provided by: 
As printers move into the New Year and you have to ask the question: "Have they raised prices yet?" The first of the year is always a good excuse to raise prices, and not just adjust the prices to reflect the increased cost of paper. Other costs have gone up and business people are allowed to make a profit. Isn't that why we are in business in the first place?
PrintBuyersOnline.com is a website that provides free, quality education, solutions, and resources to print buyers, production professionals, marketers, and their suppliers. The organization encourages best practices and promotes the exchange of information between buyers and suppliers in a non-sales environment.
The organization is constantly polling the visitors to its website to find out what print buyers are thinking. A poll at the end of 2007 asked, "How much do you expect prices to increase on your print projects in 2008 compared to 2007 (due to paper, energy, transportation, and other costs)?
The answers might surprise some printers. Seventeen percent of the print buyers expected their print prices to be raised more than 6%, while 43% expect the prices to go up 3% to 6%. Forty percent of the buyers expected a rise of 3% or less. I think most printers would be surprised to learn that the majority of their customers are expecting a price increase in 2008. Why shouldn't they? Everything else is going up. Why not printing?
Excuses! Excuses!
Printers are more price sensitive than their customers. They will cut their margins and even lose money to "keep the presses running." They agonize over every invoice and worry that their customer is going to leave because he can get a better price down the road.
One of the major reasons that printers worry about losing customers is because they can't communicate any meaningful differentiation from their competition. When Printbuyersonline.com asked print buyers to rate how effective their print suppliers are at communicating meaningful differentiation from their competition, it found that 65% thought their print supplier was either fair or poor in communicating why they were different from the competition. Only 1% rated print suppliers as excellent and 9% rated them very good.
If only 10% of the print suppliers are communicating well with their customers, then it isn't any wonder that the NAPL 2007 Digital Service Study reported: "Our biggest problem is still dealing with bad customer files and how to charge for them, when so much of our competition eats the cost." Other reports cite databases as the next nightmare file coming from customers.
Lines of Communication
According to the NAPL study, some 34.3% of shops with sales of $3 million or less don't provide any customer training on file preparation. Is it any wonder that printers get crappy files?
Successful printers are proactive and get in front of their customers to explain how the customer can be part of the printer's workflow. Not only will customer training help eliminate problem files, it will build relationships and loyalty and show how the printer is different from the competition. Customers want to provide good files. They want to know what they are doing wrong so they can correct the problem. It is up to the printer to tell them how to do it.
And is the competition really taking a customer file and fixing it for free? I think too many printers rely too much on customers for their marketing information about their competition. "My printer didn't charge me for that service" might really mean "My printer didn't list that additional charge on the invoice." I find many printers try to hide the cost of fixing files in preflight and plate charges. Most customers are just looking at the total cost on the invoice. Some printers get in trouble by listing specific charges on the invoice. The total price may be the same or lower than the competition, but the customer will key on that line item and complain. So the myth of "My last printer didn't charge me for that" becomes a reason for the new printer to give away services.
Customers understand and will accept additional prices if they know about them in advance. If printers would train their customers to the industry standards of how to prepare a file properly for printing, they would avoid questions about increased prices when customers submit the files incorrectly. It is the printer who must train the customers about the digital standards.
It doesn't cost that much to provide training to your customers, and the money saved by receiving good files from customers quickly offsets the training costs. Whether it is one-on-one training or group seminars, printers need to make training a special service they offer to their top customers. Customers want printing to be easy to buy and training makes it easier.
Surprisingly, printers don't have to train the entire print buying population. Study after study reports that printing companies get the majority of their business from their top 25 customers. Yet printers don't take the time to even train their top customers. Printers really feel the pain when some other competitor steals their top customer, but they don't usually lose their top customers because of price. It is usually because of lack of service and not learning what the customer really needs.
Printers are afraid of raising prices because they think price is the number one reason customers buy from them. To many, cheap prices are the cornerstone of their marketing plan. To avoid any discussion on price, printers limit contact with customers. They become order takers. Rather than have face-to-face discussions, they rely on direct mail and websites to let the customer know what other services they offer. They hope that the customer will find something they need in that information and order it.
Successful printers are constantly talking to their customers in person. They question the customers about their needs and show the value they can add to what the customer is already purchasing. While price is always a consideration for the customer, the successful printer also knows the customer also wants outstanding service. Offering customer training adds to a higher perceived value. Training makes it easier for a customer to buy printing.
It isn't hard to identify what customers need to know. Most prepress people can tell you the common mistakes customers make if you ask. They can also provide the solutions. Have your prepress staff train someone in the organization to tell the customers how to avoid the most common errors.
A perfect New Year's resolution would be to raise your prices and make sure your top 25 customers are trained to create and submit digital files properly. Besides the basic mechanics of constructing a file, they need to know how to submit it correctly. The easier you can make it for the customer to order from you, the more likely they will continue to be a customer. Ordering printing is hard for most buyers and they are looking for ways to ease the pain of print buying.
Pricing VDP
Pricing issues also came up in a recent VDP survey by Larry Hunt in his Color Copy News. While a number of printers are interested in offering variable data printing services, only 24% of the respondents are actively promoting VDP. According to Hunt, the major obstacle holding the industry back is the question of how to charge for the service. Hunt found that prices were all over the board. Some of the respondents cited the need for industry standards in VDP and pricing guidelines. Printers should take advantage of Larry Hunt's Color Copy News and High Speed Copy News if they are interested in buying equipment or learning about the recent trends. You can get more information at www.larryhunt.com.
Printers need to segment the market when pricing VDP work. Simple mail merge and transactional printing are commodity type work, with prices and margins plummeting. Higher prices can be charged for personalized promotional messages that combine a call for action with graphics. Lumping both types of work into the VDP category confuses pricing issues. Pricing for personalized promotional messages can command a higher price because it has a higher perceived valued to the customer than a simple personalized letter.
Where smaller printers have the advantage is that they can bring sophisticated personalized printing projects to their current market at a price that can fit the budget of their small business customer. I recently met with one printer who was doing personalized URL (PURL) projects that cost him 65- to 85-cents to produce and mail. His selling prices for the projects ranged from $3.50 to $10, depending on the length of the project and number of pieces.
His customers weren't concerned with the price per copy, but with their return on investment. How much product was the mailing project going to sell for them? They weren't interested in the manufacturing costs, so they would pay more because of the perceived value. If the $10 postcard could generate a sale worth 100 or 1,000 times the cost of the card, the customers were happy. The printer's jobs were short-run color produced on a digital color printer. Finished jobs usually consisted of fewer than 500 pieces. He was reaping the profits because he was selling value.
Most printers need higher prices to increase their profits so they can push their companies to the next level. For a job shop, battling for commodity printing work with low prices as your only weapon will result in long hours, low profits, and frustrated employees and customers. Many times, the simple solution of raising prices cures many ills and moves a printing company toward success. Of course, some price sensitive customers will leave, but if a printer is offering good service and quality, the profitable customers will remain.
If you raise your prices today, you will have the profits to be able to deliver the training and special services that make you different from the competition. Your customers expect to pay higher prices for printing in 2008. Why not meet their expectations?
Contributing editor John Giles is the owner of The Giles Group, a training and consulting firm specializing in digital file issues. Giles conducts digital audits for quick printers to assure they can accept digital files easily and increase profitability. He also conducts training seminars for printing customers on how to prepare files properly for a commercial printer. Giles also serves as technology advisor for CPrint. Contact him by voice or fax at 304/552-5363, by email at john@johngiles.com, or visit his website at www.johngiles.com.
author: by John Giles