Prepress Pricing Directly Affects Profitability

The economy is putting pressure on quick printers to adjust their pricing, especially for prepress and desktop publishing. For too many quick printers, using a low price to sell is the only strategy they have. They don’t think they will get the work unless their price is among the lowest.

Reports from the Printing Industry Pricing Study that John Stewart compiled for NAQP show desktop publishing and prepress pricing isn’t very consistent. Some of the findings indicate that PDFs account for 51.3% of incoming files. This is up from 38.9% in the last study. The study also reported that 20 minutes is the median time spent correcting customer files, and 50% of the time the customer was charged for the corrections. It also shows that 58% of printers charge a file prep fee.

Over the years, Stewart has found there is a great discrepancy in pricing practices among printers. He has found that, all things being equal, the range could be as wide as 50% between the highest and lowest price. The pricing difference isn’t just a national phenomenon. When studies have been done at a local level, pricing was just as inconsistent. The swing between the lowest and highest price has no rhyme or reason.

It is unclear whether printers are just bad at pricing or if they are bad marketers. Pricing inconsistencies are most apparent between printers who have the same equipment mix. How can one printer price a job at $600 while another printer prices the same job at $150? It isn’t that one printer has learned the secret to lower prices.

Universal poor pricing practices cause many problems in the industry today. For instance, PIA’s economists have reported that 75% of all printers loose money. Printers lament the fact that it is difficult to attract good workers, yet many fail to have a decent employee benefit package that includes health insurance, pays a competitive wage, or provides ongoing training. Visit any print related online discussion group and you will read complaints about long hours and skipped vacations.

Even successful printers are feeling the pressure from low-ballers. In some markets, there are printers who are giving customers prices below the cost of the paper. They are trying to keep the customer during the bad times even if it means a loss. The problem is that most of the printers taking this strategy don’t have the cash strength to pull it off.

Successful printers are adding technology to cut their costs so they can reduce prices without having a major affect on their margins. They become low cost producers who specialize in certain types of work that the average printer can’t compete for.

Experts are predicting a number of printing companies will go out of business in the next 18 months. Some of these printers are doing it to themselves by not pricing for profit. They don’t know their cost of doing business and they don’t know the value of the work they are producing. When it comes to pricing, they work in a vacuum and don’t really know what customers are paying or what they are willing to pay. These printers don’t talk to the customers to gather good information. They think they know what a customer wants, but they never ask.

A Question of Value

Sometimes pricing problems are simply training problems. I recently visited a shop with a fairly new customer service representative who was very concerned about prices. She wanted to give the customer the “best possible price.” She also thought that the prepress prices were “way high” and the owner’s pricing was gouging the customer. No one had ever talked to her about the cost of doing business. No one had explained to her the value of the services she was selling. She was comfortable with printing prices because “the computer did it.” It was when she had to add prepress and DTP pricing that she thought the prices were getting “outrageous.”