Author’s Alterations… To Charge or not to Charge – That is the Question
By Mike Kind on January 25th, 2010
Author’s Alterations have been another sensitive issue between sales and production. The sales perspective is how can you go back to the customer and charge them a $125.00 AA on a $10,000 job? The production perspective however is that the work is done, I’m being held accountable for billable hours and the customer should be charged.
The fact is both are right. The most productive way to deal with this dilemma is to record the AA’s in production, post them on the invoice and then allow sales the opportunity to provide them as a discount to the client if they so choose.
If you think about it, why wouldn’t it at least be recorded on the invoice so if you decide to discount them, at least the client is made aware that you’ve done additional work on their behalf and made a decision not to charge them?
Just eliminating them from the invoice completely doesn’t do anything to demonstrate the extra work that has been put forth to complete a project. This can pay off dividends in the long run if you’re ever asked by the client “what you’ve done for them lately”.
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11 Responses to “Author’s Alterations… To Charge or not to Charge – That is the Question”
By JF on Jan 25, 2010 | Reply
The fact that the question is even posed is a perfect example of what’s wrong with the printing industry. WHY WOULDN’T YOU GET PAID FOR WORK DONE – REGARDLESS OF THE COST??
For the past ten years, the printing industry has been in a non-stop whirlwind of self-destruction. While one of the primary causes is the simple fact that there is a tremendous amount of over capacity in a shrinking market, it is equally true that printing companies have been their (our) own worst enemy by devaluing the work provided to clients on a daily basis.
The number of examples of competitive bidding events where one supplier cries foul because he sees his rival submit a bid far below the actual cost of the job is countless.
The number of examples of clients pressuring suppliers to produce work far below just the cost of paper on a job is countless.
The number of examples of print suppliers being so woefully unaware of their cost structure that they have absolutely no hope of turning a profit is countless.
The number of examples of a printer believing that more volume will make up for not being able to “get the price” is countless.
And the list goes on and on and on.
When will someone wake up and smell the coffee? If you provide valuable work, you should get paid for! PERIOD!
There seems to be an unwritten rule in this industry now that print suppliers are not allowed to make a profit. At least this is the rule that the various outsourcing consultants have implemented – and more and more printers are buying into it. It’s time that this industry grew a set and said enough is enough. I guarantee your client is not giving his product away the way he is expecting you to.
By Michael J on Jan 25, 2010 | Reply
Back in the day, when I was a printing broker, one of my favorite suppliers was Cedar Graphics in Long Island. It was said among the brokers that they made their profit on AA’s. And it never caused a problem.
The secret was that they never waited for invoicing. They had a full time, very talented and experienced pro whose job was to follow a job in production. As soon as an aa was required, I got a call. ” Are you ok with this expense, this is why we have to do it?”
As long as I was informed before they spent my money, no problem. But spend my money without telling me and bill me after I couldn’t do anything about it. Not good.
By Chuck on Jan 26, 2010 | Reply
The question is, what are you charging for? If the changes don’t materially impact the estimate, and you have automated prepress, and/or you haven’t already burned plates, then maybe there isn’t really justification for charging the customer? Are you charging them for accepting a new file, or answering the phone?
By Dick R on Jan 26, 2010 | Reply
This is crazy! What does AA stand for? AUTHOR’S ALTERATIONS! As long as the printer notifies the customer that he/she has requested or is requiring additional work to the original job, and tells him/her an approximate cost, there is no reason to even think of discounting the AA’s. Doesn’t matter if the job is $100 or $10,000. You performed work that you are entitled to be paid for in full, end of story.
By Dave Wacker on Jan 26, 2010 | Reply
This has always been a delicate issue because the last thing you want to do is have a customer feel like they are being “nickle and dimed”.
We have actually made great strides in this area by doing a couple of simple things:
1. We spend more time educating the customer upfront as to the costs of making changes and encouraging a thorough review of their files prior to submittal.
2. We enhanced our internal Change Order system by providing more detailed descriptions of AA’s and requiring customer approval before proceeding. This is all done easily via our website and has allowed us to collect the necessary money that we are due.
The key (as Michael J pointed out) is that there are no surprises left to the customer – especially at the time of invoicing. That is simply unprofessional.
I’d like to point out that we do make exceptions in various instances (depending on the client and nature of the changes) in which we will absorb certain costs for work that is usually minor in nature.
It can be a bit of a chess game at times, but I agree with JF in the fact that the industry as a whole needs to stand up for what is just and collect a fair price for its products and services – which obviously goes far beyond just the AA’s…
By JimD on Jan 26, 2010 | Reply
Michael, in my short run color plant we had a standard price list and AA’s were built into the price due to short turn around times and the difficulty in getting corrected customer PO’s cut quickly. The internal cost of AA’s was annualized and averaged over all jobs.
However, for custom printing, AA’s should be expected by both the customer and the printer and provided for in the original purchase order. If it’s a continuing problem with a particular customer, then both parties could agree to include an AA budget in all quotes so that it is easier to handle administratively.
I agree that times have changed and pricing pressure is enormous, however, we should still expect to get paid for what we do.
In my experience, the problem with AA’s has often not been with the customer, but with the sales rep. They knew that they hadn’t established their value to the relationship any deeper than the price and that going back for more money scared the stuff out of them. In fact I think that asking to get paid for AA’s establishes that your original quote was a fair price for what was quoted.
Should you lose a customer over a $125 charge on a $10,000 job? No. I just think that ultimately the customer shouldn’t be willing to lose a valued supplier over $125 either.
By Michael J on Jan 27, 2010 | Reply
I think Dave has it just right:
“no surprises left to the customer – especially at the time of invoicing. That is simply unprofessional.”
I think we as printers have to be a little careful of the blame the customer. If we don’t have the systems in place to give the client the decision of whether to buy or not buy the service, then it’s bad on us, not on them.
Same thing with the Sales Rep being forced to explain a non ok’d expense. The issue is not the money, the issue is surprising with payments that were not authorized.
By CB on Jan 28, 2010 | Reply
Interesting post. When AA’s are required, estimate the cost, communicate with the client, get approval before proceeded. Data collect against that AA and if you have done your job right, you should see some additional profit.
As an Operations Manager my mantra has always been the same, collect data on all work performed, charge accordingly (AA, PE, Original Work). Ultimately it is the salespersons job to collect on the AA’s, although a customer should not be surprised by unexpected cost.
Now… along the same line, what about overs?
By Andy McCourt on Jan 31, 2010 | Reply
Here is Australia, one of the things that ruined many prepress shops was their inability or unwillingness to charge for AAs and also fixing up designer and PDF issues. They were so glad to get the work, they felt they had to stick to their estimate even if it doubled the amount or work they had to do. Along came PostScript Bureaux (mostly former typesetting businesses)and guess what? Somehow customers would accept every charge for every fix, correction and extra minute spent on the job. I still don’t get how this came about.
We must get paid for our work, everyone else does. Maybe building a ‘Maximum AA’ into the original quote is one idea? Say three AAs or three hours, anything over is extra?
If I say to a builder ‘build me a ten-feet wall’ and he quotes $1,000, then I say ‘make it twelve feet – with windows’ will I get it for the same price? I think not. QED.
By Dunen Francis on Feb 2, 2010 | Reply
After 30 years in print, I’ve tried many ways to make sure “correctio rounds” don’t slip through as un-invoiced activity. The ONLY way is to call the client during the first corrections request, explain clearly that this is additional cost over and above the original quoutation, and then get their verbal agreement on such. With new clients I will even flick them an email “confirming our earlier conversation”.
By John on Feb 4, 2010 | Reply
This will work with most “reasonable” customers provided that there is a single focal point of communication. In our business (Technical Manuals) authoring may be done by the customer or our internal staff. Usually there is a team of individuals involved in the creation process such as Customer Service, Engineering, Legal and Compliance. Things can run a muck on both sides of the fence when changes aren’t communicated to all parties in a timely fashion. To better control this, we have implemented technologies that have greatly reduced the instances of undocumented / un-invoiced changes without creating a single person bottleneck. In any case, major changes are estimated, priced and provided to the customer before work is started.