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Financial Momentum- Know (and Hit) Your Numbers!

Posted Wednesday, December 7, 2016 by Bob Lindgren.

One of the key numbers in your firm is the “hit ratio” - the percentage of quotes that turn into orders. It’s obvious that if it’s 20 percent, your pricing system is out of sync with reality and a lot of money is being wasted giving quotes to prospects who won’t buy.

On the other hand, is there a concern that if it’s high, say 60 percent, that your prices may be too low? First of all, if your system were perfect (it knew with certainty the maximum amount that a client would pay) your hit ratio would be 100 percent!

Consider also that every job sold almost certainly generates a contribution to overhead and gets you closer to profit for the month. The reality is that busy shops are profitable and slow ones aren’t. Consider also, that the dollars spent to produce a job (paper, buy-outs, factory wages, commissions) average around 60 percent of sales. Would you be better off selling a $1,000 job for $900 and getting a $300 contribution to overhead or not selling it and getting nothing?

Bob Lindgren is the President and CEO of Printing Industries Association of Southern California, the largest affiliate of PIA. Mr. Lindgren has more than 40 years of experience in the industry and is an expert in the area of print finance.

Want to get an objective, industry specific handle on the economics of your business? Consider our new Financial Performance Assessment in partnership with PIA. Learn (and earn) more today! Information at http://www.printing.org/fpa