Executive Suite: Know the Basics of Pricing Strategy

We have gone through a number of pricing evolutions over the past few decades. Back in the day we had elite, mid-level, and down-and-dirty printers, with the pricing following those levels. There was also the tendency on the part of some to gouge the best customers and compete on price for new business—all but giving away the first project. These practices worked in part because of the equipment and craftsmen disparities in the industry. Printer A might have had a six-color press, while the one next door was doing two-over-two on a four-color job.

The Dodgers will be back in Brooklyn before we see those exact trends again. With intense competition for every project and equipment parity, we have gone through a phase during which the price seemed to be set in the marketplace and the printer had to determine how he or she could produce it at that price to make a profit. Worsening things, some on-the-ropes printers would undersell the market just to get work in the house.

With the mergers, shutdowns, and belly-flops in recent years, we have thinned the herd when it comes to the number of printers in the US. Overseas competition is yet another issue.

So what should you do? Here are some thoughts.

 

Suggestions for Success

First, let’s define a few terms. We will be talking about three groups here—clients (regular and consistent buyers), customers (buyers who are not exclusive to you), and prospects (new business contacts).

• Look for customers and prospects who cannot afford the risk of going overseas to get their printing. Be shameless about promoting your local status, and be clear about what that value means to your client/customer/prospect base.

• Inch prices up by percentage among your stronger clients. Some of the larger ones will not notice, or if they do, they will not care. Be ready with a reason should anyone mention anything. If you raised your prices an average of just one percent, how many jobs would you lose? How about two percent? You may be able to go higher than that—you get the idea. Two percent falls directly to the bottom line, and two percent is a strong number for many printers.

• Look at your client list and basic meat-and-potato jobs and ask two questions. Should we—not can we—charge more for our work? If so, how much can we push up the prices gradually among certain jobs or clients to get closer to a more realistic number?

• Give more. Go online, go to the conferences, or put together a taskforce to determine what innovative, highly valued yet low cost service approaches you could add. Beyond that, look for anything you can do to differentiate yourself from the pack. I go by Dr. David rather than David Claerbaut simply because it is memorable.

• Yes, you can discount. The airlines do it and are open about it. When they need passengers the fares come plummeting down. And again, they make no secret of it. You can do something similar. Determine the “nut number”—the amount of gross revenue you need in a given month to cover all expenses. Profit kicks in just past that number. Now let’s say you are thirsting after a job from a given client that may be a bit out of your current. During any month in which you have enough hay in the barn, you can discount a job for new customer—sort of a “buy low to try us out” approach. Be straightforward about it with a new customer.

• Finally, take your best salespeople or even highly-skilled customer service people who handle clients closely and have them interview your strongest clients on their opinions and knowledge of price. There are some very sharp buyers out there who can be a marvelous resource for you on this.

Take heart. Yes, price is important, but the Marriott and Hyatt are still open. Motel 6 does not have all the business.

 

Dr. David Claerbaut has spent more than 25 years consulting in the graphic arts industry. You can reach him directly at 702-354-7000 or email him at drdavid@fcbb.com. Learn more at MyPRINTResource.com/10746916.

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