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

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.

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4 Responses to Price, Price . . . the Printer’s Lament.

  1. Sedontane says:

    Excellent article, I have to totally agree with this. Its not lumber, printing or any specific area of business. I am a computer nut and I now refuse to buy certain manufacturers products/software due to bad support/products provided. Quality has to beat Quantity every time for repeat business.

  2. Bill Alpert says:

    Yes, I’ve found there *is* a value equation in many situations. If there isn’t, it’s likely you won’t find any profit in the job anyway.

    And yes, a few internet printers turn out poor product, but then again others offer a more than reliable product at a price point below my own cost of production. In fact, as a printing firm, you should be partnering with someone like that and brokering their work, if you aren’t already. Sometimes the value equation is knowing how to prep and source brokered work for your customers, and thus working toward a long term relationship.

    The panic driven print marketplace has conditioned print buyers to shop only price, almost to the exclusion of many other factors that actually may be more important to the buyer in the long run. So it’s our job as print providers to educate our buyers. If you don’t, might as well go back into selling 2 by 4s and potatoes by the 30 lb sack.

    And to all printing company owners reading this: if you base your product/service mix and pricing solely on some anonymous competitor’s price list, you’ll likely be out of a job sooner than you think. Remember, anyone can buy a press or a copier. Actually building something of value to customers, owners and employees is quite another matter.

  3. Software RIP says:

    Thanks, that really puts things in perspective for me

  4. Don Allen says:

    I agree with your article about penny-pinching.
    My background in printing goes back to 1972. When I started at 14-years old, hot metal was still dominate with linotypes and C&P presses. The industry changed to compete with quick print shops and ITEK paper plate cameras.
    It seems that every generation loses to cutting costs and lowering service to compete.
    For 21-years I ran my shop and saw new comers come and go. They failed mainly from trying to be the “cheapest shop in town.” In those days the other guys used the Franklin Catalog to price jobs from an average of what others charged across the country.
    For myself I knew my costs, overhead, etc. and offered great service at fair prices.
    I loved those years and wished I could relive that time in my life.
    In closing the day a printer looses the sense of pride in his workmanship, is the day the last press will roll to a stop. The cheap completion is giving the legacy of printing a black eye.

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