GIMP does the same - the image remains same size, but when I open it in PEP, it shows different size which seems to be derived from the DPI.

Dan

Try compensating the size by pixels instead of inches. As you know, PEP calculates the engraving size based on the Pixel Resolution setting (step over), so calculate the pixel width & height based on that. Example: if you want it 1" X 1" and the Pixel Resolution setting is .01", the Pixel size should be 100W X 100H.  Also, since your image is real small, don't rely on the dithering outcome how it views on a large monitor.