Let us use that same capabilities brochure as a sample project to illustrate how to break down the specs and estimate the cost to produce the job.
The first thing you do is break down the specs on a piece of paper. Most agencies will have spec sheets you can work from that will contain all or most of the information listed below. Then you will call any outside people you will need vendors (printers, typesetters, etc.) and subcontractors (photographers, illustrators, other freelancers who might work on different parts of the job) to give you prices for those aspects of the job that cannot be done in house by your agency.
That leaves $1,395 for agency fees and materials. Now you have to figure out agency fees by determining the number of hours that will be spent on each aspect of the project. If you have not had much experience in pricing or you do not know how long tailings outside your area take to complete, you may have to go to other people on the staff to get their opinion of the time involved. Then you multiply the amount of time estimated by the hourly fee your agency charges for those services.
That now leaves $105 remaining in the client's budget it is better to stay under the budget than to price a project up to the limit. There are always changes that need to be made along the way that may run into extra money. So it is safer to keep a five to ten percent reserve in the budget, which this estimate does not allow for. So, in this case, you would need to go back into the estimate and see where you can bring the price down a bit.
From the agency's perspective, it is wiser to begin the cutback with printing prices than with agency fees. You have more room to cut back in the printing cost than anywhere else. You do not want to pare down agency fees because that can sacrifice quality. What that means is that if it takes an estimated eight hours to do a mechanical, you cannot decide to try and do it in six. Things like that cannot be done any faster without risking mistakes. Cutting back on the printing cost by eliminating one of the colors (if you are using more than one color to begin with, of course) or switching from a fairly expensive grade of paper to a house brand can save quite a bit of money without jeopardizing the final quality of the project. And the goal here is to produce the highest quality piece of work possible within the limitations of the client's budget.
An additional point to consider in your estimate may be sales tax. Your client might want that cost figured into the estimate as well. You may want to check with the client to see if that is a preference. Some clients just assume that tax will be additional. Personally, when I price out a job, I prefer to assume that sales tax will be additional. The reason for that is that estimating sales tax can be difficult since certain agency fees are taxable and others are not. And inevitably, project specs will change as a project progresses, and that will either increase agency time or decrease it. So rather than ask the client, I always include a disclaimer at the bottom of my price quotes that states that the total price does not include sales tax. That protects me and informs the client ahead of time. If the client wants the tax to be part of the budget total, that is the time to say so.
But most do not I also incorporate into that disclaimer that this quote is an estimate only, and it does not include client requested revisions. That protects me from additional costs when clients begin making changes in the specs which alter the original quote.
How to get price quotes from vendors and subcontractors
It is standard procedure to get a price quote from three different vendors or subcontractors for each separate part of the job that needs a quote. If you need a price to print a job, you would ask three different printing companies to quote it and then compare their prices and choose the best one to include in your project estimate. The same thing is true for typesetting, color separators, photography, and any other parts of the job where it makes sense to compare competitors. The only time you would not bother with competitive bids is when an outside service like a particular illustrator or photographer has a unique style or quality that no one else can match.
To prepare your bid request, put together a spec sheet for each of the outside service people or vendors that outline the details of the project portion that they will be responsible for. After they have their spec sheet, give them a specific period of time in which to get back to you with their price. The acceptable amount of time is about a week. If you need a quote really fast, like by the end of the day, say so. Most vendors or subcontractors can put something together if necessary. But do not make a habit of always asking for things right away.
The following is a sample spec sheet, to give you an idea of what information a printer would need to do a quote.
If time permits, meet with each vendor or subcontractor individually and explain the job. If possible show them a mock up. That way the vendors and subcontractors can make recommendations about certain things you may be able to do in the project that can save you considerable amounts of money. Or they may have creative ideas that can really enhance or complement your design. Do not forget it is a team effort, and the more input you get from others with experience in areas that are different from yours, the better the piece will be.
Get organized
Regardless of the job that you were hired to do in an agency, the two most important qualities you cannot survive without are organization and attention to details. The process involved in developing an advertising campaign, and then producing it and placing the ads in different types of media across the country, is highly complex and filled with minute details. If one detail such as an essential piece of information that has to be given to someone else is lost, overlooked, or left out, it can cost an agency hundreds or thousands or even millions of dollars. The pressure to keep track of all the details of even one campaign is almost mind boggling, never mind the ten or twelve campaigns or projects any one person in an agency is working on at any given time. So being well organized and paying attention to every little detail is the only way you will survive in this detail laden profession.
If organization and taking care of details is a weakness for you, then you may want to consider a time management class or some good books or tapes on the subject. If you are not a list maker who writes down everything you need to keep track of, become one. No matter how good your memory may be, the kind of trivial details you will have to remember in an agency will topple the best of you.
Do your best to learn whatever systems and procedures your agency has in place for taking a job from start to finish, tracking the progress of a job, and cost accounting. Any agency that has been around for a while will undoubtedly have its own system for doing things. Ask someone to explain to you, step by step, how a project moves through the agency. Every agency is different depending on its size and structure. Write down the steps and memorize them. I have included a general listing below to give you an idea of a sample system. When you are actually working in an agency, you may need to revise or change it completely.
