As the recession draws to a close, quick printers will have to deal with the challenge of raising prices. This is particularly true with prepress pricing. Too many printers use typesetting, design, and prepress as loss leaders to get printing and copying work. Printers need to look at their bottom line to make sure that all departments are contributing to the profits of the company.
Over the year, prices for all goods and services have started to rise. Paper prices are up as well as other costs. Successful printers have stayed on top of the rising costs by adjusting prices on a regular basis. Not so successful printers have failed to pass along the increased production costs. The beginning of a new year is always a good time to make sure you are getting paid a fair price for the work you do.
Printers still fool themselves into thinking they are making money in prepress by setting artificially high hourly rates for the department. The prices are artificial because no one ever really uses the hourly rate. Many shop audits show that if an hourly rate was applied to a standard job, the selling price would be four to five times higher than what the customer paid. Few owners compare the time it takes to do the actual work in the prepress department with the final selling price. Sadly, the total monthly sales for prepress functions barely cover the cost of the prepress operator.
For some reason, printers believe the prepress costs should only be a fraction of the printing price. In reality, the typesetting, design, and prepress functions can easily outstrip the printing and copying prices. The labor costs alone can drive up the final bill. It may take a prepress person several hours to complete their portion of the job, yet it takes the press or digital printer operator minutes to print the job.
Some printers use the excuse that if they were to charge for design and typesetting at the real costs, they would lose print work. Ironically, the amount of money they leave on the table for prepress usually is more than the margin made on printing. And printers wonder why the prepress department is often referred to as a black hole for profits!
Claim the Money
As the year begins, printers need to implement procedures that will assure they make money in prepress.
Set a realistic hourly rate. The $60 an hour rate may have made you money in 1990, but after 20 years of using the same rate, you are probably losing money. A more realistic figure is $100 an hour. For example, if a prepress person would bill half their time (20 hours a week) at $100 per hour, sales in prepress should be at least $2,000 a week, or $8,000 a month (with a four week month). What are your monthly sales? A one-person prepress department should bill at least $8,000 a month. A two person department should be billing a minimum of $16,000 a month.
Establish set prices for common jobs. An hourly rate is good for custom work, but much of an average printer’s prepress pricing can be handled with a preset menu price list. A price can be set for almost every product sold. By using a set price, the owner can easily measure to see if the prepress person is being productive or spending too much time on a job.
Track and manage a prepress person’s time. The production manager should be meeting several times a day with the prepress staff to assure work is moving profitably through the department. The prepress staff should be accounting for the time spend on most jobs. The prepress staff should also know how much of the selling price is budgeted for their task. If prepress is making $100 on the job, then the prepress person should spend no more than an hour on the job. Any more time spent, the company is losing money. The prepress person is responsible for time.
Get the prepress department involved in pricing. Remember that the prepress person isn’t responsible for sales. Some print owners lay the blame for low sales at the prepress department’s doorstep. Most prepress departments have nothing to do with what the customer is charged, yet they get the blame if the department looks unproductive when compared to sales. Owners will want to make sure that the prepress staff is involved in pricing the job. They should be tracking their time and making sure that time is reflected in the final selling price. The prepress staff should keep track of any jobs sold for less than what the prepress price should have been and report the variance daily to the owners.
Charge for author alterations. Many customers don’t know what they want, so they use the proofing process to start redesigning their work. The customer service representatives or sales people should let the customer know that changes by the customer during the proofing process will result in a higher charge.
Hold customers to proofing standards. Too many printers complain that customers fail to approve proofs in a timely manner and cause extra costs to the printers as they try to make the original delivery date. To stop losing money in this situation, a printer should either change the delivery date, or charge extra to make the original delivery date if the proof date is missed.
Track prepress sales on a daily basis. Do you know what your sales projection is for the month? Do you know what your totals sales are for the month? Your prepress sales? Since sales are the single most important part of a print owner’s job, sales should be tracked on a daily basis. The accumulative total can easily be calculated into the projected monthly sales. By focusing on your sales on a daily basis—in particular prepress sales—you will see a stronger effort by your staff to meet the sales goals. Printing is an important game and you have to keep your eye on the score on a daily basis.
Use outside services. If you can’t make money with your prepress department, then job out the services to an outside source. With the Internet it is easy to find third-party vendors who will do typesetting and design for the trade. Most of these companies provide 24 hour turnaround for a set, published fee. If you can buy it for one and sell it for two, you might be better off doing it outside the shop rather than losing money doing it yourself.
Compare rates with online services. Most printers don’t really know what to charge, but the Internet is making it easier to see what the market value of design and typesetting is in the world. Just use an Internet search engine and search for “logo design services” or “online print design services” and you will find hundreds of sites with pricing for a variety of work. Most printers will find their prices are much cheaper than the Internet printers for most design and typesetting work. Design and typesetting firms for the trade are very reasonable.
Don’t cut the prepress price when a job is repeated. Do you automatically lower the price of a repeating order if the last order contained prepress costs? When you consider the costs of maintaining and archiving files for customers, you may be losing money to pull up the old files. Most customers were happy with the first price and are happy to pay the same price for the reorder. Usually, a printer gets into trouble here because to justify his prepress prices the first time he offers to eliminate the price if the customer places a reorder. You will probably have to do something to the job when you call up the file, so keep the prepress costs from the first order in the second order.
Most printers see the prepress department as a necessary evil they have to deal with to get their printing work. Printers need to make sure they are making a profit with that department because in the future the entire shop will evolve around the prepress department. Almost all of the new products and services predicted to be offered by quick printers will originate in the prepress department. If printers continue to give away prepress activities as they do now, they will just put themselves out of business faster. The profits from printing in the next decade won’t be from the print side of the house. They will be from digital and prepress services and the management of content for the customer. Printers had better become comfortable in seeing larger prepress invoices now or they will be looking for an exit strategy within the next 10 years.
Ever get a corrupted InDesign file that you can’t open? Markzware is offering a service to fix corrupt InDesign files for a $99 fee. If the file cannot be fixed, there is no charge. Printers who have used the service reported the quality of the recovery was good, but it would take a little time to fix small inconsistencies with the file. For more information, contact Markzware at www.markzware.com.
The company has also released the Windows upgrade of Q2ID v5 (Quark to InDesign). This Adobe plug-in is used to convert Quark to InDesign CS5 content. The Windows upgrade of Q2ID v5 is $99 for users of Q2ID v3 or v4 or $129 for users of Q2ID v1 or v2.
Think email is always better? PIAS (Printing Industries of America South) recently reported that the USPS delivers 99% of the mail to its addressees. On the other hand, a study by ReturnPath shows that only 19% of permission-based email makes it through the spam filters and delete buttons. Remember that these are just average numbers. If the target audience is decision makers, chances are the email death rate is a lot higher because of time pressures.
You might want to tell this to your customers if they question which is best to use. More progressive printers are offering their customers both direct mail and email marketing services to cover all the bases.
John Giles is the author of “12 Secrets for Digital Success” and “The DTP PriceList.” He is the technology director and a consultant for CPrint International. He can be reached at 954-224-1942 or firstname.lastname@example.org. You can also find John on Twitter.com (search for JohnG247) and Linkedin.com. To order John’s books, visit www.cprint.org.