Quick Consultant: Printers Fail to Keep Up with Consumer Price Index

A SPECIAL ALERT FOR PRINTERS: Before I discuss some of the latest findings and features of NAQP’s just released, Bindery & Finishing Study (Second Edition), I feel compelled to issue a special alert to readers. It involves a scam being perpetrated against thousands of businesses, including hundreds of printers every single month.

Many of you will laugh, and say, “I can’t believe anyone would be so gullible as to fall for that,” but I personally know printers who have fallen victim to this scam and have lost $7,000-$10,000 as a result. I call it the “Ghanaian” scam. It is similar to the Nigerian scam letters sent out for years to individuals, but this scam concentrates on duping otherwise savvy business owners.

How does it work? You receive an email from an individual, often posing as a minister. He claims to be located somewhere in the U.S. and is seeking a quote on printing posters, flyers, or brochures. These items need to be sent to a mission church or orphanage in Ghana or some other African nation.

He describes the job in detail, most often attaching a perfectly prepared PDF document. He says he is prepared to pay for the entire job in advance with a credit card. It is typically quite a large job, and quotes can easily fall in the $3,000-$6,000 range. Forgetting for the moment that any sane printer ought to question why and how his own small printing firm has been chosen by a minister located 600 miles away, the printer prepares a quote.

Note that even in a business climate that seemingly is dominated by the Internet, printers need to exercise a great deal of caution when dealing with prospects and potential clients located hundreds of miles away.

Amazingly, shortly after it is submitted, your quote is accepted. The minister provides you with a credit card to pay for the job. If it is declined, he will supply you with another card number, saying he is using cards provided by parishioners. Eventually, you will process a card that will be approved. Wow! Now you have been paid in advance, so you have no reason not to proceed.

As the deadline for delivering the job approaches, a small wrench is tossed into the mix. The minister tells you he is too busy to pick up the job and, in any event, it needs to be shipped to Ghana. He gives you the name of a shipping firm specializing in export shipments and tells you to contact them. The shipping company says the job, because of weight and size, will cost, say, $2,900 to ship to Ghana. In addition, shipping costs must be paid in advance, prior to pick up, via a wire transfer to their bank in Ghana.

Before the red flag is raised upon hearing the phrase “wire transfer,” the minister tells you not to worry. He tells you that he will provide you with another credit card to cover the $2,900 in shipping costs and, sure enough, that card goes through as well. Being a bit naïve to this scam, you conclude you have no reason not to wire the funds to the shipper, since all your costs have been covered by one or more credit cards. Right? Nope!

Falling for the Scam

Guess what? You have just fallen for the scam. The credit cards were approved? Sure, they might have been at the time, but by now they have been reported as stolen. Soon the credit card company will issue a stop payment or a reversal of charges claim, eventually finding its way back to your bank, where your account will be debited immediately or your credit account will be faced with a “chargeback” claim—one you will rarely win.

The same thing, of course, will happen with the second credit card used to cover the wire transfer to cover shipping costs. Once again, you were careful, but also gullible. The only thing that will work very efficiently is that your wire transfer to a bank account in Ghana will go through in a couple of milliseconds. The money will disappear from your account and appear in the shipper’s account in Ghana. The funds will be gone for good and are not retrievable or reversible.

What about the printing you produced? No one ever wanted it anyway and no one ever intended to pick it up or have it shipped. The entire scam is built around what almost appears to be an innocuous minor item that involves shipping the product and how the shipping costs are paid.

I wish I had time and space to tell you more, but be forewarned. Even if you know about the scam, chances are good some of your employees don’t. By the way, forget calling the local police. Most police departments could care less. Forget about calling and alerting the credit card companies or banks issuing the credit cards. Most could care less. What about the FBI? Same story. The FBI is too busy hunting down terrorists and really seems to have little interest in helping to find these scam artists, even when all the information they need is presented to them on a silver platter!

Bindery & Finishing Survey

Now some brief comments and findings from the just released Bindery & Finishing Study (Second Edition). The newest report from NAQP was distributed in PDF format in early September to approximately 300 printing firms that participated in the survey earlier this summer.

The new 78-page study is dedicated to analyzing and reporting prices for more than 30 unique bindery services, ranging from folding and cutting, to collating (on-line and off-line), numbering, padding, and even perfect binding. A portion of the study is also dedicated to exploring prices unique to digital copiers, including bindery operations such as on-line numbering, folding, and booklet making.

The Bindery & Finishing Study features both average and median prices, for various quantity ranges. A new feature added to this year’s study is the addition of price per thousand and even price per unit where these breakouts are useful.

Profile of Participants

The average participant in the 2009 survey reported 2008 annual sales of $1,139,147 and median sales of $800,000. Average sales per employee (SPE) was $126,835 and the median SPE was almost identical at $125,000. The similarity between average and median SPE is an indication of the accuracy and reliability of the data we received. According to participants, bindery services accounted for 13% of total sales, which is quite similar to the 11.8% reported in 2001.

When the database was sorted, based upon SPE, and then broken down into quartiles, the average SPE for the top quartile was $171,916, while the average SPE for those in the bottom quartile was $87,914. This gap in SPE between those firms at the top and those at the bottom is alarming since SPE often reflects similar disparities in owner’s compensation or profitability in the industry.

Bindery Pricing vs. CPI

According to the data in this just released study, prices for many typical bindery operations have not kept up with inflation. It appears that while printers have been relatively diligent in raising prices when cost of goods have increased (e.g.: paper, plates, etc.), they have not been as diligent when it comes to monitoring bindery charges.

In an analysis of 29 common bindery services reported in both the 2001 bindery study and the current study, the compounded annual growth rate (CAGR) for these services during this period averaged only 2.1%. This compares with the CPI’s CAGR of 3.26%. The following table shows some examples of this:

SAMPLE BINDERY CHARGES 2000 vs. 2009

Service 2000 Prices 2009 Prices CAGR*

Plastic coil binding, ½", 100 books $1.86 ea. $2.22 ea. 2.03%

Booklets, 32-pages, 8.5x11", 500 qty. $160.58 $173.05 0.94%

Cutting, hourly charge $47.77 $52.76 1.25%

Folding, letterfold, 5,000 sheets $67.08 $79.61 2.16% Pads, 8.5x11", 100 shts, 100 pads $35.00 $41.00 2.00%

* Compound Annual Growth Rate

Many printers are simply not taking into account rising labor and overhead costs related to many bindery operations. As a result, their charges for these services have lagged well behind common indicators such as the CPI, according to the new study.

Bindery Study Availability

NAQP’s Bindery & Finishing Study (Second Edition) can be purchased directly from the association by visiting www.napl.org and clicking on “NAPL Store” (NQ1019) or by calling 800/642-6275 ext. 4. The NAQP/NAPL member price is $155; non-member price is $225.

In my opinion, simply uncovering one or two bindery services where you have allowed your charges to lag behind the industry, and consequently raising these prices to reflect current industry practices can easily pay for this study in less than a week.

Senior contributing columnist John Stewart is president of Q.P. Consulting, Inc. He is the co-author of the industry best seller “Print Shop For Sale.” Visit his website at www.quickconsultant.com or a website dedicated to the book at www.printshopsforsale.net. Contact him at 2110 S. Dairy Road, West Melbourne, FL 32904, call 321/727-2444, or email qkconsult@aol.com.

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