Inevitable

July 20, 2009

When we opened our Gralpharaphics (name altered to protect the sensibilities of the franchise) shop in 1998, one of the thoughts that passed fleetingly through Poor Richard’s feeble brain was that this was an industry that was “WalMart-proof.” Printing is just too technical and complex, he thought. They’d never want to get in this business. Wrong!

evil walmart greeterLast week, WalMart and PNI Digital Media of Canada announced a partnership that will feature printed products and ad specialties for small business as part of WalMart’s Online Photo Centre. The new product features will be rolled out in Canada only . . .for now. See the GraphicArts Online Press Release.

Being of a curious nature, Poor Richard had to check out the site. At first, I was slightly encouraged.  The site is template driven, much like VistaPrint and the other online megaprinters. Business cards are prominently featured with a special offer at $49.99 for 500.  This is no great deal, especially after you add shipping, lead times and PITA factor. Then I dug into the details, checking the other items listed. Uh oh . . . WalMart’s rolling back prices, again. Get your printing here for cheap. Factor in the Canadian exchange rate ($1.10 Canadian to $1 US) and it’s really ridiculous.

Poor Richard has railed against WalMart before (see Why We Need Small Business Part 1 and Part 2). The company has a ruthless history when it comes to small business, driving out local businesses with low prices to gain dominance in every market they enter. Worse yet, WalMart has become part of the American ethos . . . we’re so addicted to the perception of cheap that Joe Consumer is overjoyed when the opening of a new Super WalMart is announced for his community. Poor Richard thinks that it’s tantamount to issuing an invitation to the Visigoths to vacation in Rome or encouraging the high school rake to have his way with your teenage daughter. But perhaps I’m indulging in hyperbole.

I feel very secure that those who shop for printing at WalMart will get the value that they pay for and that they deserve. I am very curious as to how the mega retailer will implement solutions at their customer service counters to the problems that are so peculiar to printing.  Will Joe Consumer, who ordered blue printing and received purple, really be able to get satisfaction from Louise with her bouffant hairdo and cat’s eye glasses? And will he be willing to wait in line for 30 minutes before he finds out that she’s colorblind?

It’s inevitable, and it is unfortunate that small businesses, especially the new ones that are forming in this poor economy, will gravitate toward WalMart’s print services. It may not occur to many of them to look for another small business that might actually become a valuable partner. They may or may not learn the value of relationships in their community, but it is equally inevitable that they will come to resent the mega businesses like WalMart that sap the potential from every market they enter.

Thanks to whoever created the evil Walmart greeter. It’s floating around all over the web and I love it.


Relationships

May 30, 2009

relationshipsThe older gentleman was not seeking a relationship. He had called earlier for pricing on a book. 250 copies perfect bound with 160 pages. Finished size was 8.5 x 7, a little different, but not unheard of.  Like many of our customers these days, he had no real knowledge of paper . . . something nice but not too expensive. Brian provided an estimate for the job and felt good about it.

A couple of days later, the gentleman called back. “How much would it be just to do the binding?” he asked.

Now, in better days the answer to this question is “Sorry, we’ll pass.”  Binding someone else’s printing provides opportunities for all kinds of problems.  There is a need for setups and waste . . . meaning you have to explain that if the customer brings 250 book blocks and covers, the binding equipment is likely to eat a few. Covers have to be cut a certain way for perfect binding and space has to be allowed for the spine. There’s the problem of trim and margins and where the page numbers go . . . all things we look at when we print a book. All things that a customer who has never printed a book before doesn’t know.

But Brian liked the fellow and we certainly needed any kind of order, so he said “yes” and tried to explain all of the complexities that the old gentleman would need to know. Brian also asked why we wouldn’t be doing the printing.

“Office Despot beat your price on the printing,” was the reply. “But they couldn’t do the binding.” was the part he didn’t say.  Besides, when getting the lowest price is the object, the details don’t matter, do they?

We have been fortunate to have some really wonderful customers over the years.  For instance, the consultant, whose books we have shipped all over the US.  She works with government agencies and is really suffering from budget cuts now, but we’d do anything for her.  Or the school that seems to understand just how tight things are right now and sends checks almost instantaneously after jobs are complete. Or the construction company that is always in a hurry, but so very pleasant and easy to work with. Or so many more . . .

We’ve had a few customers that have strayed and come back; and lately, with the bad times, we’ve lost a few.  Some have disappeared altogether – out of business. We lost the educational establishment that was so devoted to the local community that they sent all of their printing to the low bidder in Atlanta. We’ve also lost a couple that have trimmed printing out of their budgets altogether.

The one that hurt the worst was a long-term account, a non-profit. We never did all of their printing, but for years we did the bulk of it and we supported them with fairly frequent donations.  I was worried a little when management changed a couple of years ago, but we continued along for awhile. One day, I received a request for pricing on all of the items we had printed for them.  I was led to believe that it was budget time and that numbers were needed to prepare for the next year.  I was naive . . . they were going out for bids and I missed it. We lost most of the business.  Shortly thereafter, Poor Richard received a request for donations for the following year.  They wanted a relationship, but not the kind that works for everyone involved.

Back to the gentleman and his book. Poor Richard grumbled and tried to make sure that the i’s were crossed and t’s were dotted. Both Brian and I had the same conversations with the customer.  First, we tried to convince him that it would be much better if we were allowed to do the whole job. He had already committed to Office Despot. All of their specs were the same, he said, but the price was cheaper.

Then, we tried to go over the details and repeatedly emphasized that we would not be responsible for waste or misprints. The old gentleman said that he understood.

When the job came to us, it was not a surprise. He delivered exactly 250 books. The quality of paper was poor and the quality of print was mediocre. Best of all, the book blocks had been miscut. Page sizes varied by about 3/8″ within each book. We pointed this out to the gentleman and did the best we could.  We did not put the finished product in Alphagraphics boxes.  The old gentleman did not complain, but he did not receive a good value for the money he spent on the project.

It’s difficult not to worry about the state of things  . . . of business in general, the printing business in particular and our business in specific. Poor Richard still maintains that printing does not make a good commodity. Too much detail is required and every project is different. The products of printing turn out best when printers and customers work together, when they have a relationship.

Poor Richard is decidedly old school . . . I like dealing with people. I prefer to buy things from salespeople and whenever possible from local businesses. It’s difficult to have a relationship with a website or WalMart.  I enjoy the relationships we maintain with our customers and I try to make sure that they are mutually beneficial. And I still believe that even in a depression, value trumps price every day.

But perhaps Poor Richard is idealistic . . . or naive. It’s tough turning 50.


Measuring Value

May 6, 2009

My customer’s “tweet” says, “We’d like to know why creativity and concept development have no value in the ad world.”  Poor Richard knows what’s behind this one.

We used to call them “take the cake” episodes. When I was a teenager, my friend’s mom used this expression a lot.  I can still see Mrs. K, hands on hips, very exasperated with something that her daughter, me or one of our other friends had done.  Drawing a deep breath and pushing her eyeglasses up her nose with the back of her right hand, she would exclaim, “Well! doesn’t that just take the cake!” This was followed by a perfect military turn and usually a slammed door as she left us to contemplate the consequences of our misdemeanors.

We had a “take the cake” moment today. Brian, our production manager, received the customer at the door. He had come to inquire about business cards . . . not unusual.  Specifically, he had come to inquire about business cards we had already printed for his company. The cards were designed by an agency we work closely with and were produced for them. He wanted to know our price to produce the cards, because he felt he had been charged too much.

We already knew that there was some dissatisfaction with the original run of the cards.  His cards had originally been produced them on our house 80# stock and then we’d been asked to run them again on a heavier and nicer stock. Brian, wisely reasoning that it was better for me to get into trouble than him, excused himself and ran for the back where Poor Richard was actually about to cut the second set of cards.  Brian briefed me on the situation, but I don’t think I really grasped what the fellow had come for. I grabbed a sheet of the uncut cards and headed for the lobby.

I went to the front counter and introduced myself, handing my customer’s customer the sheet of cards and explaining that they would be ready very shortly. He examined the cards and stated that he didn’t realize they were being reprinted.  He objected to the size of a line of type and proceeded to ask again how much the set of cards would cost.  He stated an amount that he had been charged by the agency and that he had been purchasing printing and cards for years and thought the amount was excessive.

I explained that while our price to the agency was less than the dollar amount he had stated, it is quite understandable  that an agency would charge for the work they do.  Our customer, the agency, created the design, did the layout, provided the proofs and handled the details of printing. It should be expected that they would add a charge for their work to the cost of the actual cards. I also tried to assure him that he was working with a talented and capable group and that they had done a great job with his design.

The conversation remained polite, but just went off track at that point.  My customer’s customer explained that he had gone to the agency needing a name and logo for a new company, website work, and consultation for search engine optimization. He had ended up with a name, a logo, business cards and other such stuff; when all he had really needed was the website work. In fact, he had created the website himself for $50 and had received a lot of compliments. He fished a few times more for the price of the cards.  He didn’t say it outright, but it was evident that he felt he had been taken for a ride.

I tried, but I don’t think that I was successful at dealing with the real problem. The problem was not the price of the cards, but their perceived and actual value. Our customer’s customer perceived some value in the cards he had received, but little in the work that went into them. Even though he was unable to create the name and do the layout, he didn’t assign any value to those services. I’ll also guess that it took a little time on the part of the agency to get him to come to a decision.  He didn’t assign any value to that time, either.

Poor Richard has a lot of respect for the agency in question.  They are a good customer of AlphaGraphics and also friends of mine. They understand marketing and the current trends. They are practical folks. They know what works. I think they understand the budget constraints of small business.  And they are very creative, very patient, very kind people.  Their creativity, expertise and their patience all have value and they rightly charge for it. If I had to bet, it would be that their customer received much more in value than he actually paid for.

There is a move afoot to convince printers that we should become “marketing service providers.”  This sounds good at first, because content is moving online and the volume of print is dropping dramatically. That means that many of us are no longer making money. We need something to hang our hats and our hopes on. But we also need to define what the new phrase really means.

Poor Richard has written before on the difficulties of trying to integrate creative design into a production environment (see The Trouble With Printshop Design).  If being a marketing service provider means taking on customers like this one, printers will fail miserably and many will go ballistic in the process.  Most of us are production people at the core. We like machines, gadgets, and ways of getting things done.  The value we create now is mostly in tangible products. It is conceivable that we could get involved in handling customer data and doing the implementation of some aspects of a marketing program, but  printers in general are not good at conceptual work.  Most of us don’t like it and we don’t have time for it.

I empathize with the exasperation my customer expressed in the Twitter post cited above.  Most people don’t do well with ideas. Very few people think them through carefully before implementing them. Even fewer measure their effect after implementation, then correct and try again.  These are the things that a good creative agency does well, if their customers will let them. There is great value in this capability and it can be measured by the return that their clients reap as the result of a well conducted marketing campaign.

I guess it’s necessary to explain and re-explain the value proposal. Value is created when a vendor provides something for a customer that the customer cannot do or does not want to do himself (or cannot do correctly or efficiently by himself). The customer chooses to pay the provider for the value of the service or product. In this case, the customer got confused. He thought that he was buying a product (business cards) and didn’t assign a value to the conceptual and design work necessary to create them.

lemon-on-scaleIt’s not that the concept and the product aren’t related.  Concept and product aren’t apples and oranges.  I guess they’re oranges and lemons, but one has to precede the other.  My customer’s customer perceived his agency as a a project shop.  He thought he was buying the orange and assigned no value to the lemons that were a necessary part of the package.  Poor Richard is sure that my customer’s customer received good ideas and practical suggestions from the agency he chose. He suspects that much (if not all) of that proposal was ignored and that the agency ended up developing “stuff” rather than engineering a marketing campaign.  And the value the customer assigned to the “stuff” was not equal to the time and energy that was spent developing it.

I’m very sorry that my customer is exasperated. They don’t deserve to be. Poor Richard was a little exasperated, too. I quit cussing a few years ago, but I thought of Mrs. K.  As the gentleman left the shop, I pushed up my glasses with the back of my right hand and exclaimed “Well, doesn’t that just take the cake!”  Executing a brisk military turn, I marched off to the back of the shop. If there’d been a door to slam, I would have.


Buttering the Bread on Both Sides

February 22, 2009

It’s happened again . . . same story, but a little different this time. In July 2007, Adobe, with indeterminate brilliance, decided that it would be advantageous to link the print dialogue in Acrobat directly to FedEx/Kinko’s (see Poor Richard’s post On Which Side is the Bread Buttered?). The rest of the industry screamed and threatened and Adobe backed down.

This time around, the culprit is Hewlett Packard (HP), who on January 27 introduced a new web-to-print site called MarketSplash (see HP’s press release).  As a standalone site, MarketSplash really doesn’t represent much in the way of an additional threat to brick and mortar printers (like us), who are already under so much pressure that one more straw on the camel’s back will hardly matter. The site will go head-to-head with VistaPrint, the web-to-print leader and compete very well. In fact, with some creative marketing from HP, MarketSplash could blow VistaPrint out of the water.

Being of a curious nature, Poor Richard had to explore.  MarketSplash, like VistaPrint, is template driven. And, like many/most of the online printing sites, business cards are free.  So Poor Richard decided to order some. I found a template that I liked, featuring Albert Einstein; and created a business card for a new company I had conceived only 30 seconds before, the Incomprehensible Services Company.  Poor Richard, needing a title, is now the Chief Conspirator of Incomprehensible Services.

I was actually impressed by the design template.  The default font sizes were a little small, but the design tools offered enough for customization of a rudimentary layout. Joe Consumer will be able to operate this design tool without getting himself into too much trouble.  I was also generally impressed by the quality of the layouts that were featured. A proof is approved online. The free cards are all double sided, with an advertisement for MarketSplash on the back.  Here’s a screenshot of the proof page . . . I hope HP doesn’t mind.  (If you do, let me know and I’ll zap the image.)

Marketsplash Proof Page for Incomprehensible Services Company

Marketsplash Proof Page for Incomprehensible Services Company

The quality of design can be attributed to another HP acquisition, a company called LogoWorks. Purchased by HP in 2007, LogoWorks offers inexpensive design work online.  Like MarketSplash, LogoWorks targets small businesses who are looking for a low cost alternative to ad agencies and freelance designers. Custom design from LogoWorks is also included as an option on the MarketSplash site.

After reading this far, you may be asking, “So, where’s the problem?”

There are a couple:

  • First, even though HP is not the first to offer a web-to-print site with low prices, they are going into competition with part of their customer base. This is admittedly a weak argument because HP’s desktop color printers were among the first technological developments to erode a segment of conventional printers’ business. (Home offices and the smallest of businesses were the first to go to self-printed business cards and letterhead).
  • Like Adobe, HP picked the wrong partner. They have teamed with Staples Office Supply for overnight delivery of product. While the geographic distribution of Staples’ centers certainly makes sense, the assumption that they will have the capability of quickly producing and delivering a quality product is open to question. To HP’s credit, they are open to “co-branding and licensing of the MarketSplash platform” to other retailers.  Poor Richard has no clue what this actually means.

Conventional printers may re-evaluate our purchasing decisions, especially when it comes to high end digital presses. HP has been the market leader with their Indigo line.  The quality and capabilities of these machines are impressive and many printers the size of our AlphaGraphics (including us) had planned to migrate to this machine as leases for our existing digital equipment run out. HP also has a strong presence in the wide format arena. But HP does not have the market share in our industry that Adobe Systems has. Also, unlike Adobe’s software, there are good alternatives to the HP products. HP’s decision falls squarely into the category of “calculated risk,” and the potential return may well outweigh the consequences from agitating bothersome printers like us.

Can brick and mortar printshops compete? The answer unfortunately is “yes” and “no.” If it’s a question of price, the answer is a definite maybe.  We won’t be giving away business cards, and we’re really not interested in selling 100 of anything for $39.95, but by the time you add freight some of the other items are not so cheap. The online printers convey the impression of low price, though, and it is sheer folly to say that the web printers have not eroded the low end of the customer base.

Repeat letterhead and envelope orders from small companies were profitable “bread and butter” business when our AlphaGraphics started. That business has virtually disappeared as correspondence has gone online and as a result of the VistaPrint – type alternatives. Freelance designers also once represented a good base of business for postcards and flyers. They began funneling these products to gang run printers a few years ago, similarly attracted by cheap pricing (See Poor Richard’s post Caveat Emptor). It is not just a little ironic that LogoWorks and MarketSplash actually represent direct competition to the freelance market segment, though the freelancers themselves may not realize it.

Especially in this economy, conventional printing companies are competing for a larger share of a rapidly shrinking pie. Many of us will not survive. Most of us are hanging on by our teeth and clawing with our fingernails. For those of us who will fight through these rapidly changing times, it will mean finding new ways of doing business, new products and services, and working harder and more closely with the customers we have left.  Local companies have the advantage of proximity, of reacting quickly to customer needs, and the ability to provide expertise to those who still value it.  Poor Richard thinks (hopes) that the ability to survive and eventually succeed again will still be based on that value proposition.

It will be another 6 or 7 days before Poor Richard receives the cards for his imaginary venture. They’ll be shipped by an unnamed ground transportation company. The order represented a $13.95 value, charges graciously waived by MarketSplash, and my cards will be printed on a medium matte paper. I’m anxious to see what that is, too. Be assured that another post will follow!

Postscript

Got the cards about five business days later.  They came Express Mail (USPS). The printing quality was good, but not exceptional. Digital color on an 80# Matte cover, with an advertisement for MarketSplash on the reverse side. The freebies presume that more profitable orders for other items will follow from satisfied customers who have received their wonderful free business cards. I’m sure that that is a valid assumption, but I wonder where the breakeven number falls.

Even with streamlined ordering, there is a real cost to print, cut, package and ship the stupid things.  I’d figure between $10 and $15/set in a really efficient production operation.  If one in four customers actually order another item, that’s $40-$60 in additional sales required before a margin is achieved.  A low volume business model must turn high volumes to make a profit. This is  a combination traditionally not compatible to a specialized and detailed business like printing.

Poor Richard confesses that this may be the business model for the times we’re in.  It’s not a model that will be conducive to the kind of business that good local printers have traditionally done. I regret that and I think that one day the customer’s we’ve lost may regret it too.


Price, Price . . . the Printer’s Lament.

June 12, 2008

In my previous life (BA -before AlphaGraphics), I sold lumber. Worked for a great company out of Perry, GA that sold treated lumber and other stuff to retail lumber yards all over the Eastern US. We actually marketed lumber, which was a little difficult. You see, it’s really kind of hard to differentiate the #2 2 x 4 you sell from the #2 2 x 4 that everyone else was selling. We ran a really tight business, with excellent customer service, and we always did what we said we would do.

In the midst of the Spring busy season, there was a game that was played. There was alway an item or two in short supply that the customer had to have on the truck. One competitor or another would always lowball this item to get the truckload order. We’d hear, “I had to place the order with ABC lumber because they were 10% less on 2 x 10 x 14 and that’s what I really needed.”

“How were we on the rest of the stuff?” I’d always ask. Usually we were pretty much in line. Frequently, we’d follow up to find that the truck had arrived from the competitor without the “most needed” item.

Here’s the point: It’s easy to price low when you don’t deliver.

Times are tough in the printing world. The market is changing rapidly and mid-sized printers are having identity crises. In Middle Georgia, the summer doldrums are compounded by the weak economy and an ever accelerating shift away from print. With the overall market shrinking, competitors are flailing away and the waves are getting rough.

Two weeks ago, we lost a nice bit of business from an old account. We had printed and delivered their letterhead and envelopes for several years, since they shut down an in-house shop. Here’s the short story: New purchasing agent, Out for bid, taken by an Atlanta printer.

The service requirements for this account are stringent: online ordering and proofing, 3 day turnaround, direct delivery to the end user, small quantity orders. It was not unusual for us to deliver a box of business cards. We had imposed a minimum of 500 cards, but were requested to change this to 100 for the new contract. We bid the contract at what I thought were very competitive prices for the level of service requested. We lost the bid to a company in Marietta, GA; roughly 2 hours to the north of us. The average value of a delivery to this client was around $180. I’m not going to draw the conclusion that the new supplier will not meet the terms of the contract, but I question that they will profit from it.

Last week we printed some letterhead and envelopes for a non-profit. It was a new customer for us . . . one of our old contacts changed jobs and gave us a call. I love it when that happens. After the envelopes were delivered, we were requested to provide pricing for a small quantity of “wallet flap” remittance envelopes. They asked for quantities of 1000 and 3000. We regularly print these envelopes and they occasionally give us fits in the small presses. I price the envelopes accordingly and fairly.

I emailed the envelope estimate and didn’t hear back from them for a week. On Monday, Brian received a call from the customer. One of our competitors had undercut our prices substantially . . . if we would match the price, we could have the order. Two of our folks have worked recently for the competitor in question. There are two presses in their facility–a 40″ Komori 6 color and an antique Ryobi that no one will run. Their business is built around long runs – real estate magazines and such. I am skeptical that an order for 3000 envelopes is going to get a lot of attention when it gets into the workflow. I explained that we would be happy to print the envelopes for them, but declined to match the competitor’s pricing. Why work for nothing?

Customer 3 came in today to ask if they could put some promotional postcards on our front counter. They’re a new business downtown. I recognized the postcard immediately . . . muddy printing, low resolution art, and UV coating. We told him we could do a better job for him next time. He paid $200 for a zillion on from Niftyprint.com. He got what he paid for.

The last customer in today’s story seems to be a really nice guy. He’s setting up a new office in a smaller community to the south of us and had heard of Alphagraphics from one of his associates. We printed his business cards last week. This week’s project was to be a trifold brochure. The graphic designer is associated somehow with the business he’s starting, but the individual offices can purchase their own printing. I like that. We provided pricing for several permutations of the brochure, small quantities printed 4/4 in digital color. Because he had wanted a heavier, “more substantial” card stock for his business cards, I suggested an 80# cover stock for the brochure.

A day later, I received a call asking for revised pricing on larger quantities. I responded accordingly.

The next call was familiar. The designer has a printing relationship and can provide the brochure for a lower price. Could we match it? This time I asked for the exact specs. 4/4 with bleeds printed on 80# text. After revising the estimate to match the specifications, we were right in line. Only one problem . . . the customer didn’t want a flimsy brochure. We revised once more for 100# text. This one worked out OK.

Here is the point: there is a value attribute in every transaction.

Lumber is universally acknowledged to be a commodity, but the value in the transactions my company undertook had to do with integrity and dependability. We delivered what we promised and took care of any problems that occurred. Regardless of the price promised, a product that is not delivered (or not delived on time) has no value whatsoever to the buyer.

There are costs associated with the value provided. These costs have to be recovered in the price of the product to enable the supplier to provide the product to the customer. In addition, the provider must make a profit in order to survive.

The lowest cost provider is not always the provider of greatest value. In printing, if the quality of the product is poor, the cost to the customer in terms of lost opportunities and poor impressions can be far in excess of the price they would have paid for a quality product in the first place.

Finally, it is necessary to understand what you are purchasing. The printer you want to do business with will help you make a good purchasing decision. He’ll help you choose the correct value and price for the product and impression you want to produce.

In times like these, the universal inclination is to pinch a penny until Mr. Lincoln screams. Businesses like mine are balancing on the edge, trying to keep our businesses alive and meet our customers’ needs without compromising the standards of value that they (our customers) have come to expect. Please take value into consideration when you make purchasing decisions. Think about the companies that you want to be doing business with when times get better. Times are tough, but buying cheap may not be the best choice.


Diagnosis Charges

March 9, 2008

Doctor with Clipboard“He wants to speak to the manager,” were the words I heard. I looked through the glass into Brian’s office. His eyes were rolling just slightly and he had that sardonic half smile that he wears when one of those, “you’re the owner, you have to deal with this” events happens. I almost think he enjoys it.

“This is Richard, may I help you?” I said to the as yet unidentified voice on the phone. The voice introduced himself as the new general manager of an organization we’ve done occasional business with over the years.

“You’re doing some business cards for us,” he stated, “and I need to talk to you about these charges.”

I was familiar with the job and the company. Sharon, our salesperson, and I had visited our contact at the company weeks before. The company has gone through a lot of changes in recent years. We printed a newsletter for them at one time; letterhead, envelopes and other “stuff” that organizations use. Our contact has always been friendly, but the attitude of the company had changed. Most of the print had been eliminated to cut costs. They had reverted to “do it yourself” with the newsletter. What little was left was handled from a corporate office in Atlanta. All that was left for local production was the business cards. Disappointing, but easy enough; at least, that’s what we thought at the time.

It took a while for the order to come in. Sharon had to answer lots of questions. Estimates were prepared and presented. You will note the word “estimates.” That’s what printshops should provide, not quotations. It is only possible to provide a hard quotation for a static set of specifications. When the specifications change, so do the costs and so should the price.

On AlphaGraphics estimates we always include a special caveat. The language goes like this:

“Prices are for production only. Additional charges will apply for layout, design, or file modifications required before printing.”

We do not estimate design or layout charges because it is absolutely impossible to predict the amount of time a customer may require from us to achieve the finished layout that they desire. We simply keep a log of the time required for the job and charge accordingly. We regularly explain the caveat and offer our advice to keep layout and design charges at a minimum. Our advice is frequently ignored.

For instance, we may suggest that a customer provide us with a digital logo and a rough sketch of a business card design rather than try to prepare it themselves. Often, more time is required to unscramble a file from an inexperienced designer than to put it together from scratch. Or we might suggest that it’s best not to proof by committee. Everyone involved will feel compelled to make changes, increasing the confusion, and requiring more time for changes and proofs before the job is ready to print.

Time is the valuable commodity in a printshop design or prepress office. Prepress is the inevitable bottleneck in any production shop. I’ve written before about the challenges of printshop design (see The Trouble with Printshop Design ). It’s not that the equipment or the employees in the design office are so all-fired expensive, but that the opportunity cost of tying up the workflow can be tremendous. An inexperienced or inefficient designer can hold up a $3500 brochure run and 2 or 3 employees while they are engrossed in the layout of a $50 business card. Prepress time is valuable simply because it’s what keeps the rest of the people and equipment productive.

The time has a measurable value and we charge for it. It’s like going to the doctor. If you go in with a complaint, see the good doctor, and are told that you are perfectly healthy; you still pay the doctor for his diagnosis. You pay him because his time is valuable. If you fail to listen to your doctor, you can run into real trouble. If you fail to listen to your printer, the result can be the same.

We had provided a production estimate with our usual caveat to the customer mentioned above. What started out as an order for 4 sets of business cards had turned into 6 sets. We were told that they would send the art for the card. We received a low resolution logo and a basic layout pasted onto an 8.5 x 11 page of a Microsoft Word file. We received the names to typeset and were later told that two of the cards had a reverse side. Proofs were required . . . 4 of them to be exact. Because the changes had become excessive, Brian sent a revised estimate to the customer showing additional layout charges of $60. The phone call ensued, providing Brian with an opportunity for entertainment at my expense.

There’s no real need to go into the detail of the conversation with the new manager. Suffice it to say that our proviso regarding additional costs was of as little importance to him as the three weeks of indecision which had delayed the production of his cards or the multiple proofs. It was his responsibility to “watch every penny,” and he simply did not understand why there had been a delay or how the cost could change from his original estimate.

“I’ll have to let you know if we’re going ahead with this,” was his concluding statement.

I haven’t scratched the job from the production list yet, but I really don’t expect to hear back from him. I’m not so naive to think that he won’t get his cards somewhere. He’ll probably send the inadequate art off to one of the internet bandits and be satisfied with what he receives because he saved so much money. Or maybe he’ll find another printer who thinks that there’s lots more business to come and will put up with his indecision.

I’m sure that my expression betrayed my thoughts as I hung up the receiver and glanced back through the glass into Brian’s office. I’m always disappointed when a customer is upset. It’s just one of those things that happens occasionally in our business, and it’s never pleasant. Good customers are hard to come by and good reputations are easier to destroy than to earn. We try very hard to do each project well and really do go a long way to diagnose and accomodate the needs of each customer. Like the doctor, though, we have to cover the cost of the diagnosis and of special treatment provided. We have to keep the office running in order to help the next patient.


Outsourcing

January 28, 2008

I haven’t told the rest of the team yet, but in 2 weeks I’m going to lay them all off. I’ve found this great company in Indolaysia (or was it Pakinesia?) that is going to handle all of our print projects for just a fraction of what it costs me to do them in house. As I understand it, all I have to do is make deliveries and collect the money from our customers.

AlphaGraphics' New Customer Service StaffThey’ll even handle customer service for me. The company has a call center in Islamadehli staffed with approximately nearly 7,632 people who are all named Danny (pictured at left). When my customers call, Danny will answer their questions and take their orders. If they have a problem, Danny can choose from one of approximately nearly 367 standard answers which may or may not apply to the problem my customer has, but most assuredly will apply at some instance to a problem that my customer may have at a future time.

Once the order is placed, it will be produced at a factory in China. A wee, small amount of lead will be added for flavoring, and it will be shipped via container ship back here to Macon. As I understand it, lead times will extend just a little bit, but the price advantage will certainly make this acceptable, even preferable to my customers.

Design will also be handled by my Indolaysian partner. In fact, we’re going to be using the same design center that the Macon Telegraph (see Telegraph to outsource part of ad production team ) will be using to design their display ads. It is located in Jakartombay. All of the graphic designers there are named Judy and they speak and write perfectly grammatical English as a second language.

I’ll miss all of the nice people who work at AlphaGraphics, but I won’t worry about them too much. As all of the jobs are shipped offshore, they’ll reconsider their need to earn a living. For a while, our government will support them, but eventually they’ll be content with the wages paid in Indolaysia and we’ll be able to operate call centers here for those filthy capitalists in China.

Thanks to McLatchy newpapers and to Pete, Andy and Patsy of the excellent American Express Travel Related Services customer service team in Calcutta for their inspiration. I’m going to send them all a new pair of Chinese made tennis shoes from Wal-Mart for their contribution to AlphaGraphics’ success!


Caveat Emptor!

March 17, 2007

TANSTAAFL – there ain’t no such thing as a free lunch.

 

I’d always thought that John Maynard Keynes coined this acronym in support of one of his free market theories. Turns out that it was Robert Heinlein, one of the strangest science fiction writers to emerge from the 1960s.

The principle is simple. There is an intrinsic value to every product or service and there is an associated economic cost to the provision of that product or service. Whether visible in the price of that product or hidden in the prices of other products, the cost is there nonetheless, and must be recovered if the transaction is to make economic sense.

Caveat Emptor, which literally means “let the buyer beware,” is a sound admonition to the purchaser when the lunch appears to be “free.” Look for the catch. The lunch may be free, but it costs $4.50 to throw away the paper sack and the apple core.

Twice last week, I’ve been confronted by “better deals” that a customer can buy over the internet. The first was from an ad agency, a customer that in the past has consumed a fair amount of time with quotations and required a little handholding when the projects came through. We had quoted postcards. They asked us to meet the price of an internet printer. I passed.

The second incident involved a college student organization that wanted some flyers. The student in charge of the project had come into the store and received pricing for the project, a thousand color handbills. He called back the next day, saying that the price didn’t fit his budget. I gave him a couple of options and finally reduced the price he was originally quoted by a little, simply because I wanted to help him out. His response frankly surprised me.

“Have you heard of Magnificoprints.com?” he queried.

I replied that I had not.

“You can get 5000 of these on manificoprints for $150, and they’ll throw in a free candy bar, too!”

I suggested that he opt for the free Snickers bar, wished him good luck, and told him to call us back if he needed help. Then I began thinking . . . always a dangerous proposition.

The internet printers have been around for a while. Four or five years ago, before the dotcom bust, there was a rush among conventional printers to establish an “internet presence.” Coalitions were formed, venture capital was obtained, grand castles of sand were built and collapsed with the incoming tide.

Most conventional printshops remained “brick and mortar” operations, using the internet for the things that made good sense for their customers. AlphaGraphics, Inc. did an exceptionally good job with this, providing their franchisees (Poor Richard included) with a web presence that included facilities for file transfer, proofing, online ordering, etc.

But now there is a new generation of online printers. At the core, the model for these businesses is not much different than that of “gang run” trade printers that have been around forever. The objective is to achieve economies of scale by combining (ganging) several similar jobs on a large sheet, thereby increasing efficiency, and reducing cost and price. Most conventional printers have relied on this model for outsourcing items like single business cards where price is more important than quality concerns.

The new online printers have enhanced this model with digital printing technology that enables very short runs with little waste or setup cost.From a manufacturing standpoint, the goal is standardization of input, maximization of capacity and mimimization of cost. Relative to a conventional printer, volumes are high and unit costs are low. Margins are very low.

The marketing strategy is blatantly simple . . . low price.

“Why, isn’t this good for the consumer?” you ask. “Shouldn’t we all be buying our printing this way?”

Poor Richard’s answer is “Yes and No,” but (predictably) “mostly No.”

The model certainly works on cheap business cards where either the quality levels are not demanding or the risk is low. AlphaGraphics has depended on a Jacksonville, FL company for years that mass produces business cards. They can produce the blue and red cards for Joe’s Bakery in Macon along with blue and red cards for Flo’s Jewelry in Mobile and Moe’s Body Shop in Kalamazoo for less than what it costs me to set up my press and print a single set. Joe saves money and the outcome is fine, as long as you stay within their paper and ink parameters and the card is uncomplicated.

And there’s the first caveat. The model works for peanut butter and jelly; maybe for a hamburger. It doesn’t work for filet mignon. What’s the risk if a business card doesn’t turn out right? You change it and do it again. Outside of the time required, the cost is certainly manageable, even for a DIY designer who is using KidPix to create the card. But what if it’s your boss’s card? What if it’s the corporate brochure or the annual report that goes to the Board of Directors? What if the event is next week and you don’t have time to do it again?

Poor Richard did a little research this morning. I read the fine print. Here it is:

19. Workmanship Guarantee
Because of the nature of “gang run” style printing ModernColorPrinting.com shall not be held responsible for the following issues which may occur during our production process: variation in color, offset (smudges), cutting variations, marking, picking, cutting issues, size discrepancies (over/under), and etc. Customer acknowledges that they are receiving gang run style printing at a substantial price discount and expedited delivery times and thus said printing will not be held to the same standard as traditional offset lithography nor generally accepted printing standards. While every effort will be made to satisfy our customer’s needs, requests for reprints or credits based on quality issues will not be recognized.

http://www.moderncolorprinting.com/terms-conditions-i-4.html

And some more:

Indeed, VistaPrint takes great pride in its commitment to customer satisfaction. However, certain circumstances are beyond our control and are not covered by the guarantee. Please note that we cannot be responsible for:

  • Spelling, punctuation or grammatical errors made by the customer.
  • Inferior quality or low-resolution of uploaded images.
  • Design errors introduced by the customer in the document creation process.
  • Errors in user-selected options such as choice of finish, quantity or product type.
  • Damage to the products arising after delivery to the customer.

Please preview your designs carefully and correct any mistakes prior to placing your order. In an effort to keep costs down and pass substantial savings along to our customers, VistaPrint does not proof documents created by its customers prior to processing.

http://www.vistaprint.com/vp/ns/customer_care/help/answer.aspx?qid=2,3&xnav=Feature

Most of our customers at AlphaGraphics have reasonable expectations when it comes to their printing projects. I don’t think that smudges, marking, picking, size variations, etc. fall within those reasonable expectations. They don’t fall within my expectations for my customers’ projects. And the best designers that we work with regularly catch minor mistakes at proof. Quality-oriented printers regularly check their customers files for errors and we regularly find them. Over 80% of the files we are given need and receive minor corrections before they are printed. In many cases our customers do not even know that a change was made to allow their file to print correctly.

In fairness, I did find one online printer that I think I might almost be willing to consider. They’re called printingforless.com and their website offers a customer satisfaction guarantee. You’re still on your own with design, but they do provide soft proofs of each job online. You can get a hard copy proof by mail for an extra charge. Their website is helpful and customer oriented.

Guess what? After all is said and done, the prices are comparable to what you can get at your local printshop. For instance, the base price for an 8.5 x 11 trifold printed 4/4 on 80# gloss text is $456.25. That’s 4 days in production + ground shipping from Montana. To reduce the production time to 2 days and ship overnight brings the total to $717.80, right in line with your local printshop who will help you with your art, your proof and probably deliver the job to your doorstep.

One of Heinlein’s more bizarre characters was a human named Michael Valentine Smith, born and raised on Mars by Martians, and rescued back to earth as a young man. From the Martians, Smith obtained a super-human analytical capability, a way of understanding that Heinlein dubbed “grokking.” To truly understand something, in Smith’s fashion, was to “grok” it.

The dictionary definition of caveat emptor is “the axiom or principle in commerce that the buyer alone is responsible for assessing the quality of a purchase before buying.” This means that you, the buyer, must determine the intrinsic value of the deal. To do this, you must understand what you are buying, you must “grok” it.

There’s a lot more to printing than meets the eye. Internet printing has a lot less to offer than low price. TANSTAAFLthere ain’t no such thing as a free lunch. Grok it?


Can You Really Resist Color?

January 24, 2007

COLOR

Times have changed. When AlphaGraphics opened 9 years ago, we had a Canon color copier. It was whiz bang! It printed beautiful color, mostly on uncoated laser bond (spruced up typing paper), one side only and you couldn’t get the same piece to print the same colors two days in a row no matter how much you calibrated the thing.

And color copies were expensive! In those days, grandmoms would come in with photos of their grandchildren. They’d want to play with the size and color and get it all just right. We’d explain to them that each copy was $1.45 and they’d fall out on the floor. They’d pass out right there in the middle of the printshop, flowerdy print dresses, funny hats and all. We’d get ‘em up with some smelling salts, encourage them, and walk them out to their cars.

The Canon was good for entertainment, but not for much of anything else. It printed at 6 pages per minute top speed, but it jammed every 3 sheets. We had one grandmom go completely senile waiting for copies of her grandkids. She forgot why she had come into the shop, wandered out the door and we never did see her again. She left her car in the parking lot and they found her in Unadilla the next day, asleep in the back of a school bus.

In those days we did a lot of 2 color printing for businesses. Process color was only done by the big shops on big presses and it was REALLY EXPENSIVE. If a small business wanted a brochure, it was usually 2 color or black and white. We had an advantage in Middle Georgia because our press could handle gloss paper with little difficulty.

Times have changed. Today’s audience expects color on almost everything. And with the evolution of technology, prices have come down amazingly. Our digital color press prints at over 10 times the speed of the old Canon and we do 4 color press work in house almost every day. We don’t have a way to make color copies any more, so we’ve lost the grandmoms’ business.

Some of our customers haven’t figured this out yet, though. This post is for them.

Here’s a chart:

This nice graph shows the price of a “typical” trifold brochure, printed all different kinds of ways. Don’t try to figure out too much about the prices from this . . . the prices on an actual job will vary with paper, design time required, and about exactly 273 other factors that are way too complicated for this post. There are a couple of things to notice here:

  1. Color prices are still higher than black ink or 2 color, but not by an awful lot. The prices have come down dramatically. It is possible to print, cut and fold 5000 brochures for around $1000. That’s $.20 each.
  2. Digital color (the green line) has made it possible to print even very small quantities at a reasonable price. The digital price for 500 gloss trifold brochures is less than $500. You can double the quantity for around $250 more.
  3. Because every impression costs the same on a digital machine, the prices get out of line around the 1200 quantity mark. But this is where the printing press kicks in. Small format 4 color presses are competitive and practical from about the 1000 sheet range and up.

Here’s another chart:
This chart shows the price gap between the 2 color version and the full color version of the same trifold brochure at various quantities. The line shows the price premium for the full color job. The bars indicate the additional cost of each piece. A few more things to note:

  1. Noted market researchers and nine out of 10 dentists cited on television commercials agree that color attracts more attention than black and white.The extra “bang” for the buck doesn’t cost much more.
  2. Even at small quantities, the cost of adding color isn’t much. It’s approximately 1/3 more at 1000 copies of this brochure.
  3. At larger quantities, the cost/piece to add color is low. On our press, it’s in the $.03 to $.06 range. Would you spend 6 cents more to attract a good customer?

So what’s the point?

Secretly, Poor Richard has always wanted to be an economist and this was a chance to play with graphs and make a point, too. If you’re going to spend the money to create marketing or communications pieces for your business, do them in COLOR . Honestly, with the Internet and all of the color marketing collateral that’s out there now, black and white looks kind of cheezy. We can do a lot with 2 color, but there is nothing like a full color brochure or sell sheet to get the message across.

And it will make your printer happy.


Business Cards and Nuclear War

January 16, 2007

“Hi, is this a printshop?” mutters the voice on the phone.

“No, this is NORAD headquarters. Could I have your identification number please?” runs the thought in my head, but I resist. “Yes, this is AlphaGraphics. Could I help you?” comes the answer from my mouth.

“Do you do business cards?” is the question.

“We control the largest nuclear arsenal in the entire world from this little bunker two miles under an undisclosed mountain in Nevada or somewhere. Why would we ever trouble with business cards?” I suppress the maniacal laugh and say, “Of course we do. If you’ll tell me a little about the cards you’d like to produce, I’ll try to help you.”

“What do you mean?” says the voice.

“I mean that if I press that little red button . . .”

The “business card call” is regularly received at AlphaGraphics. It’s a fair assumption that other shops receive this call, too. Business cards are the bane of a printer’s existence. They are the proverbial bucket with a hole in the bottom. They waste valuable time and they can jeopardize valuable accounts. Screw up the boss’s business cards and you may not get a look at the $4,500 catalog job the company is planning for next month.

But that’s not the topic of today’s post. Today, we’re going to tackle the thorny problem of pricing: how to ask for it and how to evaluate it. The example above is what not to do!

In a printer’s dreams all of our customers know what they want. Price is not the primary consideration. They listen to us and accept our advice on how to get the job done the best and most economical way possible. They have allocated the necessary time for their project, they have a reasonable budget and their primary interest is in the quality of the final product. Sounds reasonable, doesn’t it? Wake up, Richard!

Poor Richard’s Rule # 33: The accuracy and quality of a printer’s estimate is directly proportional to the quality of the information provided by the customer.

You will note that I am talking about estimates here. A smart printer does not provide an unqualified quotation. There are just too many variables involved, including the capability of the customer to make the decisions needed before production. All of the variables in printing have a cost. There is even a cost involved in producing an estimate in the first place. Here’s what we need to know to provide a good budget estimate:

  1. What is it? This is a good starting point. Tell us what you will call the project. Especially if we’re doing more than one project at a time for you, let us know that the project is. The project is the Alumni Invitation Set.
  2. What’s included? Be specific about everything involved. The Alumni Invitation Set will include a folded invitation, an outbound envelope, a response card, a response envelope, and a heartfelt request for large donations.
  3. How many? This is a really important question for us printers. “How many” will determine the best way to produce your job. If the “how many” for the invitation set is 5,000, this is going to be a press job. if it’s 500, we may do it digitally. If it’s 20, we may give you a few sheets of some nice cover stock and suggest that you print it on that $190 HP inkjet you got for Christmas.
  4. What colors? Along with “how many,” the amount of color will determine the best way to produce your project.
  5. What paper? No, we don’t expect you to be a paper expert. With all of the changes in the paper industry in recent years, it’s hard for us to keep up with what’s available. If you know exactly what paper you want, let us know. We’ll check to make sure that it is still available. If not, describe the paper. The invitations should be printed on a heavy stock with a texture and a light cream color. We’ll suggest a paper that meets your criteria.
    Please note: the paper selection can have a significant impact on the project cost. If you specify an expensive paper that can only be purchased in cartons of 1000 25″ x 38″ sheets and you want 500 business cards, guess what? Your business cards are going to be so expensive that you’d wish we had taken the nuclear option.
  6. What specifically would you like us to do? For instance, you’d like us to print, fold, stuff, address and mail the invitations.
  7. What is the timetable? If today is Wednesday and the event is on Friday, there’s no need to get an estimate. You should get all of the room mothers together and start telephoning. Printers love customers who set a timetable early on in the project and then stick to it. We like the other 95% of our customers OK, but we love the ones who can schedule. Always discuss timetable with your printer, especially when it is tight.
  8. What is the budget? Admittedly, this is a little counter-intuitive. Why would you tell the printer what you have to spend if you’re asking for a quote? If you’re asking us to quote caviar and your budget is sardines, we need to know.Believe it or not, we will try to fit your budget. Your printer can save you a bunch of money by suggesting changes in paper, colors, sizes, and exactly 342 other factors that are way beyond the scope of today’s blog entry.

Back to Poor Richard’s Rule: the better the information you provide, the more accurate the estimate. And here’s the first corollary:

  • If you provide the same information to multiple printers, it will be easier to compare the estimates.

This does not necessarily mean that you will always be comparing “apples to apples,” but you might get as close as “cumquats to nectarines.” Because of the number of variables involved in most print jobs, the likelihood of two printers coming in at exactly the same price is roughly the same as the probability of snowfall in Macon, GA in June. But at least you will have tightened up the specification.

Now, let’s talk about some other aspects of evaluating the prices:

  1. Is the printer reliable? Can they do what they say they will do and will they do it when they say they will? It is probably best not to try a new printer with a lower price when today is Monday and opening night is Wednesday. Ask a new printer for references. Give them a try with a smaller, low-risk job. Envelopes are good. Business cards are not (see above).
  2. Does the printer match the project? At AlphaGraphics, we love a run of 5,000 color trifold brochures. This is the perfect job for our color press. If you ask us to run 105,000, we’ll refer you to a friendly local competitor with great big presses. Buyer Beware! All printers do not follow this practice! There is a school of thinking that advocates accepting all projects and outsourcing those you cannot do in house. This is fine for some specialized items (like presentation folders), but can create real problems if the wrong vendor is selected for a project. Ask where the project will be done and why.
  3. Can the printer produce the quality you need? A small press that may produce acceptable quality for a form may not be able to hold the PMS color you need on your fancy letterhead. Simple process color may look ok when produced on a 2 color press. Heavy ink coverage may be a disaster. Ask for samples. Look at the quality of the work the printer is producing.
  4. Can the printer meet the timetable? Will he discuss the specifics with you? Discussing timetables requires commitments from both you and the printer. Do you have the assurance that he will meet his commitments if you meet yours?
  5. Is the price in line? Is it competitive? Does it meet the budget? It is very rare that the lowest price provider will be able to also provide high levels of service and quality. Again, see above regarding the discussion of budget prices with your printer.

If your goal is to find cheap business cards, don’t beat around the bush. The printer on the other end will be thinking about the nuclear option. If you’ve got to have cheap business cards, just ask! The printer on the other end of the phone will send you to one of the office supply superstores where you’ll get exactly what you deserve.

On the other hand, if your goal is to build a relationship with a printer who can produce the heartfelt request for large donations the way you need it, on time, and within budget; follow the guidelines above. We’d be happy at AlphaGraphics if you called us . . . but don’t ask about business cards.


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