Per-Piece Gain Report (Artwork Per-Piece Gain Report)

Overview

The Per-Piece Gain Report is a strategic financial analysis tool that calculates profitability for per-piece billing arrangements by comparing revenue from invoiced per-piece artwork against the cost of design work that was not separately invoiced. This report provides executives and financial managers with critical insight into whether the per-piece pricing model is generating positive margins or whether design costs are eroding profitability.

At its core, the report answers a fundamental business question: "Are we making money on our per-piece billing arrangements?" By aggregating billed time across different activity categories and comparing per-piece revenue against absorbed design costs, the report reveals the true financial health of per-piece client relationships.

The report breaks down financial data by Invoice Group, showing Fixed Budget allocations, Per-Piece invoiced amounts, Design costs not invoiced, and the resulting Gain (or loss). It also provides detailed activity-level breakdowns for deeper analysis when needed.

Location: Navigate to Reports from the main navigation menu, then click Per-Piece Gain Report in the PROJECTS section.

URL: /reports/artworkppprofitreport.aspx

Access Level: Administrator and Super Administrator roles only

Business Value

For Executive Leadership

The Per-Piece Gain Report provides strategic visibility into pricing model effectiveness:

• Pricing Model Validation - Confirms whether per-piece rates adequately cover actual production costs, supporting rate adjustment decisions
• Client Profitability Analysis - Identifies which Invoice Groups and Clients generate positive returns versus those that may require contract renegotiation
• Portfolio Health Assessment - Aggregated gain metrics reveal overall financial health of per-piece business segments
• Resource Allocation Decisions - Understanding where design costs exceed per-piece revenue guides staffing and efficiency investments

For Financial Management

Finance teams use this report to:

• Margin Analysis - Calculate actual margins on per-piece work by comparing invoiced amounts to absorbed costs
• Budget vs. Actual Tracking - Compare Fixed Budget allocations against realized per-piece and design costs
• Revenue Leakage Detection - Identify Invoice Groups where significant design work goes uninvoiced
• Pricing Strategy Support - Provide data for rate card reviews and client pricing negotiations

For Account Management

Account directors benefit from:

• Client Relationship Intelligence - Understand which client arrangements are financially sustainable
• Contract Renewal Preparation - Build data-driven cases for rate increases based on actual cost analysis
• Scope Creep Identification - Detect when design work exceeds what per-piece rates were intended to cover
• Performance Benchmarking - Compare gain percentages across clients and Invoice Groups

Business Benefits

1. Validates Per-Piece Pricing Strategy - By revealing the actual gain or loss on per-piece work, the report confirms whether current pricing covers costs and provides acceptable margins. This prevents the common mistake of underpricing per-piece arrangements.
2. Identifies Unprofitable Relationships - Invoice Groups showing negative or minimal gain signal relationships that may need renegotiation, scope adjustment, or operational efficiency improvements.
3. Supports Data-Driven Rate Adjustments - Historical gain analysis provides objective justification for rate increases during contract renewals, replacing subjective arguments with concrete financial data.
4. Reveals Hidden Cost Absorption - Design work performed but not invoiced represents revenue leakage. The report quantifies this absorption, enabling decisions about whether to invoice separately or adjust per-piece rates.
5. Enables Trend Analysis - By running the report across different date ranges, management can track whether profitability is improving or declining over time.
6. Facilitates Portfolio Management - The hierarchical filtering by Division, Invoice Group, and Client enables profitability analysis at multiple organizational levels.
7. Provides Activity-Level Transparency - Detailed breakdowns by activity type (Project Management, Strategy, Design Creative, etc.) show where costs originate, guiding efficiency initiatives.

Usage Scenarios

Scenario 1: Monthly Profitability Review

Role: CFO / Finance Director

At each month-end close, the finance director generates the Per-Piece Gain Report for the completed month. They review the aggregate Gain figure to confirm overall profitability of per-piece work. For any Invoice Groups showing negative gain, they drill down to understand which activities are driving costs and flag these for account management review.

Scenario 2: Client Contract Renewal Analysis

Role: Account Director

Before entering contract renewal negotiations with a major client, the account director runs the report for the past 12 months filtered to that client's Invoice Group. The data shows that while per-piece volume has increased, the Gain percentage has decreased due to growing design absorption. This objective data supports the case for a rate increase or scope clarification in the renewal.

Scenario 3: Pricing Model Evaluation

Role: VP of Operations

The operations VP needs to evaluate whether the per-piece pricing model is working across the portfolio. They run the report for the fiscal year across all Invoice Groups, reviewing the Gain column to identify consistently profitable versus consistently unprofitable relationships. This analysis informs strategic decisions about which client types to pursue and which pricing models to emphasize.

Scenario 4: Division Performance Comparison

Role: CEO / Managing Director

The managing director wants to compare profitability across business divisions. They run the report first filtered to one Division, note the Gain figures, then repeat for other Divisions. This comparison reveals which parts of the business have optimized their per-piece operations and which may need operational improvements.

Scenario 5: Activity Cost Analysis

Role: Operations Manager

An operations manager notices that a specific Invoice Group has low gain despite healthy per-piece volume. They examine the detailed activity columns (Design Creative, Project Management, Strategy, etc.) to identify which activities are consuming budget disproportionately. The analysis reveals excessive Project Management time, prompting a review of PM processes for those projects.

Scenario 6: Budget Alignment Verification

Role: Financial Controller

The controller needs to verify that Fixed Budget allocations align with actual per-piece and design costs. They run the report and compare the Fixed Budget column against the Per Piece and Design columns. Significant misalignments indicate budgets that need adjustment or client relationships where scope has drifted from original assumptions.

Industry Context

Per-Piece Pricing in Creative Services

Per-piece (or per-unit) pricing is a common billing model in packaging design and creative production services:

How Per-Piece Works

• Clients pay a fixed price per artwork item (primary packaging, secondary packaging, labels, etc.)
• Pricing tiers are based on complexity and packaging level
• The per-piece rate is intended to cover all production costs plus margin
• This model provides clients with predictable costs and simplifies budgeting

The Profitability Challenge

Per-piece pricing creates a fundamental business challenge:

• Revenue is fixed per item based on the agreed rate
• Costs are variable based on actual design and production effort
• If actual costs exceed the per-piece rate, the agency absorbs the loss
• If actual costs are below the per-piece rate, the agency earns incremental profit

The Per-Piece Gain Report directly addresses this challenge by measuring actual profitability.

Fixed Budget vs. Per-Piece Arrangements

Many client relationships include both components:

Fixed Budget

• Monthly or annual retainer covering general design and account management
• Not tied to specific deliverables
• Provides baseline revenue coverage

Per-Piece Billing

• Charges for specific artwork items produced
• Intended to cover incremental production costs
• May or may not include overhead allocation

Design Not Invoiced

• Creative work performed but not separately billed
• Often absorbed within per-piece or Fixed Budget arrangements
• When excessive, erodes profitability

The report shows all three components, enabling analysis of how they interact.

Why Gain Analysis Matters

Creative agencies commonly face per-piece profitability issues:

1. Rate Erosion - Per-piece rates set years ago may not reflect current cost structures
2. Scope Creep - Clients request additional revisions or complexity not covered by rates
3. Efficiency Variations - Some projects require more effort than others at the same rate
4. Design Absorption - Strategic or conceptual work gets performed but never invoiced

Without systematic gain analysis, agencies may operate unprofitable per-piece arrangements for years without realizing the impact. The Per-Piece Gain Report provides the visibility needed to identify and address these situations.

Business Logic Details

Gain Calculation

The report calculates Gain using a straightforward formula:

Gain = Per Piece Invoiced Amount - Design Not Invoiced Amount

This formula reveals whether per-piece revenue covers the design work that was absorbed (not separately invoiced).

Data Source Categories

The report aggregates billed time records across several categories:

Fixed Budget

• Time logged under the Fixed Budget activity type
• Represents retainer or baseline billing

Per Piece (PP) Invoiced

• Time records associated with per-piece artwork items
• Includes Artwork Items, Artwork Alterations, IFU Inserts, and Creative Artwork Items
• Must be billed and not marked as "Not Invoiced"

Design Not Invoiced

• Time logged as Brand Design/Creative activity
• Specifically marked as "Not Invoiced"
• Represents design work absorbed rather than billed

Activity Breakdown

The report also tracks specific activity types for detailed analysis:

• Design Creative (invoiced design work)
• Project Management
• Strategy
• Project Management Support
• Project Management - 3M (client-specific)
• Project Management - Neogen (client-specific)
• Strategy - 3M (client-specific)
• IFU/Insert

Date-Based Filtering

Financial data is filtered by invoice date:

• Users select Start and End months (YYYYMM format)
• Only billed time records within this invoice date range are included
• This ensures the report reflects actual invoiced periods, not work completion dates

Hierarchical Filtering

The report supports cascading filters that narrow results:

1. Invoice Group - Primary billing entity grouping clients
2. Division - Business division within the client hierarchy
3. Client - Specific client account

Selecting a filter at any level dynamically updates the available options at other levels based on which combinations have data in the selected date range.

Key Features

Filter Controls

Summary Metrics

The report header displays aggregate totals:

Invoice Group Grid

Conditional Activity Columns

These columns appear only when relevant data exists:

Summary

The Per-Piece Gain Report is a strategic financial analysis tool that reveals the true profitability of per-piece billing arrangements by calculating the difference between per-piece invoiced revenue and absorbed design costs. This critical metric helps management understand whether per-piece pricing adequately covers production costs or whether rate adjustments are needed.

Key Capabilities:

• Gain Calculation - Measures profit/loss as Per-Piece Revenue minus Design Not Invoiced
• Fixed Budget Tracking - Shows baseline retainer amounts alongside per-piece and design costs
• Multi-Level Filtering - Analyze by Invoice Group, Division, or Client
• Activity Breakdown - Detailed visibility into PM, Design, Strategy, and other cost categories
• Interactive Navigation - Click-through to Invoice Group details for deeper investigation
• Dynamic Columns - Only displays activity columns with relevant data

Business Impact:

• Validates whether per-piece pricing covers actual costs
• Identifies unprofitable client relationships requiring attention
• Supports data-driven rate negotiations during contract renewals
• Reveals design cost absorption that may indicate scope creep
• Enables trend analysis by comparing periods over time
• Provides activity-level insight for operational efficiency improvements

The report serves as an essential tool for financial management in creative services organizations using per-piece pricing models. By transforming complex time and billing data into a clear profitability metric, it enables executives to make informed decisions about pricing strategy, client relationships, and operational investments that protect and improve margins on per-piece work.