Finding the best Commercial Printer & Price

Understanding Print Industry Pricing / Price Movements

In the commercial printing industry, there are ongoing fluctuations of prices. Prices go up and down not just by a few percentage points but by as much as 25-50%. It is NOT a simple up & down movement of prices that is similar across all printers.

Yes, this phenomenon makes print buying a challenge. In the following paragraphs, we will clarify the underlying factors and show you how it can be an opportunity for your business i.e. how you can make better commercial print purchasing decisions.

RJCO helps you understand and navigate the printing market - finding good prices without ignoring other important aspects such as reliability , quality or customer service.

Getting Started - A Simplified View

Let's start with a diagram showing the changing prices at 3 different printers.

For simplicity, we are showing only 3 printers and a simplified view of the price changes (the rising and falling curves).

In the real market, there are hundreds of printers and the the changes / fluctuations can be much more pronounced / abrupt / seemingly random.

Click on the image for a closer look.  

Print Pricing - Main Components

Commercial Print Pricing is built up from a number of price components. Here are the main components:

• Fixed production costs -- mainly existing equipment and new equipment purchases.
• Variable production costs -- scales by job size - according to the printing technology being used.
• Overhead (Selling and General Management Expenses) -- actual expenses prorated by the annual volume of business
• Markup - the margin decided by company sales and management.

Print Pricing - Major Influences

All the price components listed above are influenced by business events and management decisions e.g.

• the purchase of new / modern equipment (that might lower variable production costs)
• use of smarter / more streamlined operating processes to reduce production costs
• improved matching of job type to equipment and better monitoring / control of supplies (e.g. paper costs)
• sales approach and effectiveness (e.g. reliance on high cost sales visits and lots of negotiation vs. value pricing)
• management's strategy in terms of markup and pricing in the face of market ups & downs (supply-demand situation, orders pipeline, competitive moves);
• volume of business - since the fixed costs and overhead are allocated (pro-rated) by the expected annual volume of business.

The final price offered is a combination of the financial components and the effect of all the influences that keep changing over time (weekly / monthly!)

Printer-specific Differences

The situation & developments at each printer are inevitably different. To begin with, there are differences in terms of timing of key business decisions. E.g. purchase of new equipment that makes a certain printer very cost-competitive for a certain type of job; or the implementation of a process improvement / cost management initiative (allowing a printer to pass on the resulting savings to their customers); or the launch of a marketing / promotional campaign / pricing strategy.

There are also differences in terms of management's forecast of business volume trends and their strategy for reacting to changing market conditions / outlook.

Given these changing situations that affect printers, one can see that even for the same job at the same printer, there could be very different costs & quoted prices in subsequent years / purchase cycles.

Net Effect / Bottom Line - Ongoing and Significant Fluctuations

All the factors outlined above add up to make a significant impact on price fluctuations and they are not uniform across printers. The price movements are ongoing and it is up to the customer to monitor the market to find the best combination of price, quality and delivery timeliness.

Thus a printer who was judged to be competitively priced one year may not be in the same position the next year - owing to changes at that printer as well as changes at other printers.

There are buyers who return to the same printer and after a fair amount of negotiations, obtain price concessions of a few percentage points. There is a sense of accomplishment, but the business could benefit by tens of percentage points (and reward printers who are making customer-focused improvements) by reviewing the latest pricing environment.

How to deal with this phenomenon and make sound Print Purchase decisions

Commercial printing customers / businesses typically place an order at long intervals (say once a year). Given that, it is difficult for them to have enough data to monitor the trends, evaluate their options, and make a sound print buying decision.

In order to properly deal with this phenomenon, prices (along with reliability and quality measures) need to be tracked on an ongoing basis on orders placed throughout the year.

This is where RJCO adds value by monitoring these numbers and trends in the commercial printing industry. RJCO utilizes that information to help you make the best print purchase decision for your business.

Contact Us today with any questions and to start saving on your commercial printing orders.

A Detailed Walkthrough of the Diagram

1.  Prices at all the printers (Printer A, B and C) fluctuate over time ... but independently. For simplicity, we have shown similar curves that vary only in the depth of the price movements - but in reality the price curves would look totally different and not be in any kind of synchronization at all.

2.  It is common in the industry to negotiate prices with a particular printer when going back to them for another order. However, even after spending a fair amount of time in this negotiation process, the discounted price is usually within a narrow range (a few percentage points) of the quoted price.

First Quote & Order

From the diagram, we can see that for the first quote, Printer C represents significant savings over Printer A even considering the "negotiated deals". Assuming that other critical factors such as quality and delivery timeliness are comparable (something that RJCO tracks and factors in when selecting and comparing printers for a particular job) - it is clear that the customer makes a sound buying decision by going with Printer C.

Second Quote & Order

Now let's look at what happens when, say a year later, it is time to get quotes for a second order. In general, the tendency is to assume that since Printer C seemed to offer much better value compared to Printer A the first time, that it would be a safe bet to go with Printer C again.

However, with the changing conditions described above and reflected in the price curves, the actual picture could be very different. Now, we find that Printer A is able to offer a much more competitive price and the business benefits greatly by choosing Printer A over Printer C. Once again, as shown, we are not talking about trivial differences but a difference in the range of 20-50% that far exceeds the "negotiated deal".

Contact Us today with any questions and to start saving on your commercial printing orders.

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