Page 62 - Print21 Jan-Feb 2020

Print Intelligence
Patrick Howard
Meeting the
market for print
Cost plus is a terrible way to price printing, yet it continues to be the industry’s preferred method. Adding a margin to
the cost of production takes no account
of market conditions, the intrinsic value of the printed product, or the importance it has for the customer. There has to be a
top production tracking software. Digital presses are even more connected. Then there are systems such as Kodak’s Prinergy, which is perhaps the closest the industry
has to default production software. They all provide varying degrees of insight into the effectiveness of the production process, allowing printers to tweak and refine the job flow to get maximum productivity.
In addition, a printer can indulge in collecting information and data from every part of the plant – prepress, press running, finishing and dispatch, admin and marketing – then store it in the cloud if so desired, and analyse it at length. But who has the time for that?
This is what Kodak calls Dark Data, the normally unquantifiable affects that impact every business. Its software promotes an analytics- enabled workflow, a term used to
“Successful printers are relationship managers. They know how to add value to their engagement with clients.”
turn many inputs into actionable results. It addresses the complexity of the information flow within the printing plant, from the thousands of collection points within the factory, trying to deliver it to management in real time so it can form the basis of decision-making.
It is still practically impossible
to keep track of every input, every change in paper prices, the power bills, the rent and leasing costs,
the administration charges.The imperative of knowing your costs, and pricing print to not only recover them but to make a profit, is most pressing for the web-to-print operations. Many rely on posting prices for jobs on their websites, locking in results that may not be viable. Unlike most commercial printers where experienced
estimators will assemble a quote to meet the customer’s expectations, many web-to-print businesses have a menu of prices they must meet. The recent failures of high-profile businesses in this space shows the prices charged don’t recover costs.
Expectations
Unfortunately, these websites set customer price expectations – and even if they don’t win the business, other printers are left to justify
their higher, more realistic, charges. I know of at least one printer who very quickly removed prices from the website on discovering customers were checking them as an indicator. They then phoned up asking, as long- term clients, for lower prices still. Talk about a lose/lose situation.
Another major printer I spoke with is dismissive of the whole web-to- print initiative, welcoming it as a way of diverting clients who are never going to be profitable towards other businesses. The idea of conducting a printing business with anonymous clients through fixed pricing at arm’s length over the internet seems to him a sure recipe for disaster. He may not be far wrong. Commercial printing is mainly a business-to- business business; web-to-print appears to be predicated on individuals buying print in the same way they buy groceries or clothing.
Print management operators have often been derided as interlopers between printers and their customers. They’re accused of simply skimming margins from the prices of jobs, forcing printers to accept less in order to keep the business. And there’s some grain of truth there – but there’s a bigger picture too.
Print managers know their client, that’s their strength. They cultivate a relationship by adding value
to every transaction. Mostly the value is to claim they can leverage
a lower price for printing, but they
Mbetter way, argues Patrick Howard. ost printers don’t
know their true costs, not really. They may have some idea of the average cost entailed
in keeping the business going, the average daily expenditure, even the operating costs of the presses. But there are so many variables when
it comes to a specific printing job that arriving at an accurate cost per sheet or square metre is mostly akin to sticking a wet finger in the air to gauge the wind direction.
Yet most printers price their work by the time-honoured printing methodology of ‘cost plus.’ How they arrive at this figure is a mystery. In effect, the customer sets the price, which is usually rock bottom after shopping around and checking the web prices from on-demand operators. The printer is left with one choice: either to meet the market or walk.
Unfortunately, many take the offered price regardless of whether they can make money from it, thereby perpetuating the industry’s lamentable history of price-cutting. .
Knowing how much a single print job costs to produce is not difficult, if you keep it simple. There is no shortage of MIS/ERP (management information system/enterprise resource planning) software on
the market. Contemporary print production is powered by some of the most sophisticated manufacturing software in any industry. On the offset side, Heidelberg’s Prinect, Komori’s KP-Connect, and manroland’s printnetwork are all
Above:
Software: boon to print businesses seeking to understand their costs and manage their workflows
62 Print21 JANUARY/FEBRUARY 2020