Market Intelligence: Wide Format Inkjet Graphics—Determining Retail Price

In June 2012, I.T. Strategies surveyed Wide-Format Print Converters and buyers in the US to find out today’s selling price for wide-format printed output. We talked with a variety of converters and buyers in order to cover the spectrum of wide-format output offerings. Each resource represented a different perspective on the selling price of wide-format output. We interviewed sellers and buyers of output produced on low-end, high-end, flat-bed and roll to roll printers, and all ink chemistries—UV, solvent, eco solvent, and latex to get a sense of current selling price. Interviewee’s responded with a selling price range from $0.38 up to $6.00 a square foot, depending on substrate and many other variables.

When we asked converters for examples about selling price by square foot, their response was almost always, “it depends.” We know there are a lot of factors that go into pricing for digitally printed output. It is not as simple as, “the cost to print, plus X% mark-up” equals “$X per square foot.” Of course the printer’s cost is considered when quoting a sell price, but there are different cost models within equipment categories and ink chemistries. For example, newer equipment is often more efficient than older hardware, so the job spends less time on press, which reduces the cost and therefore the selling price is more competitive. Another example: two converters, who purchased the same printer model, may have much different leasing and/or ink cost which affect their cost and in turn, affect the sell price.

Determining Price

How does a converter determine sell price of printed output? Many converters use an “hourly press rate” as a starting point for quoting a sell price. This rate encompasses all costs to run the printer for an hour—including hardware, ink, labor, rent, electricity, etc. A Converter can enter all of these individual cost equations into an MIS software program, and then automatically generate quotes based on the parameters of each job against the allocated cost per hour. Many converters do not use an MIS system, instead they have customized their own quoting system or maybe use an internally developed spreadsheet or just have an hourly cost calculation in their head. Using an hourly rate ensures that all of the converter’s costs are covered in the sell price, if all overhead is included and actual costs are correctly assigned. The hourly cost ranges are based on overhead and what values the converter assigns to each component (i.e. do they amortize hardware over two or five years, for example?).

Here’s a simple example of how a converter may come up with an hourly rate for his press: let’s say this converter has a $200,000 wide format printer that prints 1, 48”X70” sheet every 10 minutes (because the job requires very high print quality, which slows down the print speed). Potentially—this printer can print 6 sheets per hour. Without ink and substrate costs, the hourly rate for the press is $152.00 (see table below). In this example, it will cost $152 (without ink/substrate) to produce 6, 48x70 (equivalent to 23.2 sq ft) sheets or $25.00 per sheet or $1.07 per square foot. Remember, this is the converter’s cost—but the sell price is built from this rationale.

Example of How a Converter May Calculate Hourly Press Rate

Component

Allocated cost per hr

Rationale

Hardware

$52.00

$200,000 acquisition, amortized over 4 yrs ($4,166. Per month), 20 days of operation ($208 per day), 50% utilization/4 hrs per day= $52.00

Labor

$20.00

1 operator @$20. An hr.

Utilities

$10.00

 

Prepress

$40.00

Usually 15-30 min is built in hourly rate for a digital file, after that, there is often an additional charge. As much as $80.00 per hour.

Rent

$10.00

This is usually a percentage of the entire real estate rent. This amount represents the piece of the building that the WF digital press occupies. In this example the overall rent is $2500/month. Digital WF occupies 25% of the space, or $625.00/month, divided by 20 days of operation, at 50% utilization/4 hrs per day= about $10

Administrative Overhead

$20.00

Customer Service Reps, Office staff, etc

TOTAL HOURLY PRESS RATE

$152.00

Add Allocated cost per hour without consumables (ink/substrate).

A converter may determine how long the job will be “on press” then calculate the hourly rate, plus substrate cost, prepress, shipping charges and any other “value-added” services (which is a big variable that we will discuss later) and then adds profit to come up with a quote. Many converters consider the details used to create their hourly rate a secret, as it is an expression of their expertise and not just arithmetic. There is a science to quoting a sell price but there’s also the “relationship” factor. The price may be adjusted just because of the relationship the converter has or is trying to build with the customer. The converter may give a lower quote to a client who buys a high-volume of print annually, or if the converter is trying to win a new job, or this wide format job will allow the converter to gain other pieces of print (like post cards, mailings, flyers, etc).

Of course, in most cases, the print buyer does not know or care which hardware is used to print the job as long as it meets his/her standards and deadlines. A converter may need to move the printed location of a job to another press to meet delivery deadlines. Usually the hourly press rates, for those presses that produce comparable jobs, are deliberately constructed not to be significantly different, to allow for this “load balancing.”

So—what is the current selling price of wide format printed output? Well—IT DEPENDS! A converter may use a “per square foot” calculation to determine selling price but the square foot rate is variable and determined by many factors. The top factor that influences the sell price of wide format print is substrate selection, followed by ink coverage/file dimensions/one or two-sided print, and then value-added services.

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