Is Your Price Right?

While the retail clothing and jewelry sectors in most cities are drastically discounting their prices this year in an effort to boost sales and remain solvent, printing industry experts agree that there is no long-term advantage to lowering prices if you want to stay in the printing and graphics business.

“Improve your customer service, don’t cut your prices—that won’t save your firm,” said John Stewart, president of Q.P. Consulting Inc., Melbourne, Fla., and a senior contributing editor to Quick Printing magazine. “Poor management and high labor costs are the reason printing business go out.”

Stewart has been providing consulting, speaking and industry research services to the quick and small commercial printing industry for more than 20 years. His company is also the co-publisher of the National Association of Quick Printers (NAQP) 2009/2010 Printing Industry Pricing Study, now in its 13th year of publication.

“A printer should not be pricing out of fear or by what your customers are telling you the price should be,” he added. “It doesn’t matter what part of the country you live in. It’s the prices in your own community that matter the most.”

Larry Hunt, past chairman of NAQP and founder of the NAQP High Speed Copier and Color Copier Users Groups, has been the successful owner and operator of four quick print shops since 1973. He agreed with Stewart that slashing prices will not benefit a printing firm long term. “I haven’t seen a change in tactics this year” because of the economy, he noted. “The vast majority of print work comes from repeat customers, not shopping price.”

Hunt, an industry consultant and the president of Larry Hunt Publications, a Tampa, Fla. company that publishes monthly newsletters, explained, “Customers are not as knowledgeable as printers think they are because they don’t have the time to study what something costs.”

Both Stewart and Hunt stressed the importance of conducting pricing surveys in your local metro area. “You need to shop your competition, and shop it professionally,” noted Stewart. This means hiring someone to make calls to at least seven to 10 other printers in the local community regarding a specific printed item, such as a two-sided color brochure, business cards, letterhead, and a few basic printed products.

“If you can visit the other businesses, that’s even better—maybe two visits and a few phone calls,” explained Stewart. “You will learn a lot about your competition” by doing this research.

Stewart noted that prices will vary enormously in any single market, once you find the average price of a basic item you will find printers who are charging 30 to 45 percent both above and below the average. For example, if the average price of an item costs $100, you will find printers in your area charging $60 and printers asking $140 for the same basic item.

Stewart recommends the NAQP Printing Industry Pricing Study as a helpful reference for printing companies.

Highlights of the study, according to Stewart, are:

  • Make sure your prices are up-to-date—Make sure that your prices for products and services are reviewed frequently and updated when and where necessary. Be sure that your prices are competitive with what others are charging. Your prices may be higher or lower than others, but be prepared to justify these differences based upon either a thorough understanding of your local market and/or your own cost structure.
  • Do not rationalize and blame the economy—Both in good times and bad times, print and copy shop owners are often too quick to look outwards and blame others for their problems. As this study demonstrates, especially in our “Industry Snapshot” section, there will always be firms at both ends of the profit spectrum, even in the toughest of times. By examining any one of a dozen snapshots, you will quickly come to the realization that prices charged for products and services are quite similar in our industry, regardless of the sorting criteria used. If you are looking to improve your company’s financial health, the answers can most often be found in areas other than pricing—this conclusion of course assumes that you have already conducted the examination of prices suggested earlier.
  • Consider purchasing a color copier to expand your capabilities. If you already have a color copier, make sure it is the fastest most efficient you can afford. The section dealing with “Color Copying” is packed with useful pricing data and ratings of the most popular color copiers used in our industry.
  • Learn to monitor and control key expenses and ratios—As a general rule, firms that achieve the highest profits and sales in our industry achieve their status not by charging significantly more or less for products and services but rather by controlling and improving key productivity and financial ratios. Lowering ratios such as “payroll” and boosting ratios related to SPE, sales per DTP employee and sales per press operator will have a far greater impact on your profitability than steps you might take regarding adjusting your pricing—this of course assumes your prices are competitive within your own marketplace.

According to Steve Johnson, president and CEO of NAQP, “All of our industry studies are focused on the quick and small commercial printing segment and have become valuable tools for those printing companies. The Printing Industry Pricing Study is always a much anticipated publication that the participants and readers use to remain competitive while identifying those areas where they can increase their profit margins.”

NAQP also publishes a special report, the 4C Practices & Pricing Study, specifically designed to assist owners of small commerical printing and copying firms better understand current pricing practices in the four-color copying and offset printing segments of the industry.

To order the 13th annual Printing Industry Pricing Study, visit www.naqp.com or call (800) 234-0040.

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