Doing the Math: Identifying the Key Factors in the Wide-Format ROI Decision

You've looked at the applications. You’ve looked at the business model. Now it is time to invest in a wide-format printer to make it happen. But which one? How do you make the best decision for your print shop based on ROI?

The ROI discussion starts with the assumption that you understand the right applications for your customer base and that you are conducting an ROI analysis between machines that are a good fit for your jobs, your volume requirements, and the output quality your client require. It also assumes that you've evaluated the solutions your competitors are offering and have a business plan that offers you the best chance of success. Once you've done these things, you can start looking at which of these machines will produce the best return.

Simple ROI includes equipment cost, production volumes, and selling price. More sophisticated analysis takes into consideration many other factors (many of them hidden) that impact the profitability of each job, as well. For example, wide-format printers may have higher than expected waste or the manufacturer may make productivity claims that don't match real-life conditions.

Let's look at a detailed breakdown of factors affecting ROI so you can make apples-to-apples comparisons and choose the wide-format printer with the highest level of profitability for you.

GROSS REVENUE CALCULATOR

Selling Price Per Square Foot
This is what you would charge for the application. This is going to vary based on your individual marketplace. What you can charge for each application will be different in New York City than in Wichita, Kan. To get an accurate sense for how much you can charge, call around. Get quotes from competitors. Get pricing as a customer would.

Hours Printing Per Day
This is the number of hours it would take to print the necessary volume of work based on the printing speed required to produce salable quality (or better) output. These calculations can be tricky and require some additional discussion.

On their spec sheets, most manufacturers use the fastest print speed the machine is capable of producing. In most cases, this is draft mode, which might be sufficient for single line drawings but not for graphics applications or image content.

In most cases, you aren’t going to be printing in draft mode. To determine ROI, calculate based on the printing speed you will be using.

Print a test on the machine to see what happens in a job scenario. If you are printing on 4x8-foot boards, for example, time production with a stopwatch. See how many boards per hour the machine can actually print. You want to know what the machine is capable of in a real-world environment.

Ask to see a range of test prints of the same image produced across all print modes, e.g. draft, production, quality, and fine art. Ask, "What is the fastest printing speed I can use and still produce salable output?"

Also remember that manufacturer-quoted print speeds are calculated using the entire print area. If you are printing an eight-foot-wide board on a 10-foot-wide printer, your optimization is going to be 80% of the quoted speed. Additionally, some manufacturers quote a particular speed, but in their demonstrations, benchmarks, and samples, they use unidirectional mode to maximize image quality. Unidirectional printing creates optimum image quality but cuts the quoted productivity in half. Always ask to see the prints produced in bi-directional mode.

Hours printed per day is also impacted by how quickly and easily a substrate can be loaded into the machine. Here is where hybrid vs. flatbed machines have significant differences in the ROI calculation.

With a hybrid machine, the print zone is stationary and the media moves through it just like a roll-to-roll printer. Consequently, hybrid machines are generally less expensive upfront, but they require significantly more operator monitoring and intervention. This takes the operator time away from what they could be doing somewhere else.

With flatbed printers, the media is held stationary against the bed while the printing system moves over the media. This provides more consistent, operator-free printing with very high quality. It also allows the operator to accomplish other tasks while the machine is printing.

Flatbed printing not only allows more in-production time but also allows printing on irregular shaped, precut substrates. Finished "blanks" can be cut in advance, providing the flexibility of a cut-and-print workflow rather than the common print-and-cut workflow. The advantage is that you can perform the finishing before the printing has even started. Furthermore, if a piece is ruined at the finishing stage, you do not have to reprint it, thereby saving time and reducing costs. Differences between the two designs have other impacts on productivity, as well.

When calculating ROI, make sure you’ve done your homework. Go in person to see your prints being produced in the various print modes. Insist they be printed bidirectionally. Successively print multiple boards. Time production with a stopwatch and take note of how much media handling the operator performs and how much time they need to tend the printer. Know the requirements for operator involvement for your applications and the impact it will have on your actual production hours.

To download the full white paper, Doing the Math: Identifying the Key Factors in the Wide-Format ROI Decision, click here.

Work Days Per Month
How many hours per day is your machine actually running? Is it a full work day? Partial days? Multiple shifts per day? Is your operation in production on weekends? How about holidays?

Being busy running the printer near maximum capacity is generally a good thing. However, it also means less ability to handle peak volumes, rush jobs, or grow your business. Buying a wide-format printer that is more productive than you generally need will help avoid these issues.

Print Speed
Print speed is calculated in square feet per hour. This will be determined by how fast you can print the work and still produce the output quality required. For some applications, production mode will be required. If you need a higher quality mode, such as fine art, printing will be much slower. Speed will also be impacted by your applications requirements and the file processing speed of the RIP. Consider the entire workflow to determine the actual maximum speed at which you can print in your shop.

Sellable/Wastage Ratio
This is the percent of printed media that is salable. This factor is used to compensate for wastage due to trimming, reprints, and so on.

Sellable/wastage ratio is another place where the design differences between hybrid printers and true flatbed printers can impact ROI. The majority of low-cost hybrid printers evolved from roll-based printers that have been fitted with belt drive systems and/or removable tables to accommodate the transport of rigid media through the printing area. As a result, hybrid printers risk higher wastage because any movement of the media can result in skewing of the image, requiring a reprint. These machines also have inherent challenges with registration, creating challenges for double-sided prints.

Even if you’re printing flawlessly, hybrid machines still produce more waste. This is because they typically don’t print full-bleed, so there is more waste due to the need to trim and cut to finished size. With true flatbeds, the architecture enables easy edge-to-edge printing (full bleeds), so further trimming or cutting is not required. (This also reduces finishing time.)

The inherent potential for waste in the hybrid printers also means that you will likely need to print “overs” to cover the potential damage to a printed piece in the finishing stage.

Hybrid printers can be very attractive due to their low capital equipment cost, but the design of these machines has consequences on the ROI calculation that need to be taken into consideration.

Total Printed Media Per Day
This is gross square footage of printed substrates per day. This includes waste. Remember that you are paying for the ink and substrate that is trimmed off, even if the client isn’t.

Sellable Output
This is the total output you will ultimately charge for per day. Generally, this is calculated in square feet. Sellable output is impacted by more than just the volume of substrate that can be printed each day. It also includes finishing, which can vary significantly based on the design of the machine.

Monthly Gross Revenue
This is the amount you could expect to save every month compared to outsourcing based on the assumptions on all of the factors described above.

MATERIALS COSTS CALCULATOR

Media Cost Per Square Foot
These costs will vary by substrate, brand, region, sheet size, and other factors. Printers requiring coated substrates will have higher materials costs that impact the overall cost equation.

Total Media Cost Per Month
This is the substrate cost, including waste, required to produce the contracted work.

Ink Cost Per Month
Calculated ink cost is often difficult to determine. Manufacturers' claims and measurement procedures can vary. You need to know the typical ml/square foot of ink usage for the printer and multiply the square footage printed. If you are printing with white ink, you need to calculate that separately as white ink usage can vary significantly by application. For example, a solid floodcoat as used in a backlit graphic will add more cost than when used sparingly as a spot color effect. Work with your manufacturer to determine the typical ml/square foot for white ink.

The type of dots and ink set printed by the machine will also have a significant impact. For example, machines using smaller dot sizes produce quarter-tones and highlights using far less ink than a six-color system to achieve the same optical density. By using systems with smaller ink drops and using only four colors, ink consumption can be reduced by more than 30%, on average.

UV Lamp Cost (Based on Two Lamps Per Year)
Conventional UV lamps eventually need to be replaced. Assuming 500 printing hours of life, the lamp cost per hour can be divided by the number of square feet printed. If you are considering LED curing, you do not need to factor in any cost here as you’ve already paid a premium for the LED curing system built into the price of the printer.

OVERHEAD COSTS CALCULATOR

Labor Rate Per Hour
This is how much the wide-format printer operator is paid per hour. These rates will vary based on your geographic location and the experience of the operator. Because many printers will cross-train their existing operators to run their wide-format equipment, this cost may also be impacted by whether one operator is handling both presses or whether a dedicated wide-format operator is required.

Labor Ratio
This is the number of man hours per one printing hour. It is how much time the operator spends in addition to the time directly allocated to printing, such as for preparing files, loading and unloading substrates, and so on.

A stationary flatbed typically allows the operator to walk away during the printing and perform other tasks, while a hybrid machine may require continual monitoring. This results in a significantly higher labor ratio for flatbed printers than their hybrid counterparts.

Hybrid systems require more operator involvement to ensure that the boards are loading straight and consecutively after the current board completes printing. The operator also has to travel from the front to the back of the printer to load and unload boards.

Daily Additional Overhead
This is any miscellaneous costs per day that may be required. This includes daily maintenance, the per-square-foot cost of your floor space, and any building modifications. It can also include the energy requirements to operate the machine.

Pay particular attention to routine maintenance, since this can easily be overlooked. For example, some machines use a lot of ink for maintenance. If you have a six-color machine, you might have to remove the light colored inks to use white. Hybrid printers also require periodic cleaning or replacement of the belt system.

Monthly Labor Cost
This is total labor cost per month based on the number of calculated days that the operator will actually be running the machine.

Total Monthly Production Costs
This is the combined monthly material and labor costs.

Gross Profit
This is your gross profit per month before payments.

Monthly Maintenance Payments
These are the maintenance payments you may make per month after the warranty period runs out. It’s typical that the new printer will have a warranty for year one.

Lease Payments
To keep this ROI simple, we recommend you leave this blank to determine just how many months before the Adjusted Monthly Gross Profit would cover the printer investment. Otherwise, this field could be used to factor in other fixed monthly expenses such as equipment leases or apportioned building leases, insurance, and so on to help determine what your remaining cash flow would be per month.

INVESTMENT AND RETURN CALCULATOR
To help you calculate your ROI based on the factors above, we have provided a tool to help determine very quickly how fast you can recoup your investment. This tool simplifies the factors described here and turns them into line items for you to input your own numbers. You can also create your own ROI calculator in Microsoft Excel.

* The highlighted text represents user-entered data and the values displayed are for demonstration purposes only.

** Any ROI calculator is a tool and it does not guarantee success in your venture but provides you a means of tracking many of the factors that affect your profitability.

(Click on image to enlarge)