue: "Outsource" recommendation (with cost savings explanation)
Yellow/Amber: "Time-Sensitive" recommendations (with detailed time and cost analysis)
More details on the calculator decision-making logic are below.
An Explanation of the Calculations and Business Logic
The Hidden Opportunity in Outsourcing
One of the most important concepts in outsourcing decisions is understanding opportunity cost. When you outsource a print job, your in-house equipment and staff become available to handle other work. This creates a powerful business opportunity that isn’t immediately obvious when looking at direct costs alone.
For example, imagine these two scenarios:
Scenario A
Producing Job X in-house - Cost to produce: $1,000 - Cost to outsource: $1,200
Initial conclusion: Save $200 by producing in-house, with a gross profit of $400.
Scenario B
The Complete Picture - Cost to produce Job X in-house: $1,000 - Cost to outsource Job X: $1,200 BUT, by outsourcing Job X, you can use your equipment and staff to produce Job Y with a gross profit of $1000
Final conclusion: Net gain of $800 by outsourcing ($1000 - $200)
Both jobs are profitable, and you produced more revenue in a given time frame. This kind of printing business efficiency is a key element to scaling a business—getting more revenue and profit per month without adding fixed costs.
This example illustrates why sometimes it makes business sense to outsource even when the direct costs are higher. The calculator helps you make this decision by providing clear cost comparisons, but its always important to consider the potential value of the work you could take on with freed-up capacity.
Another factor in outsourced print services is fast turnaround time. In our on-demand industry, faster turnaround can be the key to acquiring new clients and keeping current ones happy.
Technical Details and Assumptions
The calculator uses several key formulas and considerations in its calculations:
1. In-House Cost Calculation
– Total Labor Cost = Hourly Rate × Estimated Production Time
– Equipment Cost = Rental Cost (if equipment not owned)
– Total In-House Cost = Labor Cost + Materials Cost + Equipment Cost
2. Outsource Cost Calculation
– Total Outsource Cost = Vendor Quote + Shipping Costs
3. Time Feasibility Analysis
– Production Start Time = Current Time + Hours Until Production Can Start
– Completion Time = Start Time + Production Hours
– Deadline Check = Compare Completion Time with Customer Deadline
4. Decision Logic
The calculator checks three overlapping factors:
1. Equipment Availability: If required equipment isn’t available and rental isn’t feasible, outsourcing is recommended
2. Deadline Feasibility: Calculates time difference between in-house and outsource completion. If in-house production can’t meet the deadline but outsourcing can, outsourcing is recommended.
3. Cost Comparison: Evaluates cost differences as a percentage of total job value. If both options are feasible, the lower-cost option is recommended. When inputs hit a threshold of 2 days time difference and 10% cost difference, it will indicate that the job is a time-sensitive decision.
Additional Considerations
When using the calculator, keep in mind:
1. Labor Rate Accuracy
– Include all overhead costs in your hourly rate
– Consider factors like benefits, facility costs, and administrative overhead
– A common mistake is using only direct labor costs, which understates the true cost
2. Production Time Estimation
– Include setup time, production time, and finishing time (in days)
– Account for potential delays and quality control checks
– Consider your current workload and realistic capacity
3. Hidden Outsourcing Benefits
– Reduced equipment wear and tear
– Lower maintenance costs
– Reduced inventory requirements
– Flexibility in taking on additional work
– Risk transfer for complex jobs
4. Long-Term Strategic Considerations
– Building relationships with trade printers to help with peak periods
– Maintaining in-house expertise while having reliable outsourcing options
– Creating in-house capacity for higher-margin work
– Ability to take on a wider range of projects to attract new clients and sell more to existing clients
Best Practices for Decision Making on Outsourcing
1. Regular Cost Review
– Update labor rates periodically
– Review and update overhead calculations
– Keep vendor pricing current as costs are rapidly changing
2. Time Management
– Track actual production times versus estimates
– Monitor seasonal variations in workload
– Build in realistic buffers for complex jobs
3. Strategic Planning
– Use the calculator as part of a larger business strategy
– Consider creating guidelines for automatic outsourcing of certain job types
– Maintain relationships with multiple print industry vendors for competitive pricing
Remember that while the calculator provides valuable guidance, it should be used as one tool in your decision-making process. Your experience, knowledge of your business’s capabilities, and understanding of your market should all factor into the final decision.
Getting Help with Print and Mail Outsourcing Decisions
Questions about an outsourcing decision? Call 559-251-8595 ext. 1 to discuss the particulars. Our job is to help make you more successful as a print service provider.
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