EES Plotter Cost Center Price Determination By Susan Delap Heath, 9 April 2010
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1 EES Plotter Cost Center Price Determination By Susan Delap Heath, 9 April 2010 On January 27, 2010, the Earth & Environmental Science Department purchased an HP Designjet Z6100ps 42 wide format inkjet printer, also known as a plotter. The printer came with a password-protected web interface that has been configured to be the only method of submitting jobs. The web interface requires a user name and account number to be entered when submitting a job, so unreported usage is not expected to be a problem. A Printer Administrator (PA) or System Administrator will submit all jobs. If printing is required after hours, a faculty member or other responsible party will be allowed to submit jobs using a temporary password. The web interface calculates the total cost of each print job based on the ink and paper used and a fixed cost that is applied to every job. The following values are entered into the interface by the PA: Ink costs, Paper costs, and Other costs. A screenshot of the cost assignments tab on the web interface is shown below in Figure 1. Figure 1. Screenshot of cost assignments tab on printer web interface.
2 EES Plotter Cost Center Price Determination - S. Heath Page 2 of 6 The web interface keeps track of all submitted jobs and their costs, and this data can be exported as an Excel spreadsheet. The exported file includes the account numbers. A screenshot of the accounting tab of the web interface is shown below in Figure 2, with the top job s cost details. Figure 2. Screenshot of accounting tab on printer web interface. The rest of this document describes the methods and justifications used in calculating the values entered into the Ink costs, Paper costs, and Fixed cost fields. Attached to the document are copies of spreadsheets used in calculations and copies of invoices and quotes showing costs of items. Ink Costs The HP Z6100ps printer web interface has a field in the cost assignments tab that allows you to enter in the cost of each ink cartridge. The printer keeps track of how much ink in milliliters is used during a print job, and calculates the cost of the ink used based on this entered cost. Since the interface doesn t have separate fields for the other consumables: printheads, maintenance cartridge, and ink absorbers. Since these other consumables are all related to the amount of ink used, it is better to add them to the ink cost than to add them to the job surcharge which has nothing to do with how much ink is used. I have estimated the life of these other consumables relative to the ink cartridges based on actual usage information and several estimates. The costs are then divided up by eight to be applied to the 8 ink cartridge costs evenly. At the end of this document are copies of the spreadsheets used to arrive at the calculations. The spreadsheets are set up so that it is easy to update prices as they change, and then the values that need to be entered into the web interface will be automatically recalculated.
3 EES Plotter Cost Center Price Determination - S. Heath Page 3 of 6 Printhead Cost On March 5, 2010, I spoke with Mark Mansell at the Bureau who manages the same type plotter that we have. He estimates that the printheads last twice as long as the ink tanks. There are 8 printheads that cost between $135 $ each, depending on what color printhead is purchased. Half this cost is between $68 $ So this cost needs to be added to the ink cost for each ink cartridge. Maintenance Cartridge Cost There is one maintenance cartridge installed in the printer. On March 5, 2010, the web interface indicated that 3% of it was used up. At the same time, all the ink cartridges were down approximately 50 ml each from their original volume. So I will assume that the ink cartridges will use up ink at approximately the same rate for this calculation. For every 50 ml of ink used in an ink cartridge, the maintenance cartridge will use up 3% of itself. To relate this to a standard size ink cartridge of 775 ml, you need to find out how many 50 ml units of ink are in a standard ink cartridge: 775 ml / 50 ml = 15.5 So there are 15.5 units of 50 ml ink per cartridge. Each of these 50 ml units represents 3% of maintenance cartridge use. So multiply 15.5 by 3% to see how much of the maintenance cartridge will be used up for one ink cartridge: 15.5 x 3% = 46.5% So about half of the maintenance cartridge will be used up for each set of ink cartridges, or the maintenance cartridge will last twice as long as one set of ink cartridges the same life as the printheads. So the total cost of the maintenance cartridge ($78.54 at GovConnection.com in April 2010) is divided by two to get the cost per set of ink cartridges: $78.54 / 2 = $39.27 Since the ink costs are entered in for 8 individual inks, divide this by the 8 ink cartridges: $39.27 / 8 = $4.91 This final amount will be added to the ink cost for each ink cartridge. Maintenance Kit Cost A maintenance kit contains 2 ink absorbers and various cleaning and lubricating supplies. One ink absorber is installed in the printer. I estimate that an ink absorber will last as long as a maintenance cartridge, which is twice as long as a set of ink cartridges. Since the kit contains 2 ink absorbers, the kit will last four times as long as a set of ink cartridges. In April 2010, GovConnection.com listed a Maintenance Kit at $330. To get the cost per set of ink cartridges: $330/ 4 = $82.50 Divide this by the 8 ink cartridges: $82.50 / 8 = $10.31 This final amount will be added to the ink cost for each ink cartridge. The total amount added to each ink cartridge cost will be: Printheads $68.00 to $76.24 Maintenance Cartridge $ 4.91 $ 4.91 Maintenance Kit $10.31 $10.31 Total $83.22 to $90.47
4 EES Plotter Cost Center Price Determination - S. Heath Page 4 of 6 Paper Costs The values to enter into the web interface for paper costs are fairly straightforward. The only problem is that you can enter in only one cost for a type of paper, even though the same type of paper comes in different widths. I calculated the cost per square foot to determine if there was any significant difference between different widths of the same type of paper. All varied by only 1 cent a square foot with the exception of the HP Coated Paper which varied by 3 cents. So I entered in the more expensive paper cost for this type to be safe. I also included shipping in the cost for the paper. At the end of the document is a copy of the spreadsheet with the paper cost calculations. Other Costs Fixed Cost Applied Per Job The web interface allows you to enter in a fixed cost that is applied to every print job independently of the amount of ink or paper used. This fixed cost is used to recover all other printer expenses that aren t directly related to ink and paper usage. I have identified four items to include in this fixed cost: 1. cost to replace printer and accessories 2. printer administrator salary 3. ink and paper used in testing and spoiled prints 4. ISD network connection The fixed cost will be calculated based on the expenses incurred over a time interval and the number of jobs printed during the same time interval. It is convenient to choose one year as the time interval. Annual Print Job Estimate I used the following data to help me estimate the annual number of print jobs: Number of print jobs in Jan-June Number of print jobs in Jul-Dec Number of posters printed elsewhere in * Total for Number of print jobs in Jan-Apr 7, Number of print jobs planned in * The values marked with (*) are results of an survey I sent to all members of the department requesting an estimate of how many items they planned to print in I also asked them how many items they printed on a printer other than the department printer during I had a 30% response rate on the survey. Because of the low response rate and the unusually large number of jobs that have already been printed this year, I am doubling the survey estimate and adding an additional 10 to the number for a total of 130 jobs for Annual Cost Estimates 1. Cost to replace printer and accessories. I estimate that the new printer and its accessories should last our department for 10 years. This is based on two things: The previous printer lasted for 12 years. Through discussion with Mark Mansell at the Bureau, the Bureau printer sees 2-3 times the use that our old printer did. Mark estimates that they will replace the Bureau printer after 4 years of use.
5 EES Plotter Cost Center Price Determination - S. Heath Page 5 of 6 If we use our printer half as much as the Bureau, we should replace it in 8 years. But because we use it a little less than half, 10 years seems like a reasonable estimate. The equipment that will need to be replaced includes the following accessories which should have the same lifetime as the printer: printer $11, additional memory (RAM) $34.17 USB interface $ extra paper spindles $ uninterruptible power supply (UPS) $ Total amount to replace: $12, Dividing the total amount by 10 years gives an annual recovery cost of $ Printer administrator salary. The printer administrator is estimated to work 52 hours a year in support of the printer. This is based on the number of jobs (130) printed a year and the following: 10 minutes to load paper and submit a job 10 min x 130 jobs = 1300 min = 21.6 hrs 1.5 hours/month to prepare billings and JVs 1.5 hr x 12 months = 18 hrs 1 hour/month for testing and maintenance 1 hr x 12 = 12 hrs Total 51.6 hours/year Rounding up, this comes to 52 hours a year, or 1 hour a week. At a rate of $10/hour, this works out to $520 annually. 3. Ink and paper used in testing and spoiled prints. Based on my past experience with a wideformat color inkjet printer, a number of test prints will need to be made during the year. Also, there will be problems with spoiled prints that are due to machine or operator error that won t be charged to the user. I estimate 1 test print a month and 1 spoiled print a month at a cost of $4 per print. The $4/print estimate is based on the average cost of ink and paper recorded for the first 37 jobs printed on the new printer so far, and a guess that most refunds will be requested on higher ink-coverage prints that are cancelled before the entire job prints out. The calculation for the annual charge for testing and spoiled prints is: 2 prints x 12 months x $4 = $ ISD Network Connection. ISD charges $14/month for a network connection. The annual cost is $168. Total Fixed Cost Calculation 1. cost to replace printer equipment $ printer administrator salary $ ink and paper used in testing and spoiled prints $ ISD network connection $ Total $ Dividing this total by the annual number of jobs per year (130) = $15.29 This is the total fixed cost that will be applied to every print job.
6 EES Plotter Cost Center Price Determination - S. Heath Page 6 of 6 Why no warranty, extended service contract, or repair charges? In my 10 years at the department and 5 years before that at my own printing business, I have worked extensively with HP printers and found them highly reliable. I have always been able to service printers myself without calling in an outside printer technician. In the 12 years that the department owned the HP Designjet 755cm plotter, the only failure was a frayed drive belt which was easy enough to diagnose, purchase parts for, and install. Buyers Laboratory, Inc. reviewed the HP Designjet Z6100ps 42 plotter in March 2008, and after a one-month-10,000-square-foot durability test with only one paper jam and no service calls, they certified it highly reliable. Mark Mansell at the Bureau reports that he has had no problems with his printer after 2 years of operation. If there were problems with this printer, bad reviews would be on the Internet by now. So I see no need to include these costs at this time. Billing Attached is a page from the exported Excel spreadsheet showing the information that will be used to bill users. Billing will take place every one to two months, depending on usage.
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