NPRC Launches New Mailing Survey

NPRC has launched the 2020 Mailing Services Pricing Survey! Participate in this just-released survey and receive a copy of the final study when it is released in January 2020.

Discover what fellow mailers & printers are charging for various mailing services and products. When you receive the final study in January 2020, you’ll be able to compare your current pricing practices against hundreds of other mailers and printers from around the country.

WARNING –  Please don’t participate unless you are willing to take your time and provide accurate answers. We have already rejected two surveys because it was very apparent owners had entered careless and/or fictitious prices in an attempt to receive a free study. If you assign this survey to others please impress upon them the need for accuracy!

Below are just a few of services covered in this new survey. This survey will retail for $195 or even more, but if you participate and return the survey by the Dec. 8, 2019 Deadline you will receive the complete study absolutely FREE!

CLICK TO DOWNLOAD
SURVEY WORKSHEET

Be sure to bookmark this page! In the event you you fail receive any of our email blasts in the next 2-3 weeks (highly unlikely <g>), you can revisit this page and find the necessary participation links here. Below are just a few of services and products covered in this brand new survey:

Full Service IMb Services & Reporting
NCOA (Link) Processing Charges
De-Duping Charges & Procedures
Mark-up Practices for Purchased Lists
EDDM Processing & Pricing
Laser Letter Merge Services
Charges for Perfect Matching
Inkjet Addressing Charges (Letters & Flats)
Insertion Charges #10 & 6 x 9″ Envelopes
Metering and Hand-affixing Stamp Charges
Postcard and 8.5 x 11″ Self-Mailer Charges
PLUS MANY OTHER SERVICES SUGGESTED
BY MAILERS AND PRINTERS LIKE YOURSELF!

PARTICIPATE NOW – Want a head-start on participating in this brand new survey? Click the following link to download and print NPRC’s Survey Worksheet. Once the worksheet is completed, you will visit the NPRC on-line survey site, where you will reenter your answers and submit your survey:

NPRC 2020 Mailing Services Pricing Survey Worksheet

Note – The worksheet is just that! It can be completed at your leisure over a 3-4 day period. Once the worksheet is completed, we estimate it takes less than 15 minutes to re-enter your worksheet answers into the official, on-line survey.

Best yet, remember this survey can be delegated to a trusted manager or CSR familiar with pricing mailing services. Simply assign the project to them, making sure that you stress the critical nature of the December 8, 2019 Deadline.

Questions? Email us at: membership@printingresearch.org

Bookstore Re-Opens With 15% Sale

NPRC is celebrating the re-opening of its Bookstore with a 15% Discount Coupon on all studies. The studies on sale include the following:

  • The 2019-2020 Financial Benchmarking Study
  • 2018-2019 Signs & Wide Format Pricing Study
  • The 2019-2020 Digital Color Pricing Study
  • 2018 Bindery Services Pricing Study
  • The 2019 Wage & Benefits Study

NPRC Bookstore Orders are typically processed and shipped within four hours. All publications are sold with a 100% Money-Back Guarantee if the study is not everything we promise! Click here to visit the NPRC Bookstore.

A New Look at Company Valuations

NPRC recently sent out an email offering a free copy of a previously published company valuation chart. The chart compared 35 different offset/digital printing firms in terms of gross sales and estimated value. The chart provides a summary of 35 valuations conducted in the past eight years by QP Consulting, Inc.. The data provided illustrates huge variations in valuations for printing firms reporting similar annual sales.

Click on the chart to view and download the entire chart comparing 35 valuations.

 The chart (see above) also clearly notes that there is little relationship between annual sales and the estimated value of the business. When you compare the estimated value of printing firms as they relate to their reported annual sales the results are nothing short of startling.

Download Free Article

Our recent email on valuations also referred readers to an article previously published on this website titled, 10 Suggestions for Increasing Company Value. If you’ve never read the article now’s your chance. We encourage you to visit this website by clicking on the Blog Tab above.

There you will have a chance to explore dozens of valuable articles and posts. Yes, some do promote previous studies and publications, but others are offered to assist fellow printers confronting various challenges in the industry.

Ten New Firms Examined

Spurred on as we examined the data from the previous valuation chart, we decided to pull out some newer folders and examine a random selection of ten valuations conducted in the past 18 months. Below is a chart depicting some of these more recent valuations.

Of special interest is that while the average annual sales of our recent sampling came very close to our previous sample of 35 firms, there was a significant increase in the average estimated value of our newest sampling when expressed as a percent of sales.

In our earlier analysis of 35 firms, the average value as a percent of sales was 49.3% and the median was 44.1%. In our newest extraction of ten firms, the average percent of sale valuation was 62.7% and the median was 63.8%. Put simply, the value or estimated worth of the average company requesting our services appears to have increased.

Recent valuations coming in at higher values relative to annual sales.

Company Values Increase

The far right-hand column below simply indicates value of the firm in question in terms of percent of gross sales. (Example: Our valuation of Anderson Digital estimated that we believed the firm was worth 79.5% of its most recent annual gross sales.) It is critical to note that just because we calculated an estimated value for a firm does not mean that it would likely sell for that amount!

The reality of the market today is that even healthy, profitable firms may not sell for anything close to what the formulas say they are worth. In fact, it is quite possible that despite the best efforts some firms might never sell.

Is there an explanation for this increase? Yes, we believe the increase can be attributed to the fact that the industry continues to shrink in size, and we are indeed looking at a situation of survival of the fittest where only the healthiest of printing firms can survive. Of course that doesn’t mean all of our ten firms are healthy, but it does mean that competition in terms good to excellent financial ratios is improving.

Are Firms More Attractive to Buyers?

As a general rule, firms that continue to survive and prosper today are indeed financially stronger firms. Nonetheless, just because many of these firms appear to be stronger and healthier than those previewed in the past, it does not mean they are necessarily more attractive to potential buyers.

Like it or not, there are not a lot of “newbies” out there looking to buy a printing firm – printing is no longer perceived as a growing industry that one should consider and explore. Most potential buyers are existing printing firms wishing to expand their sales and customer base through acquisitions rather than generating new sales.

 

 

Printers Praise New Digital Pricing Study

Below are just a few of the printers who have praised the value of our latest industry report, “The 2019-2020 Digital Color Pricing Study.”  You’ll find the very latest info on pricing digital products and services when you dive into this new study. Many printers have admitted that after studying the report, they were either over-charging or under-charging for products such as envelopes, rack cards, newsletters and carbonless forms.

The new Digital Pricing Study is quickly earning its reputation as a “must-have” study for firms relying more and more on digital printing as a major source for their income.  NPRC’s newest report features the very latest info on pricing more than 16 digital products. Visit our Bookstore for further information about this brand new report.

I was undercharging on envelopes…

“I always enjoy receiving the pricing studies and I learn something every time.  I have been doing printing for over 45 years and still learn how to price things better.  Through the Sweet Sixteen pricing study, I learned I was undercharging on envelopes (which surprised me) so this will more than pay for the cost of the membership and Pricing Study.”

Wayne Clark, Graphics North Printing
Fairbanks, AK

Keep up the good work…

“John, thank you for all your work in providing the printing industry with the “Sweet Sixteen” Digital Color Pricing Study, and the many other studies you have published for us for so many years. It always helps to know where we are at and not to leave money on the table. Keep up the good work.”

Arie Teomi, Lasting Impression Direct
Cleveland, OH

Knowing our prices are reasonable…

“I always look forward to receiving your reports, particularly the pricing studies. They’re my best source of data to be sure our prices are within a reasonable range, and the best confidence-builder I’ve found against buyers who say our prices are too high. Knowing our prices are reasonable means I look for better prospects, rather than caving on prices.”

Steve Blatman, Ink Spot Printing & Copy Center, Inc.
Frazer, PA

Confidence that our prices are fair…

“Your studies have been a big help in keeping me in business for more than 28 years. I have used the industry pricing studies over the years to make sure our prices are competitive and adjust where necessary. This gives our customer service representatives confidence that our prices are fair and reasonable. I cannot understand why many more print shop owners do not take advantage of these valuable studies, especially when they can get them for free with just a little effort.”

Mike Geygan, Minuteman Press
Lebanon, OH

The study gives us information… to stay in business…

“I want to thank you for including my firm in your annual pricing study. Even though my company is extremely small, the study gives us information necessary to stay in business. Unlike the bigger companies, which can try random pricing strategies, we need to only use fact-based strategies which the pricing study provides each year.”

Ralph Dunavant, American Printing & Promotions
Manassas, VA

This information has helped me be sharper in our pricing…

“I have been participating in your surveys for more than 20 years. As I look back over those years, I realize that I have referred to your surveys more than any other source of pricing information in the printing industry. It is concise, accurate and timely. I would have to say that this info has helped me be sharper in our pricing, win more bids and make more money. Thanks so much for your efforts.!”

Jon Robson, Auburn Document Centre
Auburn, NY

A fantastic job well done…

“John, thank you again for a fantastic job well done. We eagerly await each of your studies, as they are crammed full of helpful insights, sage advice, and of course ‘real-world’ data and pricing information. Your studies start to pay for themselves from the first page!”

James Jepsen, General Manager
Local Copies Etc., Santa Maria, CA

 

 

 

$130,000 SPE – The Magic Number!

By John Stewart, Executive Director, NPRC

$130,000 SPE – The Magic Number! If your firm is going to survive or prosper in the next five years, you must currently have an SPE of $130,000 or higher. If your firm fails to achieve that SPE the chances are good you will soon become just another mediocre firm. There are too many firms today that are simply holding on to a few “old timer” customers while the owners are eagerly awaiting retirement, forced or otherwise!

The answer may very well be found in your current sales per employee (SPE)! Meet or exceed an SPE target of $130,000 and you’re likely to be one of those firms that survive and prosper. Allow your SPE to drop below that mark and you are likely going to face increasingly serious problems in the next few years.

Defining SPE

First, let’s precisely define how to calculate SPE. Divide your total annual sales (actual or projected) by the total number of full-time equivalent employees, including all working owners, used to produce those sales. You’ll be wasting your time doing this calculation if you do not do it properly.

“Unfortunately, we also know of printing firms selling the same mix of products and services as our first example, that will often require 8 to 8.5 employees to produce that same amount of sales.”

SPE is an important productivity ratio that indicates how many employees does it take to produce $XXX in sales. The converse is true as well. You can use SPE figures to estimate the annual sales you can expect X number of employees to produce.

As an example, SPE data we rely upon states that $1,000,000 sales can be easily produced by no more than 6 to 6.5 employees. Unfortunately, we also know of printing firms that will require 8 to 8.5 employees or more to produce the very same mix of products and services.

Properly Counting All Employees

As part of the calculation, you must count all “employees” whether or not they are on the payroll. Do not rely strictly on your payroll reports to make this calculation. An example of this would be when you have a husband and wife both working in the business but where only one of them actually draws a salary.

Yes, you should also include outside sales representatives as well as in-house bookkeepers. If your father retired from the business but now comes in and works about 20 hours a week then he too should be counted as a 1/2 or .5 employee.

You also must accurately account for all part-time employees. If a graphic artist or bindery operator consistently works 30 hours per week they would be counted as a ¾ or .75 employee. On the other hand, if you have an employee that consistently works 50 hours per week then they would count as 1.25.

The only exception to the above process for counting employees occurs when we are dealing with working owners. The reality is that owners are typically expected to work 45-50 hours because they are in fact the “owners.” However, in situations where one or more owners or partners, feel compelled or are obligated to work 60-70 hours or more each week then it is time to start counting them as more than just one “body.”

If in fact an owner is consistently working in the 60-70 hours per week range then we suggest they should at least be counted as 1.5 employees!

Industry Overview of SPE

Below is a broad overview of sales per employee statistics in the printing industry. Whether or not our numbers reflect the industry at large is subject to debate. We speculate that our industry surveys tend to attract slightly more successful printing firms than exist at-large, and thus our average and median numbers may not be reflective of the industry.

Nonetheless, the numbers clearly indicate that SPEs of $130,000 and higher are easily achievable, and we can’t help but wonder why so many owners appear to be willing to tolerate SPEs of $120,000 and below.

If your firms is indeed struggling with SPEs in the $100,000 to $120,000 range you need to make “improving your SPE” a major goal for 2019-2020!

Counting Owners Properly

On the other hand, an owner who consistently works 55-65 hours we would suggest that a more accurate SPE calculation might result if we count the owner as at least a 1.25 employee. Yes, there is some subjectivity in the calculation when dealing with owners and we will just have to live with that.

Nonetheless, SPE is the most frequently tracked productivity ratio in the printing industry and we have been tracking and recording it for more than 25 years. Virtually every pricing, productivity and financial ratio study published during this time has tracked that ratio.

SPE QUARTILES – WHERE DO YOU RANKWe calculated the sales per employee of all participants based upon the information provided, and then ranked the data from high to low. Next, we divided the list into four approximately even breakouts or quartiles. Last, we averaged the SPE for each quartile breakout. The results are depicted above. If your SPE falls into either the bottom (red) or the 2nd quartile ((gold), your SPE number falls into the bottom half of the industry and should be a source of  concern. On the other hand, if your SPE is in the $130,000-$175,000 range you deserve a pat on the back. (This chart and caption appeared in the 2019-2020 Sweet Sixteen Digital Color Pricing Study published by NPRC.)

“We estimate that close to 50% of the industry (see graph above) is failing in terms of SPE, and many of those firms will most likely not make it another five years.”

We estimate that close to 50% of the industry (see graph above) is failing in terms of SPE, and many of those firms will most likely not make it another five years. There is little or no chance for firms with SPEs of $115,000 and below to pay the owners a reasonable salary and generate the excess earnings required to maintain or boost value as well as provide the funds required to finance upgrades in equipment. It just can’t be done with SPEs that low.

Higher Profits, Better Ratios

If your calculated SPE is $130,000 or higher it typically places your firm in the top two quartiles in the industry in terms of profitability. Printing firms in the top half of the industry typically report lower cost of sales ratios (30-26%) and lower payroll costs (28-30%). As a result of running leaner firms and better operating ratios, owners of firms in the top two quartiles report significantly higher owner’s compensation ratios in the 19-27% range.

Looking at the other side of the coin, we know that approximately 35-40% of the firms in our industry (based upon the feedback and results of our numerous industry surveys) report SPEs of $120,000 and below. That can be reaffirmed by examining the bar graph above.

Causes of Low SPE

There are many reasons for low SPEs, and we can only speculate for a few of them. Below is a brief listing of some of the causes we have encountered over the years as a consultant:

Build it and they will come – One cause of low and declining SPEs stems from firms acquire one or more highly productive pieces of equipment (like large, expensive and very productive digital printers or presses) only to maintain their current employee staffing. It is indeed rare these days to expect that demand will increase as the result of acquiring a new piece of equipment. The “Build it and they will come” approach is rarely an accurate assumption, at least in the short-term of 12-24 months. The original assumption in most cases is that the new equipment will produce more product than before with lower labor costs, and yet labor is rarely adjusted downward.

“…many of these owners fail to recognize the benefits that can be realized from new technology, especially as it relates to allowing them to reduce overall payroll costs.”

Failure to Invest – This is almost the exact reverse of the “Build it and they will come approach” noted above. Many owners continue to report and tolerate excessively low SPEs because they prefer to stick with what they know, rather than invest in new technology. They are fearful of new technology and often shy away from new investments in equipment, fearful of taking on new financial obligations. While the latter is a legitimate concern, many of these owners fail to recognize the benefits that can be realized from new technology, especially as it relates to allowing them to reduce overall payroll costs – i.e. produce more with fewer people! The number of small, medium and large firms that have reduced their offset press footprint and transitioned to 70-100% digital production continues to grow virtually every month. As a consequence, some have reported significant reductions in payroll costs.

The 80-20 Rule is another source or cause of low SPE ratios. There are many variations and applications of the often-quoted “80-20 Rule,” but one of the more common examples states that 20% of your employees cause 80% of the employee problems. That means in the typical company employing ten individuals, approximately two of those employees appear to cause most of the problems. Poorly managed printing firms tolerate employees that would never “make it” in more productive firms.  It is ironic that an educated outsider can often spot those “bad apples” within a few minutes or at most a couple of hours. How or why it is that owners continued to turn a blind eye to these employees and tolerate them year after year is beyond comprehension.

Tolerating Mediocrity – This may indeed sound cold-hearted and that may indeed be true, but time after time I have visited firms where there was a great reluctance to terminate employees that by any reasonable measure should be terminated. Owners typically recognize the need when it is pointed out to them, but they are rarely willing to act. By the way, most employees already know who the  bad apples are, but they are typically reluctant to share their beliefs with management.

As always, we encourage your feedback. Send us your experiences, especially if you have increased your overall productivity and SPE. We’d love to hear from you. We can of course treat any stories and tales you provide with 100% anonymity.

 

 

Pricing Study Now Available as PDF

In response to dozens and dozens of requests from printers across the country, the new 2019-2020 “Sweet Sixteen” Digital Color Pricing Study is now being made available as a PDF. Retail Price for the PDF is $225. Hard copy price remains at $245.

The new 90+ page study is packed with the latest pricing for dozens of the industry’s most popular digital products and services. The study provides average and median pricing for products such as flyers and catalog sheets (8.5 x 11″ and 11 x 17″), rack cards, postcards, carbonless forms, stand-alone click charges, newsletters and catalogs (8, 16 and 32-pages), digitally produced envelopes, business cards as well as industry discounting practices.

Quantities covered typically include 100, 500, 1,000 and 2,500 but vary depending upon the specific product. Average as well as median prices are provided for virtually all products, as well as individual unit prices. To order and receive your PDF copy today, visit the NPRC Bookstore.

Spouse’s Salary Not Part of Profits!

We’ve talked about this before but it is worth repeating. There is a big difference between what a couple takes out of a business in terms of salaries and other benefits and what is or would be considered profits. Remember, when it comes to valuing the worth of a business, a typical real-world valuation relies upon calculating what is called excess earnings or profits., not necessarily what a husband and wife might take out of the business – those are really two different animals.

A quick example is in order. First, let’s assume Ajax Printing & Signs does $450,000 per year in sales. Bob and Karen, the owners of Ajax Printing, each withdraw $40,000 in salary and benefits each year. They employ one full time employee and one part timer. Their calculated sales per employee (SPE) is a relatively healthy $128,500.

In recent years Ajax has been reporting an average pretax profit of $25,000. When Bob sits down to arrive at the value of his business, he estimates the total profit for his company is approximately $105,000 based upon combining the two salaries and then adding to that number the “corporate/company profit” of $25,000.

Unfortunately, that’s not how a valuation works, not even a simplified one! Even assuming that the salaries being paid to both Bob and Karen are perfectly reasonable based upon their contributions and expertise, you cannot count or include the salaries and benefits paid to both of you when calculating profits or excess earnings – the latter being the fundamental calculation in determining the value of a business.

“Unfortunately, that’s not how it works out. Even assuming that the salaries being paid to both Bob and Karen are perfectly reasonable based upon their contributions and expertise, you cannot count or include the salaries and benefits paid to both of you when calculating profits or excess earnings – the latter being the fundamental calculation in determining the value of a business.”

Why? Because while it is assumed that a new owner would would take over Bob’s duties and responsibilities, he certainly could not perform the duties of Karen as well. She would have to be replaced. Like most buyers who purchase a company run by a husband and wife team, the buyer has to replace both spouses when he or she purchases the business. The new owner will almost certainly be required to hire and train an individual to assume Karen’s responsibilities! Karen’s $40,000, for the purposes of a valuation, is considered nothing more than one more salary or business expense required to operate the business, and when Karen leaves she must be replaced.

What if Karen is really only working part time and could be replaced by someone at a much lower salary? If that’s the case then indeed the excess salary previously paid to Karen would indeed be included in calculating excess earnings & profits.  Calculating true “excess earnings,” the actual amount a business generates after covering all of its real-world expenses, is one of the most involved calculations we perform in arriving at company valuations.

By the way, just to clarify and avoid being called a sexist, the names, duties and responsibilities of Bob and Karen could readily be switched and reversed in the above discussion. Bob could be working for Karen and we have no intention or desire to imply who works for who in this situation. Note a similar article detailing what is paid to a spouse and how it impacts valuations appears elsewhere in this blog.

Industry Mark-up Rates & Practices

Occasionally, we receive inquiries from printers asking us about markup rates and practices in our industry. Some of the inquiries come from folks who have just gotten into the business, while others come from old-timers who entered the industry during the 1980’s and 90’s.

Here’s an email we received just the other day along with our partial response:

“Hello John, I received the new pricing guide and think it is great information, thank you. I do have a question that maybe you could point me in the right direction.  We’re going thru the process of updating my pricing ,  and I’m interested on how other printers handle outsourced costs & final price vs in house.

“I use PrintSmith and years back set up a mark-up % for cost to arrive at a selling price. However I’m struggling to have a consistent price point when generating an invoice to the end user when we decide to outsource vs in-house. I may be making it to complicated, but hoping someone could give me some pointers.”

I responded with the following:

Dear Bob (not his real name), the best I can offer is some observations based upon 35+ years of consulting plus more than 30 years of publishing various pricing studies.

My first observations is that most printers really don’t understand the purpose of mark-ups and consequently, they tend to use far lower markup rates than they should.

Markups on purchases of outside products and services should be used to establish a selling price that recovers all direct and indirect costs as well as the anticipated risks, as well as produce a reasonable profit. Unfortunately, many, many printers in this country aren’t doing that. In fact, the more they broker the lower their profits tend to be.

Low Costs, Thus Low Markups?

A couple of weeks before receiving the inquiry from Bob, I received a similar inquiry from a graphic designer who told me he was just starting off in business. He said he already had a couple of customers but was totally confused about what types of markups he should use when purchasing brokered services.

He emphasized the fact that his business was very small but he wanted to grow. He noted that right now he was working out of his house and thus he had little or no overhead to account for, so in his mind that justified much lower markups. In fact, by not having to markup jobs as much he figured he has a competitive advantage.

Of course the flaw in that argument is that if he truly wants to grow his business, acquire an office, hire staff or a secretary to field calls and inquiries, he needs to be taking that into account now when he sets his markup rates. “How do you ever expect to grow and prosper if you are not charging enough now to produce profits sufficient to finance and support that growth,” I asked.

Many printers intentionally ignore a fundamental business principle that states that when it comes to pricing, every effort must be taken to recover all direct and indirect expenses involved in the production or brokering of a job. Just because a job is brokered doesn’t mean it is exempt from contributing to the general overhead expenses of the business.

The facts are it is highly unlikely you would fielding calls regarding those brokered products if it was not for the physical structure being supported by those fixed overhead expenses. If you fail to account for these types of expenses and fail to assign a portion of these costs to every brokered job you are making a serious mistake.

Markup Rates & Practices

If you bring up the topic of markups in a gathering of printers you will likely hear two common responses:

  • ” We generally double our costs, unless it is a big job and then we might lower that a bit.”
  • “We markup all outside purchases by 50%, unless they are really big jobs and might drop that down to 40% or so.”

The problem with the practice of “doubling the costs” is that it is rarely applied as a “flat” across-the-board markup. Far more common, is the practice of lowering markup rates as the costs increase. While this practice holds up well for brokered products and services costing $100 or less, many printers feel compelled to dramatically lower the markup percentages they use when dealing with brokered jobs costing them $500, $1,000 and more.

So while a 100% markup (doubling the costs) might be considered adequate for jobs costing $100 or less,  many printers seem to be terribly reluctant to use similar markups as their internal cost of the jobs starts to approach $250, $1,000 and $2,500. The irony of this type of attitude is that the financial risk increases as the cost of the job increases. If a job that costs $50 and is sold for $100 has to be “eaten” by the average printer, he or she can afford the costs of the rerun. However, what about the brokered job costing $2,500 that must be rerun at the printer’s expense? Was it marked up sufficiently to cover the risks that might be involved if the job has to be rerun at the printer’s expense? Generally, the answer is “No.”

Gross Profits* Too Low

What about marking everything up by 50% or so? Does that work? Not if you want to survive in this industry and remain profitable.  Marking something up by only 50% produces a gross profit of 33%, far too low a gross profit to sustain, let alone grow a business. Even doubling the price (a markup of 100%) produces a gross profit of 50%, and that is still too low.

*Gross Profit is defined as selling price less cost of goods. Labor costs are not included in cost of goods.

A Markup of 100%

Selling Price $ 200
Cost $ 100
Gross Profit $ 100 (50%)

A Markup of 50%

Selling Price $ 150
Cost $ 100
Gross Profit $ 50 (33%)

It is important to note that in the printing industry, as a general rule, the average gross profit ranges between 68-70% on all jobs. However, if it is a brokered job and you’ve marked it up 100% you are producing a gross profits substantially lower than if that job or a similar job had been produced internally.  Ironically, the risks involved in brokered jobs is significantly higher than those jobs produced internally. When you broker a job, you lose control of the production process. When a job is produced internally, you can spot, correct and fix mistakes far quicker than when a job is brokered.

For the record, firms that tend to broker 25% or more of their sales to outside vendors typically report significantly lower gross profits and lower net owner’s compensation. Although brokering can be profitable, it is rarely as profitable as work produced internally. The bottom line, the more a firm brokers, the less profits it tends to produce.  (Data extracted from page 33, of the 2017-18 Financial Benchmarking Study.)

All too often it seems that printers are more concerned with pleasing customers and making them happy than they are producing a profit. I suspect, that there are some printers out there who would gladly markup something up as little as 10-15% just to keep a customer happy. Worse, are the printers who totally ignore their labor and overhead costs and thus fail to take these costs into account when calculating the types and percentages of of costs that need to be recovered by every single job processed through the printing firm – produced internally or by a broker.

Don’t ever apologize – A printer who knows a brokered job will cost him $1,000 and marks it by 70% and consequently sells it for $1,700 has nothing whatsoever to apologize for or feel guilty about! Remember too, that graphic design charges and shipping charges also need to be added to that $1,700 job.

Many of the pricing studies produced by NPRC report on markup practices. Some studies only cover paper markup practices, while other studies have addressed markup practices involving outside products. The 2018-19 Signs & Wide Format Pricing Study is a good example of the latter.

Markup Rates for Outsourced Products & Services – 2018-19 Signs & Wide Format Pricing Study

As I told Bob in my email to him, “Most printers tend to use a sliding scale based upon their costs, whether they are dealing with cost of paper or the cost of the brokered product or services. Whether the markups they are using are sufficient remains to be seen.”

I offered Bob some examples of current markups in use in our industry. The data I sent him appears below:

MARKUP PRACTICES

Brokered Cost $50 $100 $250 $1,000
Mark-up % 120% 99% 86% 71%
Aver. Selling Price $110 $199 $465 $1,715

The data above is taken from page 54 of the 2018-2019 Signs & Wide Format Pricing Study. I know many printers that would  use far more aggressive markup rates.

There is one very successful printer in the Northeast who would scoff at using any markup less than 100%, regardless of the projected selling price. In fact, this printer tends to prefer using markups of 125-150%. She knows full well that some of her more timid competitors just down the street would never consider using markup rates anywhere near that large.  Does she worry about losing a job because a competitor is offering the same job for far less? Not a chance.

For those printers (and I know some of you will react this way) who will respond by claiming there is no way they could get away with markups like we are talking about I will tell you that you are wrong. Yes indeed, there are printers within a couple of blocks of your operation that are indeed marking up 100% or more and getting the jobs – the same jobs that you will timidly markup 30-40%!

Many readers claim to know their markets when nothing could be further from the truth. They know nothing more about their markets that what an occasional customer has remarked about their pricing. Oh, you conducted a pricing survey a couple of years ago and you know what your market will accept in terms of markups. Hogwash!

I’ll bet the survey wasn’t worth the paper it was written on, and I wouldn’t put a lot of faith in the individual conducting that survey either! Who was it? Your lead CSR, your delivery guy or possibly your cousin? Wolw, before you rationalize and give us all the reasons why you can’t do this and why you can’t do that, read the article titled “Shopping Your Competitors” in the NPRC Blog.

Less successful printers, those who make marginal profits and struggle to make payroll including their own, tend to shy away from markups of 100% and more, believing instead that markups of 50% are good enough, which of course they never are!

 

Printers Praise New NPRC Digital Pricing Study

Printers from across the U.S. are praising NPRC’s newest study, The 2019-2020 “Sweet Sixteen” Digital Pricing Study. This just-released report, covers 16 of the printing industry’s most popular digital products and services, is only available as a hard copy.

The new report is packed with the very latest pricing info and includes literally hundreds of average and median prices for more than a dozen of the most popular digital products and services in the printing industry. Click here to view and download the study’s Table of Contents.

Virtually every page in this just-released study reveals pricing info you can use immediately to cross-check and compare your own pricing against others in the industry.

Most products and services covered in this study include average and median pricing, a 10% high and low extraction, plus pricing based on a per unit basis such as pricing per sheet, per click, per envelope and even pricing per carbonless set. This feature makes it easier than ever for readers to obtain pricing for unusual quantities or quantities simply not covered in the report.

Orders are processed and shipped same-day as received via USPS Priority Mail.

Retail Price: $245. Click here to order:

Go below and read what fellow printers
have to say about this new pricing study…

“John, thank you for all your work in providing the printing industry with the “Sweet Sixteen” Digital Color Pricing Study, and the many other studies you have published for us for so many years. It always helps to know where we are at and not to leave money on the table. Keep up the good work.”

Arie Teomi, Lasting Impression Direct, Cleveland, OH

 

“Having just updated our digital press so we are able to competitively print 4-color envelopes, this price study is invaluable when setting competitive pricing for 4-color envelopes.”

Marian Fenlon, DPI Printing, Oshkosh, WI

 

“I always look forward to receiving your reports, particularly the pricing studies. They’re my best source of data to be sure our prices are within a reasonable range, and the best confidence-builder I’ve found against buyers who say our prices are too high. Knowing our prices are reasonable means I look for better prospects, rather than caving on prices.”

Steve Blatman, Ink Spot Printing & Copy Center, Inc., Frazer, PA

 

“Your studies have been a big help in keeping me in business for more than 28 years. I have used the industry pricing studies over the years to make sure our prices are competitive and adjust where necessary. This gives our customer service representatives confidence that our prices are fair and reasonable. I cannot understand why many more print shop owners do not take advantage of these valuable studies, especially when they can get them for free with just a little effort.”

Mike Geygan, Minuteman Press, Lebanon, OH

“I want to thank you for including my firm in your annual pricing study. Even though my company is extremely small, the study gives us information necessary to stay in business. Unlike the bigger companies, which can try random pricing strategies, we need to only use fact-based strategies which the pricing study provides each year.”

Ralph Dunavant, American Printing & Promotions, Manassas, VA

 

“Hi John, I have been participating in your surveys for more than 20 years. As I look back over those years, I realize that I have referred to your surveys more than any other source of pricing information in the printing industry. It is concise, accurate and timely. I would have to say that this info has helped me be sharper in our pricing, win more bids and make more money. Thanks so much for your efforts!”

Jon Robson, Auburn Document Centre, Auburn, NY

 

“We have been participating in the NPRC’s surveys for some years now. The information they have provided us with has been the topic of many pricing plan discussions in our weekly meetings. they help us stay competitive. The “Sweet Sixteen” survey helped us tune our digital pricing structure as we move forward to grow the digital segment of our business. Invaluable information.”

David Adams, Quality Printing Services Inc., Petaluma, CA

 

 

 

 

 

David Adams

90 Sycamore Lane

Petaluma, CA 94952

707-775-4300

NPRC Releases New Digital Pricing Study

NPRC has just released its latest research report, the 2019-2020 “Sweet Sixteen” Digital Color Pricing Study! The new report, packed with the very latest pricing info, and including literally hundreds of average and median prices, is now available for immediate shipment. The new study covers more than a dozen of the industry’s most popular products and services in the digital printing arena.

The 90+ page study offers an up-to-the-minute look at what printers are charging for services such as flyers & catalog sheets, postcards, rack cards, carbonless forms, newsletters and digitally printed envelopes, just to name a few. Click here to view the entire table of contents.

Each page in this brand new study is packed with pricing info you can use to cross-check your own pricing against printers around the country.

Most products and services included in this study include average and median pricing, a 10% high and low extraction, plus pricing based on a per unit basis such as pricing per sheet, per click, per envelope and even pricing per carbonless set. This feature makes it easier than ever for readers to obtain pricing for unusual quantities or quantities simply not covered in the report.

Due to on-going concerns regarding copyright violations, this study and possibly future NPRC studies, will no longer be made available as a PDF. Instead, we will only provide “hard” copies. Most orders are processed same day as received and are shipped out via USPS Priority Mail.

Available for sale beginning July 18, 2019.
Retail Price Only $245. Hard copies only!
Click below to visit the NPRC Bookstore for more details.

NPRC BOOKSTORE