Pricing Study – Table of Contents

You asked for it, so we did it! Recently we received some inquiries from owners who have been thinking about purchasing our latest pricing study – The 2018 Digital Color Pricing Study, but told us that before they placed an order they would like to view the Table of Contents – a pretty reasonable request, but to be honest something we had totally failed to consider. When it comes to marketing, we’re always learning.

Although the study, like all publications published by NPRC, is sold on a 100% money-back guarantee, some folks would still rather just be sure before they place an order.  As we noted, we probably should have provided a copy of the Table of Contents in the very beginning but we just forgot! So click this Link and preview the contents and then visit the NPRC Bookstore to place your order.

Digital Color Pricing Tips

Pricing Newsletters or Booklets Feature Make
Quoting Odd Quantities Easier than Ever!

Here’s a “real world” example of how to get the most out of the newly released NPRC 2018 Digital Color Pricing Study. Some people are often overwhelmed at the information available in our studies, so we thought we would pass on a couple of digital color pricing tips gleaned from our own experiences. 

This is a modified version of the old “The cobbler’s son has no shoes” parable. As many of you know I am the Executive Director of NPRC while my wife Mary owns and runs a small printing operation (Paragon Printing & Graphics) that offers most of the traditional offset and digital services found in most printing firms these days. 

She Gets Her Studies Free!

I have nothing to do with the printing firm and Mary has little to do with my publishing and consulting services. In fact, we can go one or two days at work without even speaking to each other, with each of us so busy doing our own thing.

While Mary is certainly aware of the types of studies we produce, she rarely finds the time to read or analyze them to any great extent, which is is always a bit disappointing to me, considering the rock-bottom prices at which I make them available to her!

So much to my surprise, she came to me the other day with a copy of the recent digital printing study in hand, and said she was working on a quote for 900 copies of a 24-page newsletter. Finished size of the self-cover newsletter was to be 8.5 x 11″. More specifically, the job was to consist of 6 11 x 17″ page signatures, no bleeds, digitally printed on 100# coated text. Signatures where to be collated, folded, stapled and face-trimmed. 

Mary said she found the newsletter pricing section on pages 55-57, but all that she could find were average and median prices for either 16-page or 32-page newsletters, and she needed a price for a 24-page newsletter. I told her that wouldn’t be too hard to come up with a price, at the very least we could interpolate pricing.

Pricing Per Newsletter

Voila! I found an even easier way, something I had forgotten. Not only does our study offer average and median prices for quantities ranging between 100 and 2,500, it also features pricing per individual newsletter as well. In fact, it provides average and median price per newsletter as well as what we term “majority low” and “majority high” pricing as well.

So the first thing we did is look at the average price per newsletter at the 1,000 quantity level for both a 16-page newsletter and then pricing for a 32-page version. Average digital color pricing for the 16-page newsletters was $2.68. Pricing for the 32-page newsletters was $4.87.  Averaging the two produced and average price per newsletter of $3.78.

Knowing the quantity was very close to the 1,000 quantity pricing we chose to go with that price and simply multiply our $3.78 x 900 for a total price of $3,397. Mary’s original price was significantly higher, but to be honest, I have no idea what her final price was for the job, but at least I can say she was better informed regarding digital color pricing for this quantity, format and size than she was before, but don’t let on I said that!

Even more useful, the digital color pricing in the newsletter pricing section is the fact that the study actually breaks down pricing to the signature level, so we could look at pricing per side, per signature and discover that pricing ranges between $0.33 and $0.30 each. 

Does Study Cover All Products?

No, the study couldn’t possibly cover every type of product offered in the industry, but by using interpolation, averaging and a big dose of common sense, you can find sample pricing for dozens and dozens of products produced on digital color devices. As an example, you can find detailed pricing on some of the following products:

  • Flat Sheets, 100# coated text & cover (8.5 x 11 and 11 x 17 sizes)
  • 2-part and 3-part carbonless forms, plain and numbered
  • Retail click pricing (no stock pricing included)
  • Stock Mark-up practices
  • 16-page and 32-page newsletters and booklets
  • Envelope Pricing, black  and 4-c
  • Business Card Pricing, offset, digital and brokered
  • Popular discounting methods for various customers
  • Plus, dozens of variations in terms of quantities and pricing

To read more about this study visit the NPRC Bookstore.

NPRC Offers Printing Goals Sheet

NPRC Offers Free Financial Printing Goals Sheet

NPRC has just released its latest 2018 Financial Printing Goals sheet for the printing industry. Based upon years of research conducted by QP Consulting, Inc., as well as data available in NPRC’s 2017-2018 Financial Benchmarking Study, this new handout offers specific financial printing goals required to attain “profit leader” status.

Printing Goals  

The data is based upon information provided by printers falling into the top quartile in this industry in terms of profitability. This new Financial Goals Sheet for the printing industry details specific ratios for cost of sales, payroll expenses (excluding owners) and overhead expenses.

Download Printing Goals Sheet…

Free Financial Printing Goals Sheet with key ratios

Free Financial Printing Goals Sheet with key ratios

Our advice, download and print the PDF provided and tape or staple to the wall next to your desk. Simply viewing these key profitability ratios on a daily basis, according to many printers who have used this sheet in the past, will help you improve your profitability.

To view and download a PDF of this goal sheet, click here.

5 Characteristics of Troubled Printing Firms

Troubled Printing Firms – Five Characteristics!

John C. Stewart, Executive Director, NPRC

John Stewart

John Stewart Executive Director, NPRC

NPRC maintains the largest and most accurate data base in the printing industry, especially when it comes to key financial ratios. Just like  the Farmers Insurance Company that  frequently notes, “We know a thing or two because we’ve seen a thing or two,” we feel the same way when it comes to knowing what works and what doesn’t work in the printing industry! This article intends to target one of our most topics – troubled printing firms!

So we thought we would tackle in detail five of the most common attributes of troubled printing firms – attributes that clearly distinguish between the profit leaders and the profit laggards in our industry. For some readers, one or more of the practices noted below will be almost “second nature,” while others will either skip the advice entirely, or rationalize why that characteristic doesn’t apply to them.

(1) Monthly Financial Statements – There’s no question about it – troubled printing firms are the least likely to receive and analyze monthly financial statements. Some owners appear to go through the motions of getting financial statements, but then rarely take the time to really look them over! Some of the most troubled firms I know are likely to go months without obtaining a current profit and loss statement or a balance sheet.

Collage of Financial Benchmark Study Pages

Collage of Financial Benchmark Study Pages

Successful owners are far more likely to spend at least a couple of hours each month going over various expenses and ratios, using a yellow highlighter to denote areas that need work. Every owner should have at their finger-tips key ratio goals for categories such as payroll, cost of goods and overhead expenses. Note that “payroll” should include all direct and indirect payroll expenses, but should exclude that attributed to a single owner. Successful and profitable owners can typically quote these key ratios, while less successful printers end up making wild guesses.

If you have no idea what the “top” companies in this industry report for these key expense categories then you need to make a small investment and purchase the latest Financial Benchmarking Study from NPRC. This report is all about how to increase your profitability. The Executive Summary by long-time industry guru Larry Hunt is by itself worth ten times the price of this report. To purchase, visit the NPRC Bookstore.

(2) Low Productivity as Measured by SPE – How many employees, including working owners, does it take to produce $XXX in sales. This critical ratio is one of the simplest of ratios to calculate in our industry, and yet it is also the most telling as well! The bottom line – troubled printing firms do a lousy job when it comes to maintaining high levels of productivity.

Sales Per Employee Graph

Sales Per Employee Graph

To calculate your SPE, divide total annual sales (actual or projected) by the total number of employees (including all working owners and partners) required to produce those sales. Yes, that includes outside sales reps whether or not they receive a salary. The more accurate your numbers the more valuable the resulting answer will be. Count part-time employees proportionately. If an employee averages about 20 hours per week, then count he or she as a one-half or .5 employee.

In a recent survey of approximately 210 printing firms, the SPE ranged from 20 firms reporting an SPE of less than $100,000 to 52 companies reporting an SPE of $155,000 or more. To put this in some “real world” terms, let’s take a look at two firms – both producing $700,000 in sales.

• One $700,000 firm requires/reports using 7 employees to produce its sales – An SPE of $100,000! Plain and simple, a firm reporting an SPE of $100,000 or less is simply over-staffed, as well as most likely inefficient as well. That SPE number is also significantly below the industry average of approximately $135,000! Owners of firms with below average SPEs are likely under-paying themselves due to excessive payroll. Low SPEs also tend to impact the value of a firm when it comes time to sell – if it sells at all!

• While a second firm reporting the same $700,000 in sales produces its sales with only 4.5 employees, or an SPE of $155,500. Although the SPE calculation totally ignores what employees are actually paid, a closer examination tends to indicate that employees working for high-SPE firms also tend to be paid significantly higher and also tend to be far more efficient and talented at what they do.

(3) High Payroll Costs – Unfortunately for many owners  of troubled printing firms (it’s not always their fault), total payroll costs are sometimes hard to find on the typical profit and loss statement. This is often the fault of CPAs and accountants, as well as in-house bookkeepers, who fail to consolidate payroll expenses under one heading.

We often see direct payroll expenses under a payroll heading, but then discover that other related payroll expenses such as health insurance, payroll taxes and unemployment taxes are listed below under overhead expenses. Ideally, you should be able to look at your financial statements and quickly determine the total amount spent each month, as a percent of sales, for total payroll, excluding your own payroll, taxes and benefits.

Financial Benchmarking Study

Financial Benchmarking Study

The previously mentioned Financial Benchmarking Study contains some very reliable payroll ratios, including ratios based upon various annual sales categories, but also a quartile report which provides total payroll for the top 25% firms (in terms of profitability) and compare that ratio against the bottom 25%.

Is your company a “troubled printing firm? If your total payroll expenses are in the 32-34% range or higher (excluding your own payroll) the answer is “yes.”You have a serious problem on your hands, at least in comparison with the rest of the industry, and it needs to be addressed immediately.

On the other hand, if your total payroll is in the 26-28% range you should pat yourself on the back because those ratios would be considered outstanding in this industry.

P.S. Payroll is consistently the single largest expense in operating a modern-day printing firm, and has been the largest expense ratio for more than 35 years. If you fail to proactively address this category, it really won’t matter much about steps taken elsewhere on your financial statements.  As we’ve noted previously, troubled printing firms are notorious  for  failing to maintain acceptable payroll ratios.

(4) Failure to Monitor Industry Pricing – Our industry is somewhat unique in that it has available to it so much in terms of valuable financial and pricing data – information that can really help a firm compare its performance and pricing practices against others in the industry. Without many of these studies, a printer could easily find himself misled by the comments of customers who sometimes remark, “I like what you folks do, but your prices are just too high sometimes.”

How is a printer to react when he hears something like that? Well, before you go off and start lowering all your prices, or instituting more discounting, there are at least two things you can do. The cost will be relative small and the ROI could be huge, in terms of both raw dollars as well as peace of mind.

First, if you’re concerned about pricing and where you stand compared to competitors you could visit the NPRC site and check-out an article we posted about 15 months ago titled, “Hiring Someone to Shop Competitors.” Click here to read the article. Conducting a thorough, detailed survey of competitors can be a real eye-opener, but you can’t do it on the cheap. Hire someone, as the article explains, and do it right.

I have seen some top-notch surveys conducted by printers I know and every time I see the results they tend to refute many of the myths regarding pricing within individual markets – even in very small markets where only 5-6 printing firms exist.

Key NPRC Studies

These are just a few of the many studies and reports available in the NPRC Bookstore. No other printing association offers the broad selection of studies and reports offered by NPRC.

Second, visit the NPRC Bookstore and check-out the list of pricing studies we have published in the past 24-36 months. The pricing data we report is extremely accurate with an average margin of error of +/- 4% or less for most items. And please don’t dismiss this suggestion by saying that most pricing is local and not national and therefore what we report may not have any bearing in your local market! Wrong, wrong!

We can report with absolute certainty, based upon hundreds of individual market surveys, that pricing tends to vary far more within your own individual market than it does from one section of the country to the next. We can report with great assurance that while the national average price for a simple product such as 1,000 #10/24 envelopes printed in reflex blue (no bleeds) may vary by no more that +/- 4%, prices for that product within an individual market can easily vary by as much +/- 35-40%.  +/- of the reported average price!

We just checked pricing on this product and even after eliminating outliers, the pricing for 1M envelopes varied between a low of $104 and $280, with an average price of approximately $158. that type of variation occurs even within the smallest of markets. 

(5) Tolerating “Bad Apples” – With more than 400 on-site, individualized consulting visits under my belt, I can report that I can’t recall visiting a mid-size or larger firm (5 or more employees) that didn’t have within their midst at least one “bad apple.”

Ironically, while it was not that difficult for me to spot the bad apple, the owners were often totally oblivious of the bad apple, or the real-world impact that the bad apple was having on the rest of the staff. Not surprising too was the fact that virtually all of the remaining employees could name the ‘bad apple” in the company, agreeing almost 100% of the time on who that employee was!

Press Room

Press Room

Rest assured, your employees are uniquely equipped to identify who the bad apple is and how he or she is impacting the profitability of your firm. They know it, even if you don’t! Unfortunately, even the good employees, just like the owners, sooner rather than later start making up excuses for the bad apples, and why they continue to be retained.

“Bobbi’s a single mother who brings her personal problems to work and shares them with other employees as well as our customers! Sometimes it’s like a soap opera out there in the shop. As a consequence, a lot of time is wasted.”

“Martin is a recovering alcoholic but every once in awhile he goes off the wagon. We always seem to have our fingers crossed as to whether he will show up, especially after the holidays.”

“Steve isn’t the most reliable. However, when he shows up he is very productive, but I can’t always count on him. There is always something going on in his life that interferes with work.”

“Cathy is incredibly talented, but has a terrible personality when it comes to dealing with customers, and I’m at my wits end in how to deal with the situation. I’m embarrassed to admit that I have been putting up with this for more than seven years!”

“Mike is probably one of the best operators I have when it comes to knowing the equipment, but he makes a lot of mistakes as well. He’s just not very good when it comes following procedures.”

I could go on offering up a dozen of the more popular excuses I have heard over the years when it comes to tolerating employees that in any other more profitable firm would have been terminated months if not years ago. I guess that’s the difference, among many, between how the “profit leaders” in our industry manage their businesses as opposed to the “profit laggards.”

If you have any questions about this article don’t hesitate to drop me an email at johnstewart@printingresearch.org.

Happy 2018!

Findings Uncovered in Digital Pricing Study

The just-released 100+ page 2018 Digital Color Pricing Study contains literally thousands of average and median prices for dozens of digital products produced in the typical printing firm. This is what one of the survey participants shared with us in the past couple of days:

“Hello John,
I just had to let you know how impressed I was with the Digital Pricing Study you just released. While I only spent 30 minutes going over the study, my initial impression is that the quality of this study is as good if not better than previous studies. Thanks for the hard work you and NPRC put into these studies, The printing industry is better off because of studies such as this.”
Armand Girard,
Curry Printing & Marketing,
Auburn, ME

Orders placed between now and Jan. 14, 2018 will be processed and shipped beginning January 15th. To order your copy, visit the NPRC Bookstore.

What About Participant Copies? Participants received two emails and a link for downloading their FREE copy of this new study on Dec. 20th and again on Dec. 21st. The subject line of that email was: “URGENT – Here’s your 2018 Digital Color Pricing Study! Please check your spam and deleted folders. Please do not ask us to send a replacement copy.

Below are some random findings and pricing data from this latest study:

• Average SPE – The average sales per employee of the 214 firms participating in this year’s 2017-2018 Digital Printing Color Pricing Survey was $133,538. The median is close behind at $128,333. Approximately 25% of all participants reports SPEs between $160,000 and $190,146.

Digital Jobs Finished On-line? Only 22% (average) of all digital jobs are finished on line. Most are processed on digital printers but are finished off line.

• File Handling & Graphic Charges? The average file handling fee reported by participants was $14.47. For Complex jobs that file handling fee jumps to almost $35. The average hourly graphics charge is now almost $74. For complex jobs the hourly fees jumps to $90.

• Variable Data? Approximately 85% of jobs processed on digital printers involve “static” data, with the rest involving some variable data.

• Flat Sheet Pricing – The average price to print a 4/0, 11 x 17” sheet (full bleed) on 100# coated text is $532, or $0.53 per sheet. The median price is slightly lower at $490, or $0.49 each. Prices are provided for quantities of 100, 500, 1,000 and 2,500. Pricing is also provided for 4/4 and for 100# coated cover.

• Carbonless Forms – The average price being charged for 500 2-part carbonless forms produced on a color digital printer is $317. If numbered, this prices increases by approximately $40.

• Source of jobs? – Approximately 63% of all jobs processed in the typical printing firm subject to this survey were provided by customers. The remainder were produced by a graphic’s department. These figures are quite similar to those provided in thr 2016-2017 study.

• Discounts Offered? – Jobs falling in the $1,000 range, if warranted, are likely to be discounted 11-18% depending upon type or class of customer.

• Most Finishing Accomplished Off-line -When it comes to finishing newsletters produced on digital devices, approximately 40% of printers would do all finishing off-line – collating, folding, stitching, etc. Approximately 15% of printers would collate a 16-page or 32-page newsletter on-line but complete the remainder of the finishing off-line.

• Business Cards – Despite the significant number of options for printing business cards, we were somewhat surprised that almost 75% of all business cards sold by our participants were produced in-house, either via offset printing or a color digital device.

• Business Card Pricing – The average price for 500 4/4 business cards, excluding any graphics charges, on 12-14 pt. coated cover and produced internally is $89.73. If the same job is brokered it will sell for $78.95.

2018 Digital Pricing Study

New Digital Pricing Study Proves Popular

NPRC has released its highly anticipated 2018 Digital Color Pricing Study. This new 100+ page report offers up average and median pricing for dozens of color digital products and services in the printing industry. Data on digital pricing is provided in various formats, including average and median prices for a range of quantities, plus in many cases the price per booklet, sheet or in some cases per signature.

“Hello John,
I just had to let you know how impressed I was with the Digital Pricing Study you just released. While I only spent 30 minutes going over the study, my initial impression is that the quality of this study is as good if not better than previous studies. Thanks for the hard work you and NPRC put into these studies, The printing industry is better off because of studies such as this.”
Armand Girard, Curry Printing & Marketing, Auburn, ME

To NPRC,
“An excellent study. It is great to see what other printers are charging for the same products and be able to compare those prices in an organized fashion.”
Kevin Williams, Systems Print & Mail, Laguna Hills, CA

Pricing Study Cover

Cover of New Pricing Study

Publication Price…
PDF Copies… $179.00
Hard Copies… $191.00

NPRC Member Pricing
PDF Pricing… $89.50
Hard Copies… $95.50

 Discover what fellow printers from
around the country are charging for…
Graphic Services – Standard and Complex
Variable Data 4/4 cards (sizes 4.25 x 5.5 and 5.5 x 8.5)
Flat sheets, 100# Text & Cover (finished sizes 8.5 x 11 and 11 x 17)
Rack Cards – 4/0 and 4/4, finished size 4 x 9, full-bleed
2-Part and 3-Part Carbonless forms, plain and numbered
Click Charges Only for quantities ranging from 500 to 5,000!
16-page and 32-page newsletters (qtys. 100 – 2,500)
32-page Booklets – finished size.5 x 8.5 (qtys. 100 – 2,500)
#10 and 9 x 12 Envelopes – Blk only and 4-C (qtys. 100 – 2,500)
Plus many, many other prices with majority high-low guidelines

Special Note to Survey Participants – Please note that printing firms who participated in our Digital Color Pricing survey receive an email and link for downloading the FREE PDF of the study on Dec. 2oth and Dec. 21st, 2017. Please check your trash and deleted folders as well as your spam folders if you are unable to find the email used to distribute this study. The subject line used to advise participants was: “Urgent – Here’s Your 2018 Digital Color Pricing Study.”

Visit the NPRC Bookstore to place your order.

Effective Email Marketing Programs

Effective Email Marketing Sometimes
Requires Wearing Out the Welcome Mat!

By John C. Stewart

Sometimes I can write a column in a couple of hours. This one took me more than three days to complete. I think I started it and re-started it 3-4 times. The intent of the column was to share with readers my personal experiences as to how I learned to use effective email marketing to boost participation in my industry surveys as well as to dramatically increase the sales of products and services that we provide to the printing industry. So finally, here we go…

As many of you may know, I am currently the executive director of the National Printing Research Council (NPRC). I was formerly the founding executive director of the National Print Owners Association (NPOA). Both positions required substantial marketing efforts on my part, all directed at attracting new members and soliciting participation in various indusgtry surveys and studies.

I relied heavily on aggressive direct email campaigns to promote and encourage participation in these surveys, as well as to direct visitors and members to association websites where we maintained bookstores and provided various links to other helpful sites. In an average month, we typically mailed out 60-70,000 emails. Some recipients receiving 4-6 emails a month while others, because of the lists they were on, only seeing 1-2 emails.

As I noted previously, the primary objective of most of our emails was (and still is) to direct visitors to visit our website. That’s definitely where the action is – our bookstore, or mini-reports, and news about our latest research. One important note that I want to stress – no matter how valuable our content and no matter how frequently we change it, we would never get folks to visit our website as frequently as they do without the constant and large-scale use of email blasts.

An Aggressive Marketing Tool

First, let me state that I believe aggressive and effective email campaigns are one of the most under-used and under appreciated marketing tools in our industry.

Second, I believe that the ability and willingness to send out one or two thousand emails every week, or at least every two weeks, can prove to be a very powerful, effective and yet inexpensive marketing tools at your disposal. Note that while I said “inexpensive,” I did not mean to imply that an aggressive email campaign won’t take time and commitment on your part.

Good, effective email campaigns may not require a bunch of money, but they will certainly require some time and dedication on your part. You will need to spend at least one or two hours a week towards your email efforts. And your efforts also require a long-term commitment on your part – not just a flash in the pan effort that ends up with you saying, “I tried it for a couple of months and nothing happened.”

Ok, I can already hear a few of you saying something like, “Hell, that’s way too many emails and my customers would yell and scream if I sent them something once or twice a week.” Generally speaking, folks who spout those types of statements typically don’t know what the hell they are talking about. They’ve probably never tried a regular, consistent email program, and generally speaking, they’re rarely able to back up their claims with hard cold facts. Most of these people give off negative vibes all day long and I hate to be around them! <g>

“Hell, that’s way too many emails and my customers would yell and scream if I sent them something once or twice a week.”

I can only imagine the number of readers I have already turned-off by the comments above. Nonetheless, I make my living consulting and valuing firms by being brutally honest and not telling folks just what they want to hear! I do recognize and accept the possibility that by the time I get to the end of this article, there may only be 3-4 readers left! <g>

Email Marketing Programs

Heavy reliance on direct mail

We rely almost 100% on email to conduct surveys as well as to promote the sale of studies we publish.

As many of you know, I have been publishing statistical studies dealing with profitability, wages, bindery operations and pricing of offset and digital printing services for 30+ years. In the last ten years, we have relied heavily (almost 100%) on large scale email campaigns to encourage participation in these surveys as well as to sell these studies after they are published.

Although I used the word “campaigns” to describe the mailing efforts above, let’s make no mistake about it…. They are really blasts or huge torrents of hopefully effective email messages being sent frequently to as many prospects as possible, and sometimes with only one or two days between one blast and the next! The bottom line is that I send out a lot of emails.

I may send out 8-10 different emails over the course of 20 days to the same basic list of approximately 4,600! – All that effort just to promote and encourage participation in one single industry survey. And you know what? Very, very few of the email recipients complain or ask to be removed from our lists. Unfortunately, even when I send out at that frequency and volume levels, it may still not be enough to get the responses I need.

As an aside, I also have access and use an email list of 34,000+ printers as well. The price for me to use that list is incredibly low… so low I would be embarrassed to share it publicly. However, you also get what you pay for, and I know the list is less than perfect with lots of entries I would prefer to delete but simply don’t have the time. I also do not have the reporting tools available to me with this list as I have with my current email marketing program.

Using GetResponse

I currently use an email marketing program called GetResponse to design and mail my emails. I formerly used MailChimp. I can’t even remember why I switched from MailChimp to GetResponse – probably a temper tantrum on my part! There are now many additional choices as well. However, if you’re going send emails out to customers and prospects you must, however, use one of these types of email marketing programs.

Don’t think you can do this on the cheap and copy a mailing list of 800 to 1,200 customers into the addressee line or CC portion of your email program and send out a blast. In fact, you would be lucky to send out 40-60 via your email client without quickly having the entire mail rejected, returned or declined. Each mail server establishes limits as to the maximum number of emails they will allow you to send out at one time. Plus, that number changes daily to keep you from getting comfortable with a specific number.

If you attempt to use your personal or company email address to mail out large quantities of emails you take the risk of quickly being denied service and be identified as a spammer. Not only will your email be returned or blocked, but you take the risk of or your email address being blacklisted in the industry.

If you’re going to become a frequent email marketer (which I strongly encourage you to do) you are going to have to spend a modest amount of money to do it RIGHT!

My Costs and Experiences

I don’t tend to shop on price alone. There may be cheaper alternatives, but I can tell you that I currently pay $75 monthly for GetResponse. That amount allows me to maintain various ‘campaigns” or lists containing upwards of 10,000 email addresses. I can send out an unlimited number of emails to that list every single month. I maintain more than 22+ separate email lists within GetResponse, representing a myriad of breakouts – past survey participants, purchasers of various studies, association members and various listserv subscribers 

Many of the email addresses I maintain on Get Response are duplicated across various lists I maintain. In reality, the actual number of unique email addresses is approximately 4,600 in size and the statistics that I provide below are based upon that number.

GetResponse has many, many tools and features that I never use, but it also has many features that I love. I can create an attractive and effective email blast using existing templates they offer, or I can create a custom maker with my own artwork, graphs, photos as well as special links and buttons. I can also test these mailers by send it to myself numerous times, especially to check if the links are working properly.  

Sample Templates

GetResponse provides me with hundreds if not thousands of templates you can use to promote products and services. For better or worse, I tend to design my own.

GetResponse provides both pre-designed templates for various groups and organizations plus maintains an “art/photo” gallery. I also maintain my own gallery of artwork within GetResponse and I can pull or select from more than 100 photographs, charts and banners almost instantly.

Library of Stored Art and JPGs

I am constantly adding artwork to my Get Response library, including jpgs of various report covers and studies.

If pushed or in a rush, I can design a mailer from scratch and have it ready to go in 30 minutes or less, especially if I am using a format or template that I have used previously. I change the headlines, the subject lines and possibly change the colors a bit, and I can send it out immediately to 4,600 recipients. GetResponse also allows me to schedule that mailing for some time and date in the future. So, I can design something on Thursday, but decided that I want it sent out at 6 a.m. on Monday! Pretty neat!

AB Tests and Other Features

Another nice feature is that GetResponse allows me to conduct various AB tests using various subject lines. I can come up with two subject lines that I would like to test. How does it work?

Let’s say that I have a list of say 4,600. I tell the program to send out the email with subject line A to a fixed number or percent of the total list – say 10% or 460. It will also send out 460 emails with subject line B as well. After that, everything is pretty automatic.

The program measure the response rate (based open or click rates– your choice) for each of the two subject line over a duration of time that you have selected (2 hours or 2 days). Then it automatically sends out the email with the winning subject line to the remainder of the list (3,680 emails) and provides you with hard data as to the final results as to opens and clicks. Although I have used AB testing, I will be candid in saying such testing is ideally suited to email blasts involving 20-50,000 recipients than it with the size of lists I use.

What I have come to appreciate, more than anything else, is the ability of GetResponse to provide me with some valuable statistics. As you will see below, I can check almost immediately after sending out 4500 or so emails exactly how many were actually opened, how many folks clicked on one or more links, how many folks unsubscribed and even how many complained.

Another really neat feature of GetResponse is not only does it tell me who opened my emails and who didn’t, but it also allows me to follow with emails to each of these groups. You can send a simple “thank you” note to those who did open an email, and you can send another email follow-up email to folks who didn’t open the email and make them a special offer. You just have to use your imagination as to how best to use these tools.

Sample Open and Click Rates

In the first 20 days of November (2017) sent out 14 unique emails to approximately 65,000 emails. I don’t even know how many more I will send out for the remainder of this month. In addition, I have also used my 3rd party vendor to send out 150,000 emails to printing firms during that time as well.

Let’s take a look at three recent emails I sent out using GetResponse and and look at the response rates reported:

Campaign #1 – Emailed 11-14-17 – 6th or 7th promotion sent out to encourage participation Color Digital Printing Pricing Study. The subject line for this mailer was simple – “Check-out Sample Digital Pricing.” Not very creative, but folks want to know about pricing.

A 37% Open Rate - Fantastic!

A 37% open rate is pretty good in anybody’s book. The click rate is outstanding, and much higher than I have ever experienced in the past.

More data on response rates

Another outstanding open rate of 33% in our effort to encourage participation in our latest digital pricing survey.

Campaign #2 – Emailed 11-13-17 – Another promotion sent out to encourage participation Color Digital Printing Pricing Study. Subject line was only two words and very direct – “Deadline Alert.” Note that Campaign #1 and #2 were sent out back to back on Monday and Tuesday of the same week to the same list of approximately 4,460 printers.

Email Response Rates

This GetResponse email dealt with my recent experiences using a standing desk; from the statistics above, at least 256 readers actually clicked the link and read the column I had written.

Campaign #3 – Emailed 11-10-17 – A special promotion to get folks to read a recent article written about “Standing Desks. Note, once again, the excellent open rate.  Titled simply, “Standing Desks – Are they for You?” – this emailer generated an equally good open rates. 

Note that I will gladly trade 2 tenths of one percent (.002%) of unsubscribes (11 in the case of these three mailings) in order to get 4,500 emails opened and read.

Size Really Does Matter

If the above comments about GetResponse sound like a commercial they certainly were not meant to be. I have had issues with the company, but I have issues with everyone. I suspect that most of the more frequently mentioned email marketing programs out there offer either equivalent features or possibly even better ones.

Make no mistake about email marketing – It is indeed a game of numbers. While it is hard to beat really great subject lines or good content for the messages inside, it still comes down to list size – Size does matter. The bigger your list, the greater your response rate will be in terms of sheer numbers.

If you have the opportunity to purchase a list of businesses in your market area don’t make the mistake of being cheap and trying to eliminate emails to save a few dollars. Do some testing first.

Next to list size, is the frequency you use the list. Based upon my personal experiences, I don’t think, within reason, that you can wear out your welcome or turn folks off because you mail to them every 2-3 days. You should try, at the very least to send emails every single week!

Mailing out to a list of 2,500 or 5,000 once a week, possibly twice a week on some occasions, would not be too much in my book! On the other hand, if you can only put on your “creative” hat once a month or every two months I would honestly suggest that you find another approach to marketing your business.

Email Lessons I Can Share 

Below are just a few of the lessons I have learned from my email marketing campaigns. And yes, I am still learning.  There’s lots to learn when it comes to effective email marketing. Some of the lessons I have learned include…

  • Open Rates – Most people (a large majority) likely will never open up a specific email that you send them. No matter how clever and well written the subject line might be. However, many of those who will not open the email you sent them today will indeed open the very same email if you send it to them tomorrow. That’s life.
  • Click Thru Rates Even Worse – No matter how small your open rate is, the click-thru rate on links that you offer will be far smaller still. Sometimes, though, the subject line is so good and the message inside so clear and compelling that you will even amaze yourself with the open and click rates you find. Special note – If you’re going to have them click a link, you better make sure it is worth their time – offer something of true value, and don’t boast about your neat, online ordering system.
  • Time of Day -The actual time of the day the email is sent as well as the actual day of the week it is sent is probably important, but no one on earth seems to know the correct time or day. Some folks say Fridays are a bad day to email. My experiences are the opposite. Some folks say early AM delivery is best, but Get Response actually tracks opening times of your customers and they can adjust the time each specific email is sent based upon the open rates of each specific email recipient. This is a standard feature of GetResponse. A pretty neat feature, but I rarely use it.
  • Great Subject Lines – lots of opinions in this area as well. But let’s face it, good marketing efforts typically start with a great headline or in this case a great subject line. Learn to steal good subject lines. Look at the list of 30-40+ emails you received this morning and just check out the subject lines that seemed to attract your attention the most. I recently read that, “three words or less” constituted the most successful subject line. “Deadline is Tomorrow,” “We’re disappointed,” or “Counting on you.” I will grant you, however, that limiting subject lines to three words can be stressful! Sometimes, you just have to go longer! There are certain words you definitely don’t want to use in subject lines. These are considered Spam Trigger Words. Go here for more details: https://www.simplycast.com/blog/100-top-email-spam-trigger-words-and-phrases-to-avoid/ Something I learned just the other day – don’t use exclamation marks in your subject lines.
  • Unsubscribe Requests – With each mailing you send out, it is possible that at least a couple of recipients will submit an unsubscribe request – Maybe they hate you, or maybe they had a bad day! Whatever you do, don’t get upset, don’t take it personally and don’t allow a miniscule percent of recipients (the unsubscribes) to alter your long-term objectives. My unsubscribe rates is less than one-tenth of 1%. I can live with that. 

Conclusions About Emails

I accept the fact that a large number of the emails I send will never, never be opened, even with a very effective email campaign. I will also tell you the good news and that is only a very small number of recipients will actually unsubscribe as a result of sending them “too many emails.” I used to take “unsubscribe” requests personally, but these days I figure it is their loss, not mine!

If you’re not already conducting regular emailings at least once a week then shame on you. They are easy, fun and they can be very satisfying when you start seeing the results of your efforts. Whatever you do, however, make sure that your emails are either offering legitimate news, savings or discounts or the sites to which you direct them offer the same. Please, please don’t direct readers to a boring site. Make sure it offers something of true value as well.

I think my next article is going involve a random visit to 8-10 websites and report what I find.

Happy holidays.

John Stewart
Executive Director, NPRC

Standing Desks – Are They For You?

Standing Up for Standing Desks!
By John C. Stewart

There are two types of individuals who start looking at standing desks – those who are basically healthy and wish to remain so, and those who have one or more physical ailments such as a bad back or temporary leg problems (that’s me) and hope that one of these desks will help alleviate their problems.

This is the Apex model that I ended up purchasing.

Having just gone through my second hip operation in the past four years, as well as suddenly experiencing some lower back pains, I fall into the latter group above.

As a result, I started doing some basic research on what I called adjustable desks. Ultimately, I ended up purchasing one of these new desks and this article is about my experiences, and offers some tips for others who might find themselves doing similar research.

First, there are indeed “adjustable desks” that actually replace your current desk or workstation. Some of these desks are fancier than others, but most are basically rectangular desks that come in various laminate colors, and they typically measure between four and six feet in width. These desks can be automatically raised and lowered to accommodate you whether you are sitting in a standard office chair, or when you choose to work standing up.

Although they appear simple and possibly very plain, these types of adjustable desks can end up being far more expensive that the desk-top models I was looking at.

In almost all cases, these height-adjustable desks are raised and lowered electrically by pressing a button on the front or side. Some of these desks controls can get pretty fancy (and expensive) and offer “pre-sets,” meaning that once you have found the “perfect” height for standing and sitting, you can store that setting. Many of these desks also feature multiple USB ports as well as other outlets for plugging in various devices.

Selecting an Alternative

I quickly eliminated considering one of these standing desks because I already have a large office desk that I like, and I am a creature of habit. My desk is a fairly large “U-shaped desk,” with cabinets and shelves behind me and is basically a full-size wrap-around piece of furniture that I was not willing to give up.

What I was really looking for was what I would refer to as an “adjustable desk stand,” or ADS. I just made up that acronym because as I did my research I found that even the manufacturers have a very difficult time from a marketing standpoint when it comes to clearly distinguishing between what are truly two distinctly different types of devices – (1) Height Adjustable Stand-alone Desk – An entirely separate desk that replaces a previous desk that raises and lowers as opposed to (2) A Height Adjustable Desk Stand – an adjustable desk “stand” which is a separate piece of furniture designed to sit on top of an existing desk.

In the fully lowered position, the new desk top sits 5.5″ above the “old” desktop.

Almost by definition, An ADS is a separate piece of furniture that is designed to sit on top of an existing desk. It can be quickly and easily raised or lowered to accommodate your requirements.

ADS devices should not be considered mobile devices that can be quickly placed and then removed from the desk top. They are substantial enough in both size and weight that you shouldn’t plan on casually lifting them off your desk and then replacing them two hours later.

Anyway, I pretty much knew early on that I wanted an ADS so I began to refine my search.

Searching Out an ADS

It is hard to believe, but if you visit Google and type in the search phrase “standing desks” you will end up with 24,000,000 results! Let me tell you something, if you can’t find what you want in the first 2-3 pages you’re probably a bit anal, and the rest of this article is probably not for you. Better yet, just take a look at the two links listed near the end of this article. My apologies to all the other companies out there selling similar products, but I am not a patient person. I have a life to live and in the short time I have remaining I will not be spending it researching desks.

The trick in using a standing desk is finding that “perfect” height for your size. It does take some considerable amount of time to find that “perfect” height. To be honest, I am still looking for the right height for me.

Since my current desk set-up relies on two 21” Acer monitors side-by-side, my new ADS had to accommodate the same. I also needed a desk-top with room not only for the monitors but also some front to back space  on which I could place stuff like folders, notes, calculators, coffee cups, etc.

My full U-shaped desk is often a picture of utter chaos, so I needed some room on my new desk-top to spread out. As it turns out, front-to-back space was not an issue in making my final decision.

Most of the basic desk models I looked at came in three basic widths – 30”, 36” and 48”. The latter was overkill in my book, and a 30” width desk is simply too small to accommodate two monitors sitting side-by-side.

I will note (as you can see in the photos) that my monitors are angled slight towards each other. Even though the two monitors measured horizontally measure approximately 42” in width, their stands are centered and thus two 21”+ monitors can easily fit on a 36” wide surface. If by chance you use three monitors on your desk, you will definitely need a 48” wide ADS.

Electric or manual?

The Varidesk model appears to be solid and well-built but it did not offer the electric up and down feature.

After conducting less than a thorough research, I ended up choosing an electric model made by Apex. Even though I work out at a gym 2-3 times a week and can easily bench press 225 lbs. (that’s me bragging!), I really didn’t want to exert myself raising and lowering my new ADS, no matter how little effort or strength was required. I wasn’t absolutely locked into an electric desk, but if price wasn’t a major consideration electric was going to be my choice. As it turns out, at least in my case, electric also turned out to be less expensive.

The non-electric ADS desks are spring-loaded, and it is just a question of gripping a lever on each side and either lifting-up slightly or pushing down. Very little exertion is required, at least so they promise.

No big deal either way. It occurs to me now, however, that if the electric motor goes out it is going to be a hassle to get it fixed or replaced, and in the meantime you are going to be stuck with a desk that you can’t adjust. I suspect that a manually adjustable desk would present a lot fewer problems in this regard.

Minor Cautions and Considerations?

A Rubber Mat – First, you are going to need a firm, rubber floor mat to provide for a cushioned support while standing. I don’t suggest trying to stand for any length of time without one of these mats. However, when ordering a mat, you also need to make sure that it is firm enough to accommodate a desk chair on wheels. (UPDATE 11-21-17) – I must admit finding an adequate rubber mat that is comfortable to stand on while at the same allowing a desk-chair to freely move on top of the mat has been a much bigger challenge than I thought. I’m still looking.

Wireless Keyboard – For efficiency sake, you’re also going want to purchase a wireless keyboard and mouse if you don’t already have one. Standard keyboard and mouse cables may not be long enough in some scenarios. The wireless feature also allows for much easier position between the ADS keyboard tray and your normal keyboard tray or standard desktop. I bought a wireless keyboard and mouse for $19.95 on sale at Office Depot.

A Chair Cushion – You may also want to consider purchasing a 3-4” thick chair cushion, but not for the reason you may think. I am not suggesting a cushion from an enhanced comfort standpoint, but rather it is based on the fact that the ADS desk top, even when fully lowered, is approximately 5-6” higher than your current desk height. I discovered that many adjustable desk chairs may or may not offer that much additional adjustment in height to accommodate the new desk height, even when the ADS is in the lowest position. I have not yet purchased a cushion but it is worth considering. Also, I have not settled into a routine yet to decide when I am in the seated position whether I like my keyboard on the original beneath-the-desk platform or located on the ADS keyboard platform that comes with the new desk.

Coffee Cups and Cell Phones – Used coffee cups and soda cans typically don’t present a problem on the standard desk top, but your new ADS calls for you to give a little extra attention as to where you place items on your desk top. When standing, it is not unusual to casually place a cup, a soda can or even a cell phone on the desk top directly beneath your new ADS and then forgetting you placed the item there. If you lower the desk and forget about these items you can have a real mess on your hands when the items are crushed, the liquid spills out, or your cell phone ends up being much thinner than it was minutes before!

Health Benefits and Considerations?

I could have easily placed this section at the top of the article, but I assumed that if the original headline caught your eye you’ve probably already read about the numerous health benefits of standing desks.

Common sense strongly suggests that sitting on your ass six to eight hours a day staring at a computer monitor simply cannot be healthy for you. It might be necessary, but it still isn’t healthy. Of course standing for that same period of time in a single spot, at least without the benefit of a cushioned floor mat, probably is not going to be much better.

Nonetheless, if you must spend this amount of time working at one or more computer terminals then an ADS might improve your overall health. One of the “health” articles I came across during my brief research suggested that, “If you’re not getting out of your seat much during the day, you really are hurting your body. If you’re sitting 8 or more hours a day, your risk of dying prematurely increases by about 15%.” Go here for a fairly well balanced article on the pros and cons of standing vs. sitting: http://lovework.standdesk.co/standing-desk-vs.-sitting-desk-which-is-best-pros/cons

If you’re want to be frightened to death and convinced that you should buy one of these desks in the next 10 minutes you need visit a site named Mercola – Take Control of Your Health. One of the many health and fitness articles they feature includes a great article titled, “Improving Your Health by Ditching Desks and Chairs.” This is the link to that site: https://articles.mercola.com/sites/articles/archive/2016/11/27/sitting-standing-moving.aspx

My Final Choice

After talking and bragging around the office to anyone who would listen to me (they never do) that I was going to get a standing desk, I finally started some serious research. To be brutally honest, a few years ago I would have first posted my interest in this subject on the old Printowners list serv, and I would have asked subscribers for their help.

Unfortunately, I have been permanently banned from the list by the NPOA BOD because they apparently are worried about losing more members if I am allowed to post questions and comments. They worry too that exposure to another association or industry consultant somehow represents a threat to their own association. Sad – no, make that pathetic!

Now back on track – So, anyone who conducts any type of serious research is going to stumble upon what I believe are two of the leaders in the field of stand-up desks:

1. Varideskhttps://www.varidesk.com/products/ (Pro-Plus 36 Black, $395.)

2. Apex Deskshttps://standingdesknation.com/collections/electric-adjust (Vivo Electric, $298)

I tend to shop based upon features and not price, but my final choice offered the best of both worlds in my opinion. I ended up selecting the Apex Desk because the “electric” feature appealed to me. The bonus for me was the APEX desk was actually cheaper as well. We purchased it from Amazon and paid slight less than the list price noted above. I am sure that either of these two devices can be readily purchased for less than list price, especially if you are good at such things.

The Apex desk was literally plug and play. No assembly required, but because of its weight and bulky size it did require two individuals to place it on my desk.

If you have any questions, don’t hesitate to email me at either membership@printingresearch.org or johnstewart@quickconsultant.com

P.S. By the way, if you’re considering buying or selling your shop or you are just interested in company valuations, visit our home page and check-out some of the other articles we have posted in the past few weeks. 

Free Excerpt From Financial Benchmark Study

Printing Association Releases
2017-18 Financial Benchmarking Study

The 2017-18 Financial Benchmarking Study, sponsored by Accuzip, is by far the most valuable, information-packed study publichsed in the printing industry, especially for firms with sales ranging between $400,000 and $3 million. It is filled with useful graphs, charts and real-world profit & loss statements (and balance sheets) depicting, among other things, the key ratios that distinguish the “profit leaders” from the “profit laggards” in this industry.

 

Click on the artwork above or click here to read the entire PDF excerpt

Because we believe so strongly in the value of this document, we have decided make available a PDF containing an excerpt from the Executive Summary for this key industry report – just to give you an idea of what it contains. Authored by industry financial expert Larry Hunt, Hunt tracks and explains the ups and downs and the successes and failures that have occurred in this industry for more than 30+ years. 

You can of course purchase the entire report by visiting the NPRC Bookstore.

10 Tips for Increasing Company Value

Analysis Reveals Huge Disparities in Company Values
Among Firms Reporting Almost Identical Sales!
By John Stewart
Printing Firm Valuation Chart

35 Valuations – Even the small portion of valuations excerpted above illustrate the huge variations in valuations for printing firms in this country. For explanations of the “headers” please visit the full chart at the end of this post. As to why the huge variances? Click here or the chart above to download a PDF of the above chart. Read further…

Rules of Thumb

In the old days, one of the most popular rules of thumb for determining what a printing business was worth or company valuations was based upon nothing more than a multiple of sales –one times annual sales was probably the most common.Sometimes that multiplier even exceeded one! The amazing thing about that rule was that it never took into account profitability or what a working owner was able to take out of the business.

Other valuation rules that are still floating around today may be a bit more logical in that they take profitability into account. Some rules rely on a multiple of excess earnings, and some modify that by adding in the value of net assets. Still other rules use a average of owner’s compensation over a period of time multiplied by a factor between 2-6.

Unfortunately, many owners don’t understand the term “excess earnings,” or give much thought to company valuations until they near retirement and suddenly realize that the business isn’t worth half what they thought it would be! Very few owners fully understand terms such as “owner’s compensation,” or “earnings multipliers” and thus have great difficulty determining the value of their own firm.

“Print Shop For Sale” Published

In 2007 Larry Hunt (a highly respected printing consultant) and I published a book titled, “Print Shop for Sale.” PSFS, a 280+ page publication, has been reprinted numerous times and at last count had sold more than 3,800 copies. At the time “Print Shop for Sale” was published it was the only book in the printing industry dedicated strictly to valuing printing firms. It continues to hold that distinction today. As noted on the cover of the book, it is intended to provide readers with, “A step-by-step guide for establishing a fair market value for your printing firm, or one you are looking to buy.”

Writing the book with Larry was a true labor of love. Neither of us imagined that it would eventually lead to numerous inquiries from printers around the country asking if we would value their firm. Naively, we assumed our $89 book would do the trick. We figured the book did a pretty good job at explaining the “Modified Excess Earnings” approach and how to use that to arrive at the value of a printing firm.

Wow, were we wrong! We began getting calls from both independents and franchises alike asking us if we would prepare a valuation for their firm. Larry decided he would prefer to retire early and play golf. I don’t play golf, but I do own an airplane which is very expensive to operate and maintain, thus I continue offering valuation services when asked. <g> (Interestingly enough, after we evacuated the plane during the last hurricane we returned to Melbourne only to discover that we had developed a crack in the engine block and we are now looking at a $37,500 cost for a re-built engine!)

When an independent or franchise owner would call about valuations one of the first things I would recommend is that they should buy the book and gather together the various forms suggested in the book and then provide answers to our valuation questionnaire. If they still had questions then they should call me.

Sometimes, you just have to do the “hard” work. There are no “rules of thumb” or shortcuts to valuing most firms.

Interestingly enough, many of the printers told me they had already bought to book but still wanted me to do the work. They wanted more than “Print Shop for Sale” had to offer.

Some owners, although telling me they had purchased the book, admitted they were not really into the “numbers” and wanted me to do the work. Some wanted a detailed valuation of their firm and were willing to pay the price. Other owners had found a business they were interested in buying but wanted my help in coming up with a “fair market” offering price.

Avoiding Valuation Pitfalls

Since that time, I have conducted more than 450 valuations and I continue to provide valuation services today. However, I am NOT trying to sell valuation services. What I would like to share with you are some general comments about valuations and why some owners are able to receive “top dollar” for their businesses, while other owners end up, even after 10-15 years of operation, with businesses with little if any value. The result, they work it to the very end and then close the doors.

For those of you who used to read my columns in Quick Printing magazine, or have read some of my recent articles posted on the National Printing Research Council website (www.printingresearch.org) you know that I tend to rant and rave sometimes just to make a point.

That’s what I am going to do with the column – Offering up some “rants” and “raves” about company valuations and what causes some to be valued extremely high, while others end up being shockingly low.

First, let me observe that in today’s world, it does strike me that many of the owners that I encounter are far more realistic than they were in the past as to what they think their business might be worth. Buyers also strike me as being better informed and more realistic as to what they are looking for and what they are willing to pay. You’re probably not going get away with the old, “Hey, this business is a goldmine and someone with some real marketing skills and who is a good sales person can easily take this business to the next level.”

Unfortunately, there is also a substantial number of owners who have worked more than half their life to build a business, only to discover that it is worth far less than they thought it was. They had put most of their eggs into one basket (the business), only to discover too late that they had been making poor decisions almost from day one – decisions that would really hurt them in the long run.

Low Valuations and Lost Friends

The sad thing is that I have actually lost a couple of friends along the way as the result of valuations that came in much lower than what they had expected, and they blamed me for the low valuations. They had been counting on a valuation of $$$ for the last few years, and then I prepare a valuation based upon the numbers they provided and I end up telling them their business was worth less than 50% of what they thought.

Another owner bragged about how much money he was able to take out under the table and thus avoid taxes. When I valued his firm, and told him we couldn’t use that “stolen cash” to value his business he was shocked!

Still another owner bragged to me about his excellent package of equipment and that he could produce 95% of all his work in house. What we discovered was that he was asset-rich and excess earnings poor. He had accumulated far more in equipment than he really needed to produce his annual sales.

Sure, the equipment was really neat, and worked extremely well, but a lot of it was only used 2-3 times a month and for the remainder of the time it sat in the corner collecting dust. Excessive amounts of hard assets, as a percent of sales, combined with low excess earnings, typically produce low company valuations. Most savvy buyers are not interested in buying all of your fancy assets, but rather what those assets can produce in terms of excess earnings!

The Worst Case of All!

Of course, the worst case of all is to put a fairly-valued firm up for sale hoping to get lots of offers only to hear dead silence. Even the best, most logical, common-sense valuation doesn’t guarantee and that that you are going to find qualified buyers in your market willing and able to pay your asking price. Bottom line, that unlike in the residential real estate market, there really isn’t much of a market in which to advertise, let alone sell printing businesses.

Special Editorial Note: Actually this entire article is an “editorial note” <g>, but I want to point out the values assigned to various businesses noted in this article are not meant to imply that these businesses sold for those prices, or in fact sold at all! Many businesses just never sell. Some are taken off the market by the business owner or broker and some never get even a nibble because of excessive value placed on the business by the owner, a business broker and yes, even a consultant. 

“Print Shop for Sale” quotes a well know author on valuations as saying:

“Despite the commonly held belief that markets are efficient, and efficient market does not exist for privately held businesses… unlike the NYSE or the NASDAQ, there is no place to buy and sell privately held businesses aside from the business brokerage community, which is small in scope. As a result, it is very difficult to determine what a privately held business is worth in the marketplace. This lack of an efficient market presents a critical need for valuation services.

This study is “worth its weight in gold,” say many of the profit leaders in the industry. Unfortunately, this may indeed be the last edition of this study to be published in the industry due to a lack of support by printers.

Let’s face it, this industry, taken as whole, is also a very mature industry. Sure, we’ve evolved in the products we produce and how we produce them, and we’ve added more services and products but it is difficult to argue against it being a mature industry. To claim that the printing industry offers up boundless opportunities for sales, growth and profits has to be taken with a grain of salt.

When it comes to valuations there is one thing you don’t want to do and that is to be caught with “your pants down” when you are are approached by a competitor asking, “Have you guys ever thought of selling your business, and if so what do you think it is worth?” That’s not the time to be scrambling around to come up with some value.

To be blunt, valuing your own firm ought to be done every couple of years, just like to update your statements of personal net worth – Of course you do that, don’t you? If the value of your firm has continued to grow over the years then congratulations! If it hasn’t, then do something about it. See my list of “Key Take-aways” near the end of this article.

35 Randomly Selected Printing Firms

Recently I was looking for a specific chart I prepared a few years listing and comparing company valuations but for the life of me I could not find it. So I went searching out some of hundreds of valuations I have conducted in the last 7-10 years and started opening up one folder after another, retrieving basic information from each valuation.

I extracted data for 35 firms. I could have easily extracted 50 or even 100! However, I know from experience that once I passed the 25 count or so, that the average and median data I was searching for would change little if any.

I assigned a fictional name to each company folder I opened, and then retrieved the following items:
       • Annual Sales
       • Calculated Excess Earnings
       • Value of Net Assets* (sold)
       • Excess Earnings Multiplier used in the valuation
       • Estimated Valuation of Firm

*NET ASSETS, as defined in the accompanying charts, is the true, market value of the essential assets (equipment, furniture and fixtures) transferred and sold to the buyer. This value is not necessarily “book” value, but rather the value that a savvy buyer would pay if he or she had to go out on the street and replace the equipment used to produce the sales in question.  As a general observation, many owners want to assign a much higher value on their equipment package than would be warranted in the real-world marketplace!

For purposes of comparison and sorting, I also calculated the percent of net assets to annual sales as well as the value of the firm expressed as a percent of annual sales. Below is one of four charts I prepared. It illustrates, without sorting, the first 17 firms for which I recorded data. Note that we eliminated two “outlier” firms (#4 and #17) – One was worth 110% its annual sales (certainly possible but still a clear “outlier”) and one firm that actually had a negative value – that scenario is also quite possible, but it too was an outlier that would have otherwise distorted our average.

SPECIAL CAUTION: Be advised that the above company names are totally fictional and have no relationship whatsoever to firms that might coincidentally have the same name. You don’t know how hard it is to actually come up with a fictional name without a real firm name coming to mind.

Of the 35 companies for which we retrieved valuation data, the smallest firm we uncovered (Instant Copy) reported annual sales of $230,256 and was eventually valued at $114,905, or 49.9% of its annual sales.

The largest firm in our selection of 35 firms (Signature Offset) reported $4,199,105 in sales, and it was ultimately valued at $931,116, or 22.4% of its annual sales.

All Firms Ranked – Although the above chart reflects the remaining 18 firms we analyzed, we have included at the end of this article a single table ranking the above firm in terms of calculated value to annual sales.

As you examine the two tables above, you can’t help but notice the range of valuations based upon annual sales. Some firms are valued extremely low at 3-29% of annual sales, while other firms, those near the top, are valued at 52-75% (and some even higher) of annual sales.

Each of the valuations were subjected to the same valuation tests and formulas. You would like to think that the highest valued firms were those with the highest ratio of “Excess Earnings” to “value” but that is not always the case. The same expectation might be said for “Net Assets to Value” but that too cannot be said. What we can say is there are so many variables when it comes to preparing a valuation that it pretty much precludes the ability to offer up a neat “rule of thumb” that you could quickly apply to just two or three ratios.

Below is the entire list of 35 firms sorted by their value as a percent of annual sales:

Click image to download PDF of this chart

Partial Definitions of headers:
   Annual Sales – Self explantory
   Excess Earnings – Total owner’s compensation less “fair market salary” for working owner. Explained in detail in Print Shop for Sale.
   Net Assets – Hard assets (“real world” street market value of equipment, furniture & leasehold improvements) transferred free & clear at time of sales. Does    not include cash, AR, etc. as those normally are retained by seller.)
   % Of Assets to Total Sales – A comparative ratio of Net Assets to Sales.
   Earnings Multiplier – Multiplier and score arrived when sellers complete valuation questionnaire as explained in Print Shop for Sale. Questionnaire is also available for inspection at our Valuation Services Page on our companion site.
   Estimated Valuation – This is the value (we sometimes determine a range rather than a specific figure) that we arrived at when applying and using the Modified Excess Earnings Approach.
   Value as a Percent of Sales – We divided estimated value by annual sales to arrive at this ratio.

Key Take-Aways for Increasing Value

While I cannot offer up hard “rules of thumb,” I can still rant a bit and offer up suggestions for improving the overall profitability of your firm and thus its value. Some are common sense, others are not as obvious:

1. Monthly Financial Statements – Generally speaking, the most troubled firms I have encountered over the years, including many of those with a low valuation as a percent of sales, are those that either don’t receive monthly financial statements, or if they do they don’t read them! Some owners just don’t seem to care too much about the “numbers” and it shows when it comes time to value their firm. It’s probably preaching the the choir, but my guess is a vast majority of the most troubled firms in this industry have never, never examined an Industry Financial Benchmarking Study  and that is a tragedy. (This link directs you to our bookstore where this key study can be purchased)  Hell, Larry Hunt’s Executive Summary is a treasure trove of suggestions for becoming a profit leader! Do I feel sorry for these folks? Not a bit. That’s a rant!

2. Properly Formatted Financial Statements – Of Course, you can get financial statements every month, but if they are not formatted properly you’re not going to be able to find the key info that you need to manage the business. At the very least, your financial statements need to breakout expenses into three basic categories – Total Payroll, Cost of Goods and Overhead Expenses. When it comes to payroll, you also need to be able to quickly distinguish payroll costs and benefits paid to a single owner as compared to what is paid for all other employees. This is critical info required for a valuation. P.S. If both husband and wife work the business, one of those salaries needs to be shifted to general payroll. By the way, it is up to you and not your CPA or bookkeeper to determine how your P&L should be formatted.

3. A Huge Mistake Made by Many – Far too many owners allow either their CPA or their internal bookkeeper to provide raw dollar figures without providing them with an adjacent column reflecting the the actual ratios or percent of annual sales that each cost item or category represents – These are critical ratios you need to commit to memory and if someone isn’t giving these ratios to you then fire them! These ratios, whether good or bad, can be used to compare to the ratios for profit leaders and laggards found in industry benchmarking studies.

4. Excess Earnings vs. Owner’s Compensation – “For a business to have any appreciable value to a potential buyer, it must produce a cash flow above and beyond what would be required to pay a fair market salary to the new owner or manager. It is this ‘excess cash flow’ or ‘excess earnings’ that is used to purchase the business from the former owner.” (Excerpt from Print Shop for Sale.) If you’re unfamiliar with this principle or don’t understand it you need to hit the books! If you think someone is going to buy your business and not take out a reasonable salary while he/she uses the profits of the business to pay you off you are sadly mistaken. That new buyer is entitled to pay himself/herself a fair market salary and still have enough money left over to pay you! Where is that money?

5. Truly Understanding Owner’s Compensation – Most owners don’t fully understand what is meant by the term “Owner’s Compensation.” “Owner’s Compensation” is defined as, “all the money that is left over in the business after covering all expenses of the business (cost of goods, payroll and overhead expenses) but before paying the primary working owner a salary or giving that owner any fringe benefits.” “Owner’s Compensation” DOES NOT include combined salaries or benefits paid to a spouse or partner. You should be able to calculate your owner’s compensation quickly and without trying to play games with the numbers.

6. Blood Sweat and Tears Don’t Count – Just because you and your spouse or partner have worked the business very hard for so many years plays little if any role in its value to others. In “Print Shop for Sale” we discuss the “Endowment Principle” – “The endowment principle suggests that an owner of an object tends to attribute a higher value to that object because he owns it. Consequently, the owner of a business may think that the business has a higher value than it actually does, merely because he or she started it, nurtured it, etc.” That principle is often the cause for the vast differences in valuations prepared by sellers as opposed to those prepared by potential buyers.

7. Whatever You Do, Clean-Up Your Balance Sheets – In 90% or more of sales involving small businesses, the seller typically keeps or retains all cash and AR and assumes responsibility for paying off all short and long-term accounts payable, including notes, loans, etc. (Operating Leases remain on the books as an expense) As for all those special liabilities or notes payable to owners or relatives forget about them! No buyer is going to pay-off those types of liabilities. If the company owes you money you better take care of it now because it won’t happen at the time of sale. The same is true for fictional entries like “amortization” or trade secrets or other ill-defined items listed as assets.

8. Increasing Value by Decreasing Costs – You may think you are running a tight ship. Chances are you’re not, certainly not when compared to the real “profit leaders” in this industry. For every $10,000 in annual expenses that can be trimmed means that the value of your business can increase by anywhere between $25,000 and $60,000!

9. Inability to Make Hard Choices – Sometimes, owners with the best of intentions fail to make decisions that would almost immediately enhance the value of their business. Terminating bad apples or at least apples that are starting to rot. Like it or not, almost every company with six or more employees has one of these employees. Failure to act on the obvious ultimately leads to lower excess earnings and lower valuations. It is also possible that you have a great team of long-term, very loyal employees, all of who are highly valued AND YET it is also quite possible that you may have one more employee than you really need. (for a good article on Sales Per Employee and how it is related to profitability, go here.) If you terminate just one $40,000 employee that could easily increase the value of your firm by $120,000 to $200,000! But you can’t do that at the very end and expect to benefit from that increased value!

10. Spending Too Much Time on Social Networks – While I rarely go out in the field these days, I can tell you that many owners I know spend an enormous amount of time on social networks. In many respects, I believe Facebook, Twitter, LinkedIn as well as various listservs can be tremendous time-wasters, preventing even the best-intentioned owners from really pursuing what needs to be done. What’s fun to do, is not the same as what needs to be done!

Thanks for Reading

Tired of my rants? I understand if you nod “yes.” If you spotted a couple of grammatical mistakes or missing words I am constantly reproofing so if you notice a mistake chances are good it will be corrected soon. On the other hand, if you find something wrong or unclear let me know ASAP and I will correct it. For those that finished this article I want to say thanks as well. I welcome your comments, although I can’t promise that I will be able to get back to all of them. You can email me at johnstewart@printingresearch.org

SPECIAL NOTE – Last week, we launched a special 22% Discount Sale on all NPRC publications. The offer was originally set to expire Sept. 26th, but that offer has now been extended until Sept. 29th! You must use “Irma2017” for your coupon code. “Print Shop For Sale” is excluded from this special offer.