The new year is always a good time to review and raise prices. Printers have seen a great deal of price pressure from customers and they are closely reviewing their prices. Many experts are expecting pricing to remain fairly consistent in the coming year and pricing increases to cover rising paper costs.
Over the years, pricing for typesetting and design produced by quick printers has remained very low. In many shops the total sales for typesetting and design services barely cover the salary of the staff. Unless printers increase prepress prices to cover the department's costs and turn it into a profit center, the black hole of printing will continue to suck away profits from other departments.
Most printers have pricing structures that would allow the prepress department to make money, but the pricing standards are ignored by the sales staff. Most printers attempt to sell based on having the lowest price, and prepress just adds to the charge. No one monitors the prepress selling prices, so they become unimportant. The prepress costs are discarded so the printer can get the job.
Establishing policies and procedures related to prepress pricing is easy. Standard pricing can be created that can be understood by both the selling staff and the customers. But unless someone is making sure that the standards are applied, the prepress prices will disappear and printers won't make anything for their prepress work.
Would a $35 charge for every digital file a printer accepted cause the printer to lose the job? Would an extra $20 for every typesetting job chase away customers? Would charging at the same design rates as the online sources drive customers to the nearest competition?
Customers are price sensitive, but printers should charge for the work they do, and that includes prepress. In the scheme of things, prepress prices are only a small percentage, but they could mean the difference between a successful company and one that can't pay its bills.
Bumping up prices for prepress shouldn't cause a wide spread panic among customers, but cutting prices could send the wrong message. James Surowiecki recently wrote about price wars in The New Yorker. He surmised that when there are a lot of competitors selling the same product, pricing is the easiest way for a company to distinguish itself. He said companies hope to increase market share with lower prices, but usually it isn't the case. Surowiecki believes everyone loses when a price war begins.
He believes the best way to win a price war is not to play in the first place. He suggests that a business compete with customer service or quality. A price-matching guarantee mentality will only lead to failure.
The lesson is to concentrate on service and quality and make sure it is promoted among customers and employees. It is all well and good if a printer can become the low cost producer, but most can't because their product line is to wide and varied. Most printers are job shops that produce custom work. If a printer can build a reputation on service and quality, then pricing becomes less of an issue with the customers who matter.
What are you doing to build your reputation or your "brand" in your local community? Do you have a state-of-the art website? Are you actively sending out newsletters that educate and demonstrate what your company can produce? Are you in front of customer telling your story and showing what value you add to the printing job?
There will always be someone who will sell the job cheaper, but is the cheapest price what the customer really needs? How valuable is the job if it is a week late? Or if the quality is bad? Or if getting the job took up too much of the customer's time?
Pricing is difficult. You want to get the right price that will help sell the product and provide a margin for profit. Don't just try to be the cheapest price. You should be the best price, and the best price will include a prepress charge that allows the printer to make a profit and provide better service to the customer.