I had the privilege of conducting and producing the 2012/13 NAQP Digital and Wide Format Pricing Study, so I want to share some of the survey findings and my thoughts on the results. In Part Two, I will offer advice on how to use the results of that study for your company’s benefit and profits.
Here are some of the statistics and results from that study with my comments:
• We had 290 participate in our survey. We eliminated duplicate entries, very incomplete surveys, or obviously wrong data.
• We attracted a wider participation base than earlier surveys. We not only had more large shops take the survey, but also more shops that were totally digital, sign shops, or wide-format based.
• Participation was evenly spread throughout the US, with the average shop being 32 years old. Certainly the ownership is aging—it is no surprise that mergers and acquisitions are booming right now.
• The average sales revenue is almost $3 million, although the median was $877,500.
I believe it is true that the big are getting bigger at the expense of the smaller companies. I believe that the disparity between small and large companies will continue to widen.
• Amazingly, the average participant is anticipating relatively significant sales growth in 2013. In fact, 71.3 percent responded that they anticipated higher sales, and another 9.2 percent expected flat sales. Participants of these surveys do, though, tend to be the industry leaders and not the laggards, so I don’t believe the entire industry is showing these same sales trends.
• The average sales per employee (SPE) was $125,462, which is slightly higher than the 2011/2012 NAQP Pricing Study. Larger companies have more productive equipment and more volume, so it’s not surprising that their SPE was $139,004.
• 35.6 percent of the participants belong to either NAQP/NAPL and/or PIA. 17.3 percent indicated they are franchisees, while 67.3 percent responded that they are independent.
• Only 7.4 percent indicated that they belonged to a peer group. My experience has shown that a majority of the leading companies in the industry are in a peer group, so I was surprised by the low percentage.
• By far, the most stunning statistic is that 22.2 percent of all the survey participants still do not use estimating software. Further, another eight percent are using homemade systems or spreadsheets for estimating.
I find that hard to believe as print estimating software has been available for more than 30 years and the cost to install and train is far less than the cost of labor to do manual quotes, not to mention the consistency and accuracy of computer estimating.
• We were surprised that 60.3 percent of the participants use 54-inch or larger units. The trend is that the smallest wide-format printer to install today would be a 54-inch, and most would buy a 64-inch or wider.
• This study is the first to include data about which wide-format substrates are most commonly used. A majority of the participants print on more than poster paper and banners. We will include more substrates such as wall covering, floor graphics, back-lit film, car wrap material, and others in future surveys.
• The trend for printers to move into producing signage is escalating. Most installed wide-format printers to simply output posters and banners, only to realize that the printers can print on dozens of substrates. This movement parallels the fact that some sign companies are starting to sell digital printing.
Digital black-and-white pricing has not changed much since the last survey, but color digital pricing has decreased about five percent on average. Two reasons for the decrease are increasing competition and printers handling larger volumes, which decreases their overall cost per impression.
Digital and wide-format printing both continue to be growth areas for most printers. I believe that the leading printers will continue to grow these departments. Many printers commented that they have added digital print volume by taking work off of their offset presses, or they are producing previously outsourced jobs in house.
We noticed almost no variation in the pricing between the regions and little variation between companies in different sized markets (rural vs. metropolitan). I do not subscribe to the old argument that “my market is different”. I do however subscribe to the fact that some printers attract more price sensitive customers than other printers.
Where relevant, we showed the survey results by small companies (those that had 2011 annual sales less than $1 million; 51 percent of total respondents) and large companies that make $1 million or more.
My opinion is that pricing should not be dictated by the size of your company. However, our survey clearly showed that larger companies do charge more for their products and services, plus they tend to charge for everything they do. Prime examples are that large companies almost always charge a minimum job set-up fee plus an additional fee for file handling. I believe that larger companies are more comfortable with their pricing and less flexible in waiving charges.
Overall, the pricing seems to be driven by the market and not by the costs. Several participants have attempted to price their digital work by using burden rates, calculating set-up time, time to produce, and adding a waste factor. Most, however, use systems that price digital work based on the number of impressions produced and then add bindery and finishing, similar to the way they have always priced traditional bindery.
In Part Two, which will be published in the May issue of Quick Printing, I will show you how to create a pricing philosophy so you can use the pricing study survey results to increase your profitability. I will also discuss how the results tell you where you need to position your company to grow moving forward.
In closing, I want to thank QP publisher Kelley Holmes and Cygnus Business Media for sponsoring the distribution of the study worksheet. Quick Printing is NAQP’s publishing partner.
The 2012/2013 NAQP Digital & Wide Format Pricing Study can be purchased at members.napl.org/Members/Store.
Mitch Evans is president of Mitch Evans Consulting (www.MyPRINTResource.com/10209474). His areas of expertise are in strategic planning, valuation, mergers and acquisition, financial planning, new technology, and “1-2-1” coaching. Contact him at 561-351-6950 or firstname.lastname@example.org.