Adding Value: Short vs. Long Runs

Printers continue to seek more accurate ways to evaluate and benchmark projects in order to determine the type of equipment and run lengths needed to get clients the biggest bang for their buck.

“I get asked this all the time: When should you go offset and when should you go digital?” said Bill Van Buskirk, national sales manager for xpedx Printing Technologies. “Generally, the number used to be around 1,000 copies—1,000 or more single original, no variable data involved. It was cheaper to go offset.” That benchmark, however, has changed with the passage of time. “It is now getting closer to 1,500 since a lot of the companies have changed their click charges. It’s now between 1,000 and 1,500 that you would cross over between digital and offset.

“Now, if you’re looking at offset only and asking where is the crossover,” Van Buskirk continued, “it depends on the type of work you are doing. Obviously in a brochure, in a smaller area, it depends on whether it’s two-color or four-color, black and white, etc. Speed is the big thing for digital over offset. But if you’ve got offset presses it depends on whether you want perfecting—two-sided—and whether you’re doing labels or special substrates. It depends on a combination of the substrate and whether it’s a two-color job, an eight-color job, packaging or whatever. It really hinges on what the end product is.”

Obviously, he added, “for the more simple jobs—a brochure, a direct-mail piece, a small type thing—you wouldn’t need a large press. But again, you can do long runs. Most of the presses are between 10,000 and 18,000 an hour.”

“One of the great challenges that print service providers face every day is determining the tipping point between offset and digital in terms of run length and cost,” said Jim Aust, business analyst, US&C Region for Kodak’s Graphic Communications Business. “With no simple formula to apply, many factors must be considered.”

In general, Aust noted, print runs of less than 1,000 will be more economical on a digital press than on a typical 29-inch, four-color non-perfecting sheetfed offset press. Runs of more than 1,000 will usually be more economical on the offset press, “but the real gray area comes in those runs between 750 to 1,500 sheets. This area will vary based on the current economics of the offset manufacturing process, but what’s changing is the number of jobs that fall under the cutoff. The current trend is toward more short-run jobs.”

Today, Aust explained, many printers may not have a lot of jobs under 1,000 impressions, “so they may feel they can’t justify a digital press. But each year that changes as more customers demand shorter runs. We have found that a printer doesn’t need to generate a lot of work to justify a cut sheet digital press.”

A $5-million-to-$10-million shop might only produce 2 to 3 percent of all pages on a digital press, Aust continued. “However, the shorter runs are the most expensive to print. A typical offset job of 5,000 sheets or more sells for 5 to 10 cents per page. But producing shorter runs of 500 to 1,000 impressions on an offset press can cost customers 30 to 45 cents per page, while a digital press can produce these for 10 to 15 cents per page. In this scenario, digital is a clear winner.”

“It’s job-dependent,” suggested Scott Brown, district sales manager, large-format presses, xpedx. “In the past it always used to be more cut and dried as far as the dividing line. But now, with the capabilities of digital, the speeds are increasing, the makeready times are going down, variable data has gone up. So it depends on the job, 100 percent, as far as which—offset versus digital—is going to be better.”

Changing Attitudes

“In the quick and small commercial printing segment, printers have been working with the print-on-demand concept for so long that it’s difficult to even remember the overrun mindset of the past,” said Karen Lowery Hall, managing editor of Printing News’ sister publication Quick Printing magazine. “The idea of warehousing thousands of prints or, worse, trashing them is almost unthinkable.”

Digital printing has been widely adopted by this segment of the printing industry, Hall pointed out, “and that technology brings with it an ability to better serve the needs of the customers in terms of run lengths. It just seems to be so intuitive that if your customer needs 250 copies of a document, you print 250. If you insist upon a minimum run of 1,000 or more, what happens to the remaining three-quarters of that run?”

“Xerox is constantly working with customers to make sure they maximize their technology investment, and when we’re talking about short versus long runs it’s important to look at each job individually,” said Tracy Yelencsics, vice president of production marketing communications & programs, Xerox Corp. “There is no magic run length that guarantees the right ROI. Print providers need to look at the entire print job from pre-press to finishing to determine the right choice.”

Nor, Yelencsics emphasized, must there be an either/or answer. “There are plenty of applications that require a hybrid between offset and digital. For example, certain sales collateral can be run in large static quantities using offset equipment and supplemented with customized digital pieces for specific target audiences. We also help our customers with a job estimation software tool to help them make this decision based on the parameters of each job.”

Determining Breakeven

Those printers trying to find a reliable rule of thumb for deciding run lengths and break-even points should know that there are tools available that can help. “Actually, we have better than rules of thumb,” said Avi Basu, director of business development services for the Americas with HP. “This question, as you know, has been going on for quite some time.”

The firm’s solution is HP Indigo Smart Planner 3.0, an advanced job estimator and business planning tool that can calculate the breakeven point between offset and digital jobs. The planner, an upgrade to the former HP Indigo Commercial Job and Label Job estimators, offers estimating tools for complex multi-step applications such as direct-mail jobs that require postage discount calculations in addition to overprint, warehousing, postage discount and advanced finishing costs. It also offers support for offset and digital continuous-feed presses, and has an available option for importing actual job data from PSPs’ management information systems.

“It is a tool we developed with some industry analysts,” said Basu, “and it’s something we make available to all our customers. They put in their data in terms of the costs of labor, substrate, time, everything and, depending on their cost, they are actually able to determine their break-even.”

Long and Short of Things

Canon U.S.A. sees a “huge shift from long to short runs,” noted Forrest Leighton, director of production and field marketing for Canon USA. “Print runs are getting shorter, turnarounds are getting faster and jobs are targeting more diverse, niche audiences. The increase in customization is one reason why print jobs are going short. But the real question facing shops is, ‘How does the printer add more value to the printed piece? Basically, what am I going to do with those applications to drive a better ROI for my customer and, in the end, myself?’”

It is, Leighton maintained, his and his colleagues’ challenge to determine “how we can educate print providers to put value into the document utilizing advances in technology that enable greater customization through variable data printing, while helping printers better market themselves to their customers.”

There has always been, according to Leighton, a break-even point when it comes to offset versus digital printing. Recently, he noted, “we’ve see that break-even point rising from the traditional level of 1,500 to 2,000 pages to one approaching 3,000 to 4,000 thanks to the greater performance of digital presses.”

When considering ROI, however, he calls it critical to look at the individual shop’s market, “especially in a down economy, as every print buyer is looking at the marketing spend and the allocation of dollars.” Canon, like many providers in this space, is seeing a lot of traditional marketing pieces go online or via some other media “if they are being done at all. We need to be smarter about the documents that we are going to print. What are they, the customer, trying to accomplish with the printed piece? Customer loyalty? New leads? The creation of good information for their employees to reference? How can the printer increase value in that chain? These factors must also be considered when calculating ROI.”

When evaluating print jobs, Leighton insisted, it is “overly simplistic to say that if it’s a static printing job, its evaluated on run length and cost per page, and (that) where you end up on the break-even point determines which device to use. By the same token, if it’s variable data the job will always go digital. Canon believes that the true cost of a print job is what it does for your customer and in ensuring that the marketing spend is providing the greatest ROI on a job. If the customer is successful and the printer delivers what the customer needs, they will be successful.”

Howard Riell is a Las Vegas-based journalist who has covered the printing industry since 1990.