Download Free Mark-up Practices Report

Just a brief reminder that you can still download a FREE copy of  NPRC’s popular 2017 Hourly Rates & Mark-up Practices Report.  This “Free Download” offer expires July 18th and will not be repeated. Published in the summer of 2017, this special report  offers an in-depth view of budgeted hour rates and mark-up practices in the quick and small format printing industry.

This offer is simply our way of saying thanks to owners like yourself who have supported our industry research efforts during the past 25+ years. We appreciate your support and encourage your continued participation.

This study reviews hourly rates for hand labor, graphic services and more than ten bindery operations – operations such as padding, laminating, 3-hole drilling and hand collating. Use this study to update and revise your computerized estimating programs.

The Hourly Rates Report analyzes average and median mark-up percentages applied by owners when paper costs $100, $250, $500, $1,000 and $2,500.

To download this useful report, click here or the adjoining artwork.

After you’ve downloaded this FREE Report, take a view minutes to visit the NPRC Bookstore where you will find a half dozen or more studies dealing with Mailing Services, Digital Printing, Wages & Benefits and Pricing Practices for Signs & Large Format.

Special Coupons Available – The following coupons are available when purchasing the following studies: (Note the coupons below expire July 18th!)

  • 2018 -19 Signs & Wide Format Pricing StudyNPRCSIGNS18 (18% Discount)
  • 2019 Printing Industry Wage & Benefits StudyNPRCWAGES14 (14%  Discount)
  • 2020-21 Mailing Services Pricing StudyNPRCMAILING16 (16 % Discount)
Visits: 127

NPRC Offers Free Samples of Digital Pricing

Act now and save 16% on popular 2019-2020 Digital Pricing Study. This study covers pricing for dozens of the most popular digital products and services provided in our industry. Use Coupon: NPRCVIP16

As an example, you’ll find useful pricing info for 4 x 9 rack cards, #10 and 9×12″ Envelopes, 4/4 flyers, catalog sheets, rack cards and postcards just to name a few. Most prices includes cutting and trim charges, but assumes artwork is provided by customer.

Click here to view the Table of Contents. Visit the Bookstore for more info about this study. Reg. Retail Price  (PDF) is $225. With coupon pay on $189.

Download two sample pricing pages from this popular study by clicking here.

Visits: 217

What Laggards Don’t Know in the Covid19 Era!

The real problem with “profit laggards” in our industry is that they don’t know they are laggards. Most printers blame the economy, Covid19, vendors and the internet for most, if not all of their problems.

Many of these troubled companies simply ignore their own profit and loss statements. When they do examine them, they often are not even sure what to look for.

Profit laggards (those in the bottom 25% in terms of profitability) often have no idea whatsoever how poorly they are doing, especially when compared to printers in the top 25th percentile. They just figure everyone must be having the same problems they are facing.

When troubled firms look at key expense items such as “cost of goods,” “payroll costs” and “overhead expenses,” they have no idea whatsoever how those expenses compare to others – especially those firms falling into the top 25% in our industry in terms of profitability.

One of the big reasons for this is that they have so little information to work with when it comes to financial data. Our surveys show that most profit laggards lack properly prepared financial statements. Even when they do have decent statements, their statements fail to display key ratios adjacent to expenses (expenses expressed as a percent of sales).

Lacking ratios that they can use to compare their performance against others, it is no surprise that many of these troubled companies are so ill-prepared when a double whammy like Covid19 comes along.

Operating Ratio Studies

Fortunately for the industry, the National Printing Research Council (NPRC) has continued a 35+ year tradition in the printing industry of publishing key financial reports detailing profitability in the printing industry. Described as either “Operating Ratio Reports” or “Benchmarking Studies,” these popular reports provide an in-depth look at profitability in our industry.

These reports examine our industry in terms of annual sales, key expenses, and owner’s compensation. In addition, comparative breakouts include independents vs. franchises, single vs. multiple, association memberships, offset vs. digital, and firms with high reliance on brokering vs. those that broker very little.

As for sales, the latest study, the 2019-2020 Financial Benchmarking Study, provides breakout data for firms with sales as low as $400,000 to those reporting sales of $2.5 million and higher. Another valuable breakout includes an analysis of firms based upon their reported sales per employee.

As the study notes, firms with SPEs of $140,000 and higher are significantly more profitable than those with SPEs in the $80,000 to $115,000 range. The higher the SPE, the greater the odds that firms will indeed survive these turbulent times.

Profit Leader Quartiles

Of all the breakouts offered in the current and previous benchmarking studies, none is more revealing than when the study presents breakouts based upon “Profitability Quartiles.” In the most recent report, profitability quartiles are defined as:

• Bottom Quartile 0.5% – 9.9%
• 3rd Quartile 10.0% – 15.9%
• 2nd Quartile 16.0% – 21.9%
• Top Quartile 22.0% – 31.0%

The current Benchmarking Study not only analyzes profitability for the industry at large (all participants), but it also provides profitability quartiles breakouts for both independent and franchises.

Other breakouts offered include peer groups vs. non-peer groups, firms employing sales reps vs. those with no sales reps, and breakouts based upon geographic location.

Profit Leader vs. Profit Laggard Ratios

While the Benchmarking Study provides hundreds and hundreds of expenses and their corresponding ratios, there are a few that standout. Below are some key $$$ amounts and ratios that are discussed in this study.

Please not that the firms falling into the bottom quartile were in serious trouble pre-Covid19. One can only imagine the struggles the bottom 25% of our industry is facing in this new era of extended quarantines, wearing of masks and reductions in staffing.

Bottom Quartile Top Quartile
Total Gross Sales $1,448,004 $1,037,417
Cost of Goods 30.6% 29.0%
Payroll (Excl. Owner) 38.8% 25.8%
Overhead Expenses 25.2% 19.4%
Owner’s Compensation 5.4% 25.7

Doomed to Failure

If you fail to control your payroll costs you are most likely doomed to failure. You may not close your doors, but you are endangering the future survivability of your firm. When it comes time to sell, it will have little if any value and will command only pennies on the dollar.

If your firm fails to control overhead expenses and tends to report expense ratios that fall into the bottom quartile (as depicted above) you are probably doomed to failure. You cannot consistently achieve or report bottom quartile ratios as shown above and expect to remain in business! Things have to change and it begins at the top.

Purchase this Study

To purchase this study, visit the NPRC Bookstore here.
For a limited time, you can save 15% on this info-packed study.
Use coupon code: NPRCBENCH15 to save 15%. Retail Price $149. With coupon, pay only $126.65 

Visits: 330

Characteristics of Leaders & Laggards

Learning to Distinguish Between The
Leaders & Laggards in the Printing Industry

By John Stewart, Executive Director
National Printing Research Council (NPRC)

I’ve been actively involved in this industry since the early 1980’s working with association such as NAQP, NAPL, NPOA and NPRC. I’ve published or co-published virtually every statistical study produced in our industry, ranging from wage and benefits and pricing studies to studies dealing with compensation practices for outside sales reps to what I consider the most valuable of them all – the biennial financial benchmarking studies.

My expertise as an observer of our industry’s history also stems from the fact that I have conducted more than 400 on-site consulting visits both in the U.S., Canada, Australia, Ireland and even Brazil. Most of these consulting visits were conducted in the late 1990s and early 2000s.

Ironically and to a large extent, I can still recall the physical attributes of almost every shop I ever consulted with as well as the major recommendations I made following the visit. As the popular Farmers Insurance commercial suggests, “We know a thing or two because we’ve seen a thing or two.” I truly have seen it all, but the one more humorous visits I can recall was a consulting visit to a printing firm in Brazil where I encountered press operators using gasoline as a press wash while smoking cigarettes.

Characteristics of Winners vs. Losers

With the foregoing out of the way, and hopefully having established some credibility with you the reader, I would like to share with you what I consider to be some specific characteristics that distinguish highly efficient and profitable firms from firms found at the other end of the spectrum.

Success or failure in this industry can rarely be blamed on cut-throat competitors, brokers, the local economy or even on employees.

I will note that, more often then not, the primary cause of failure in this industry falls entirely on the shoulders of the owners. Success or failure in this industry can rarely be blamed on cut-throat competitors, brokers, the local economy or even on employees. The blame belongs precisely where it should – The owner.

Monitoring Productivity via SPE

As many of the studies that I have published, it is shocking to see a histogram depicting sales per employee in our industry, and observing the fact that sales per employee (SPE) can range dramatically from a low of $80,000 to more than $200,000 at the high end.

Tell me your annual sales and the total number of employees (including yourself, partners and spouses) and I can closely predict where you will fall in terms of real profitability. SPE in turn will also provide a good indication of the ultimate value of your firm if  it was put up for sale tomorrow.

According to the just-released 2019-2020 Financial Benchmarking Study, (visit the NPRC Bookstore for further information about this study)the average SPE of our 177 qualified participants was $139,595. The median SPE was almost identical. Firm’s falling into the bottom quartile reported SPEs in the $119,000 range while those in the top quartile reported an average SPE of approximately $144,000.

It never ceases to amaze me how poorly some printers perform these days!

Owners of troubled printing firms constantly make excuses for poor performance. The solution for boosting and improving SPE is two-fold – Terminating excess or unproductive employees and boosting the firm’s overall productivity and efficiency.

Unfortunately, all I hear most of the time from owners of troubled firms is excuses, excuses and excuses. Owners are simply afraid to make changes and constantly rationalize as to why certain suggestions can’t be implemented at their firms. Offer specific suggestions for major improvements in their SPE and owners balk and claim, “It simply can’t be done at my company.”

The truly sad thing is most of these owners will never, never change, and will ultimately end up closing their doors because they will never find a qualified buyer for their firm willing to pay them anything close to what they think their business is worth. In the best case scenario, many, many printers will end up closing their doors, selling off their equipment, and selling the customer list for mere pennies on the dollar.

Poor Financial Reporting

Profit leaders in our industry are far more likely to receive monthly financial statements, including a P&L and a balance sheet. Even more important than the statements themselves is how they are formatted.

No profit & loss statement should come across your desk without a column of “expense ratios” appearing directly to the right. If total cost of goods (COG) is $440,000 I want to immediately know what percent of gross sales does that figure represent? Is it in the 31-32% range (that’s bad) or is it 29% or lower (that’s good).

Comparing the performance of leaders against laggards in our industry.

Far more critical is taking a look at total payroll expenses (excluding what is paid to a single working owner). The most financially troubled firms in this industry report payroll ratios of 34-38% and higher, while the best performers in our industry report keeping payroll ratios in the 25-29% range.

Check-out the percent of owner’s compensation being withdrawn in the industry.

If your bookkeeper or CPA is providing you with financial statements that lack comparative ratios adjoining your column of expenses you need to fire them immediately. There is no excuse for failing to provide “ratios” next to “expenses.” It shouldn’t be a question of “well you never asked.” That was and is their responsibility to provide you with the proper tools, whether or not you asked for it. And, these “ratios” are indeed the most important tools you can use to help you analyze your business.

Of course, the worst sin of all is to see owners of troubled firms receiving properly formatted financial statements month after month and yet seeing them take no action. What the hell are they waiting for. As you can surmise, I have little sympathy for owners who sit on their ass every day checking their Facebook accounts and reading their Twitter feeds.

Owner’s used to ask me what guarantees I would offer and I used to respond. I will refund the entire consulting fee if I can’t turn your company around, but you have to give me total authority to implement all of my recommendations. And that authority would include terminating your son or daugher-in-law and raising prices across the board. Guess what, too many timid owners out, almost all of whom where afraid to give me that authority.

It’s All About Pricing – NOT!

Profit laggards (those making less than 6% owner’s compensation) are far more likely to be willing to match or lower prices than those offered by profitable firms – firms reporting owner’s compensation of 25% or more.

Sometimes a printer will tell me that, “I don’t try to be the lowest priced printer. Instead, I try to be sort of in the middle.” And yet, when challenged, many of these printers simply know very little about local or regional pricing. Troubled printers are far more likely to be swayed by customers telling them that their prices are a bit high, too often responding to the customer by saying, “Let me look over the quote we provided and see if we can’t shave it a bit.”

In my experience talking with some of the best and most profitable firms in this industry, they tend to have an attitude that their first price is also their best price, and they make no apologies or excuses for the fact that their quote is may indeed be higher than other quotes obtained by a customer. They know the value of their product and will not quibble.

Imagine visiting a high-end restaurant and when the waiter comes to your table, you point out the price of the eight ounce filet mignon on the menu and asking him if he could do a bit better on the price. Even worse, imagine telling him that all three of your guests are going to be ordering filets and surely they can lower the price a bit!

For additional information on pricing in our industry, we invite you to visit the NPRC blog where you can find two articles of interest:

Major Pricing Variations A Myth (Page 1 of Blog)
Shopping Your Competitors (Page 2 of Blog)

For those who always seem to get hung up on price and believe it to be the most important criteria when it comes to selecting one printer over the next, I suggest that the next time you are at the grocery store and explain, if you can, how Philadelphia Cream Cheese is consistently priced 30-40% higher than the store brand sitting directly next to it? Better packaging, marketing, shelf placement, great recipes? Whatever your excuse or answer, it can be applied to printing products as well.

 

A survey print buyers conducted years ago found “Price” ranked #5 in terms of importance.

P.S. A study of print buyers conducted a number of years ago by RIT sought to determine the importance of various factors in making a decision to use or select one printer over another. They prepared a scale that ranked eight various factors in the selection process. Guess where “price” fell? Pricing was ranked #5. What factors were more important? Dependability was #1, and was followed by Print Quality, Turnaround Time, and Ease of Doing Business – all ranking above “Price.”

Failing to Practice the 80-20 Rule

 Learning to spend time wisely (The 80-20 Rule) is another characteristic that seems to distinguish the best run printing firms from the also-rans. Owner’s of top tier firms seem far more disciplined that owners of troubled firms.

One perfect example of the 80-20 rule suggests (at least roughly) that 80% of your employee problems are caused by 20% of your employees. A very small number of employees cause most of the problems… they call in sick, make most of the mistakes, and seem to be the root cause of much of the turmoil in a company. In you have 10 employees there’s a very good chance that two of them cause most of the problems in your company. Terminating these employees can make a major improvement in most companies.

Another example? Approximately 20% of your overhead items account for 80% of your expenses. If you’re motivated to cut expenses and improve profitability, don’t spend time worrying about the reducing the cost of office supplies, trash removal, travel and marketing. Concentrate instead on some of the “biggies” like auto operating expenses, building rent (Yes, that too can be renegotiated), lease expenses, repairs & maintenance, and even utilities. Successful companies find a way to reduce these types of expenses, while troubled firms once again just rationalize and make excuses.

Too Much Time On Social Media (A personal a rant <g>)

There is no doubt in my mind, that there is at least an inverse relationship between profitability and the time spent by many owners on social media. While I cannot point to hard statistics to back up this claim, Just observing printers from close up and afar I see so much time being wasted in this industry on social media such as Facebook, Twitter, WhatsApp and Instagram, just to name a few. I would also include various printing related listservs to this list as well.

I believe a significant percentage of our political and social discord in this country can be directly traced to what is published and shared on these sites. I think many owners and their families would be far better served by reducing participation in these various social network sites.

It is embarrassing these days to go out to a medium or high-end restaurant these days and to observe two adults and two children all with their heads down sending out text messages and reading the latest posts on Facebook. Not only is it rude and impolite, it is a terrible waste of intellectual talents.  Enough ranting!

I used to own a cell-phone jammer (Yeah, yeah, I know they are illegal – who cares) and I could destroy an evening for a family like that, but unfortunately it only worked G3 Networks. When they went to G5 the jammers got more expensive and harder to purchase. When it worked, it was so much fun watching folks suddenly losing reception and then holding up their cell phone higher in the air somehow thinking this would boost reception.

Enough for now. Have a great week.

 

 

 

Visits: 137

Save 16% on NPRC Mailing Study

PRIVATE SALE ANNOUNCEMENT*
Use Coupon to Save 16%
On Association’s Newest Study
*This announcement is limited to readers of the NPRC Website Only!

Now, for the first time, you can save 16% on NPRC’s recently released pricing study – The 2020-2021 Mailing Services Pricing Study. First published in February 2020 and offered at a retail price of $175 (PDF Only), you can now purchase this study for only $147, but you must act quickly since this limited-time offer expires June 19, 2020. Use the following coupon code to save 16%: NPRCMAIL16

NPRC’s newest study has been praised by printers from across the country. The 2020-2021 Mailing Services Pricing Study is 110+ pages in length, and covers dozens of mailing services and products, including average and median pricing for products and services such as:

  • Full-Service IMb Charges
  • De-duping Fees
  • NCOA Processing
  • Markup Rates for Brokered Lists
  • Laser letter Merging Fees
  • Inkjet Addressing Fees
  • Insertion Charges #10, 6×9″ & 9×12″
  • Metering Charges
  • Hand & Machine Application of stamps
  • Self-Mailer Processing Fees
    Plus many, many other services & products

To order your copy or to read more about this study, visit the NPRC Bookstore.

“As always, NPRC has produced a top-notch publication. “Going rates” for mailing services are hard to track from company to company and town to town, so it’s very helpful to have a baseline to compare with. While the numbers alone are worth the cost of the book, the commentary and analyses that come along with these studies are a huge bonus, especially true because they are unbiased and accurate.”

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

 

“I have been in the printing business almost 30 years. A big part of my success is because of John Stewart’s industry studies. The latest study, the 2020-21 Mailing Services Pricing Study has helped me determine that I was undercharging on some of my mailing services. We all are busy running our companies and often times simply forget how long it’s been since we last raised our prices to reflect the increased costs of operation. This study is the perfect tool to remind you to analyze your prices to ensure you stay profitable.”

Armand Girard
Curry Printing & Marketing
Auburn, ME

 

“NPRC has hit the mark again! We are very appreciative of the association’s tireless efforts to get these studies right and on time. We’ve been in the print and mail business for 15 years and have always relied on client feedback and market knowledge to help us set prices. It’s nice to see these corroborated by other businesses similar to ours on a regional and even national basis. Thanks again NPRC.”

Bob Heid
We Are Kymera
Orlando, FL

 

“The mailing survey is one of the best surveys to come out from NPRC in a long time. All of the association’s surveys are of immense help. This one hit a sweet spot for our company. It validated our pricing positions and gave us some items to add, services we should be breaking up into different price categories and not be “all-inclusive in pricing”. We have grown our commercial printing firm to be in the top ten in the San Francisco north bay. Surveys like the Mailing Services Pricing Study keep us growing.”

David Adams
QPS Printing
Petaluma, CA 94952

To order your copy or to read more about this study, visit the NPRC Bookstore.

Visits: 353

Save 16% on Signs & Wide Format Pricing Study

NPRC Releases Signs & Wide Format Pricing Study

The 2018-2019 Signs & Wide Format Pricing Study is one of NPRC’s most popular pricing studies, and you can now save 16% – BUT you must place your order by Friday, June  19th! This study has already proven to be a real eye-opener for many firms!

Visit our bookstore at  https://printingresearch.org/products-page/ to read details about this popular study. Remember too, that 98% of  all orders are processed and mailed same day as received.

Covering dozens of products & services – This new, 110+ page study details real-world pricing practices for dozens of the most common products and services in the signs and wide format industry. Click here or the artwork below to view and download two sample pricing pages.

Click below to view
Table of contents 

SAVE 16% – OFFER EXPIRES JUNE 19TH!
RETAIL PRICE (PDF)… $169.00
USE COUPON NPRCSIGNS16
AND PAY ONLY… $141.96!

OWNERS PRAISE NEW SIGN
PRICING STUDY PUBLISHED BY NPRC

“After reviewing the latest Sign & Wide Format study I realized I’d been leaving money ‘sitting on the table’ on some products. Literally within minutes of receiving the study, I was able to confidently revise a quote for a customer, knowing the price would still be fair yet competitive. The resulting revenue increase nearly covered the cost of the study—and that’s just one project! Thank you for all of your hard work.”

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


“The work that John and his team do is so great for our industry and I would hope more companies invest the time in taking part in the survey every year. We all rise up together and this work is a great step for all of us! Our company is only 4 years old so this information is invaluable.”

Zeno Signs & Chesterton Printing Co.
Chesterton, IN


“Hi John. Got the study, printed it, and now using it. Every time we get a survey from you we spend a good deal of time reviewing our pricing. I know we should do this more often but your surveys are the ‘kick in the butt’ that we need to make sure we are getting the best return on our work. I have been doing these surveys for more than 20 years. While I own other businesses, there is nothing in those industries to compare with the surveys you produce. Thanks.”

Jon Robson
Auburn Document Centre, Auburn, NY

This information-packed study offers average and median pricing for dozens of products and services offered in the sign industry, including the following:

  • Laminating Services
  • Substrate Pricing Retail and Discounted)
  • 3′ x 6′ and 4′ x 8′ Banners
  • Vertical Banners & Stands
  • Feather Flags
  • 4MM Coroplast Yard Signs (1-S & 2-S)
  • ACM Panel Pricing (18″ x 24″ and 24′ x 36′)
  • Magnetic Signs
  • Decals – square and contour cut
  • Vehicle Decals
  • Flat Surface Vehicle Wraps
  • Window Perfs
  • Basic Pricing Charges for Vinyl Signs

The study is available in both PDF and Hard-Copy formats.

 

Visits: 152

Are Grants & Loans Really Necessary for Survival?

By John Stewart, Executive Director, NPRC

Are printers counting on government grants and Loans to survive the Covid-19 crisis?  Well, checking out various printing industry list servs, it certainly appears that many printers are indeed doing just that!

Instead of returning to the basics and concentrating on improving key financial ratios such as SPE, payroll and profits per employee many printers seem to be spending the better part of their days worrying how to fine tune loan applications and mastering SBA regulations.

Ironically, more printers appear to have mastered the myriad of new government regulations involved in securing PPP and EIDL loans and grants far better than they have mastered their own financial ratios. To be blunt, I have seen more posts in the past two weeks about how to secure various government loans than I have seen discussions in the past two years regarding  achieving higher SPEs and best practices for lowering payroll costs.

Most profit leaders in this industry (the top quartile in terms of profitability) appear well prepared to deal with the challenges that Covid-19 represents. Sure, there will be struggles and bumps along the way, but there is little doubt that they will survive and prosper both in the short term and the long term. Profit laggards, on the other hand, were ill-prepared to weather even a small financial storm, long before Covid-19 even existed. Now they find themselves in a cash and profit crisis mostly of their own making.

Sure, receiving a loan for $20,000, $50,000 or even $100,000 or more sounds great, but if that loan or grant is viewed as making the difference between “closing your doors” and your surviving to see 2021 then I would seriously question the financial strength and stability of your firm, Covid-19 not withstanding!

If you’ve been running a marginal or below average firm for the past two or three years, or possibly even longer, any loan or grant that you receive will end up being nothing more than a small band-aid where a tourniquet is required instead. Covid-19 related loans and grants are not likely to save firms that are foundering financially. At best, the inflow of new money will simply prolong the inevitable.

I talk to profit leaders all the time, and virtually all of them admit to me admit to me that while the loans and grants they have received are certainly helpful, they note that their firms are not dependent upon them for their survival. Some are treating these loans as “icing on the cake.” Ironically, because they are profitable to begin with, the loans and grants these firms will receive will end up making them even stronger in terms of profitability in 2020 and 2021.

Don’t misunderstand me when I talk about “icing on the cake.” Yes, even the strongest companies in our industry surely welcome the help, and they will indeed put these grants and loans to good use. Weaker firms, however, will likely use the money to patch holes in a sinking ship – a ship that was sinking long before we ever heard of Covid-19. In fact, many troubled firms will end up using the influx of cash to patch holes above the water line, instead of the more serious ones down below.

Don’t misunderstand me when I talk about “icing on the cake.” Yes, even the strongest companies in our industry surely welcome the help, and they will indeed put these grants and loans to good use. Weaker firms, however, will likely use the money to patch holes in a sinking ship – a ship that was sinking long before we ever heard of Covid-19.

Six months from now – I strongly suspect that that many of the troubled firms that so desperately need government grants and loans to survive will have blown through those funds faster than a speeding bullet, and six months from now they will be once again desperate for more loans and grants. As always, this industry, like all industries, has “profit leaders” and “profit laggards.” The difference between the two groups is that the former know there ratios inside and out and recognize that they are indeed in that top quartile. On the other hand, the “profit laggards” are generally poorly informed as to the types of key financial ratios it takes to operate a profitable firm in this industry, and thus struggle along, week to week, month to month.

In turbulent and uncertain times such as  we are facing today, it is more important than ever that you understand the kinds of key financial ratios required to survive and prosper. Granted, “increasing profitability” may be a bit “pollyannish” during the Covid-19 era, but the last thing you want to encounter these days is a slow, yet subtle decline in key ratios.

One fact we know for sure – Six months from now “profit leaders” will continue to be “profit leaders,” while many of the “profit laggards” of today will be struggling even more so than they are today, regardless of any loans or grants they may have received.

Granted, “increasing profitability” may be a bit “pollyannish” during the Covid-19 era, but the last thing you want to encounter these days is a slow, yet subtle decline in key ratios.

We’ve been publishing Financial Benchmarking Studies for the Printing industry for more than 30 years and we have tracked dozens of key ratios in our industry. Most important of all, we’ve been able to compare and breakdown ratios of of the top firms vs. those at the bottom in terms of profitability. Suffice it to say that the “profit leaders” in our industry seem far better prepared to weather the “storm” than the “profit laggards.”

Below are just a few of the key ratios that we look at closely when analyzing the value of firms and their survivability score. Average sales for the firms in this extraction was $1,100,000. These ratios are extracted from the NPRC 2019-2020 financial Benchmarking Study. The 64-page study is a comprehensive analysis of Key financial benchmarks and ratios for the quick and small commercial printing industry. See page 48 for specific definitions and formulas used to report the following. (Click here to read more about this info-packed study.)

Key Ratios – All Firms by Profitability Quartiles

 

Key Financial Ratio* Bottom Profit Qrtl Top Profit Qrtl
2018 Average Gross Sales $1,448,004 $1,037,417
Cost of Goods % 30.6% 29.0%
Payroll Expense % 38.8% 25.8%
Overhead Expense % 25.2% 19.4%
Owner’s Compensation % 5.4% 25.7%
Excess Earnings $ -$7,135 $201,258
Profits Per Employee $ -$637 $32,461
Sales Per Employee $ $118,688 $144,085

Definitions as to specific ratios reported below can be found in 2019-2020 Financial Benchmarking Study

Sales Per Employee can often act as instant indicator of overall financial health. You don’t need a P&L or a Balance sheet and you don’t need the help of a CPA or bookkeeper to calculate it. SPE has nothing directly to do with payroll or wages so you don’t need that info either. Simply divide your annual sales (do not include postage income) by the total number of FT equivalent employees, including all working owners, partners, etc. used to produce those sales. SPE is generally calculated and expressed in annual terms, not monthly, although it can change somewhat from month to month.

By the way, a SPE in the $140-$150,000 range, even though that puts it in the “Profit Leader ” category, does not represent the top of what can be achieved. I know many firms, most of them heavily invested in digital printing, that report achieving SPEs of $160,000 to $180,000 and even more. So don’t be patting yourself on the back too quickly. You can always do better. On the other hand, if your SPE is $130,000 or below you are seriously under-performing in this industry compared to your peers.

Recent SPEs reported by NPRC – SPE varies modestly from report to report. Below are are recent SPEs as reported in various studies:

Study                                                               Average        Median
2019 Digital Color Pricing Study                    $139,830         $130,673
2020 Mailing Services Pricing Study             $156,179          $142,500
2019 Wage & Benefits Study                            $139,048         $134,444
2019 Financial Benchmarking Study              $139,595               NA

2019 Financial Benchmarking Study – Average SPE

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PPP Payments Outpace Stimulus Checks 2:1

Covid-19 “Take #2”

5-15-20 – The National Printing Research Council (NPRC) continues to serve the printing, mailing and sign industries with a series of statistical surveys designed to keep owners informed regarding major industry trends. Of course nothing has had a greater impact on our combined industries than the current Covid-19 Pandemic! (To download a 11-page PDF copy of this report click here.)

In fact, no single event in the past 100 years has had more impact on our industry than the current pandemic. As a result, NPRC launched its first Covid-19 Survey in mid-March and published the results on its website on March 26th. (Click here to read and download the previous report.)

It didn’t take long for it to become apparent that NPRC would need a second and most likely a third survey if we were to meet the needs of our industry. So on May 5th NPRC launched its 2nd survey called Covid-19 “Take #2.” 

The survey ran for seven days, closing on May 12th and attracted 253 participating firms, closely matching the 279 responses we received on our 1st survey about a month ago.

Stimulus Checks vs. PPP Disbursements

As a general rule, printers appear to have had far greater success in receiving PPP loans than they have in receiving their $1,200 stimulus checks by almost exactly a 2:1 rate. According to our data, and based upon 253 responses received between May 7-12, only 39% of survey respondents told us they had received their $1,200 checks, while 61% told us they were still waiting. Somewhat ironic considering no applications or forms were required for the latter while an application process was established for PPP disbursements.

As for PPP applications and disbursements, approximately 92% of printers told us they had applied for the Federal Government’s Payroll Protection Plan (PPP), and that 78% of those that had applied have already received the PPP funds.

Interesting too is that approximately 38% of the industry has applied for and received either an advance payment or full disbursement on their EIDL SBA Disaster Loan. (See Chart #18) Once again, contrast that with the fact that 61% of participants are still waiting for their stimulus checks. Granted, there are far more of the latter to be disbursed, but the disbursement process is much simpler and subject to far less variables than what can be a complex loan application.

Covid-19 & General Industries Trends

One of our first series of questions sought out participants and asked them to estimate or project the percent decline in total employees for three specific periods of time. We asked them about the number of employees currently employed as well as the number of employees they projected for two periods in the future. Below are the results uncovered as of May 12th:

Chart #1 – % Declines in Employment

As you can see (See Chart #1), it appears that many printers seem to be implying that the worst is possibly now behind us. The first two bars (average & median) reflect the decline in sales over a four-month (Jan-April),  however, most of the decline in staffing appears to have occurred in March and April, the last two months of that time-frame.

It is likely, but not assured, that in the next few months  we will look back on 2020 and view the March-April time-frame as the worst two-months of 2020. Of course, we still have no idea what May or June 2020 will bring, but the consensus seems to be “it can’t be any worse than what we have already seen.”

We also asked participants to predict the impact that Covid-19 will have on their employee staffing as it relates to both the first six months of 2020 as well as on total employment for all 12 months in 2020.

Chart #2 – Employees

Chart #2 above reflects answers to our survey question asking participants to tell us their current and projected staffing levels as we approach the end of the 1st six months of 2020 as well how we will finish out the year. Overall, it appears that owners are predicting that by year-end 2020 total staffing will have declined by approximately 13-17% from what it was in January 2020.


If you enjoy and appreciate reading research reports such as this, consider supporting NPRC by purchasing one or more of its research publications, or making a small financial contribution to NPRC via a PayPal donation to membership@printingresearch.org


Business As Usual?

Chart #3 provides the answers to the question, “Based upon state or county regulations or laws currently in effect, what is your current business status as of May 8, 2020?” According to our data, it appears that approximately 70% of the industry is back to “normal” in terms of being open for business. However, being open for business is not the same as a return to business as usual. Many participants told us that customers are simply staying home and are certainly not venturing outside to place orders.

Chart #3 – Current “open” or “closed” Status

With significant declines in raw business volume, something has to give, and we asked survey participants to tell us how they were handling their payroll and staffing demands in light of much lower sales. As you can see (Chart #4) approximately 46% told us they are currently paying employees full-pay.

Chart #4 – Employee Payroll Status

Payroll Status for Specific Firms –  Question #4 of our survey asked, “If you are temporarily closed, or operating under limited hours of operation, how are you handling payroll?” As you can see, 46% of those responding firms said they were continuing to pay employees at “full” pay. The remainder (remember these are firms that are still closed or operating under limited hours) turned to paying employees only for hours actually worked.

Employed vs. Furloughed? Question #5 asked respondents what percent of their total work forces is currently working at their physical plant as opposed to furloughed? Question #6 asked how many employees have been furloughed as a result of Covid-19. We clarified that question by noting that “furloughed” meant “temporarily sent home for a period of time without pay.” 

Chart #5-6 Employed or Furloughed?

Chart #5-6 illustrates that employers have, on average, retained approximately 73% of their work force. The bad news, of course, is that approximately 26% of the workforce in our industry has indeed been laid-off or furloughed and we suspect that most of them will never be rehired.

Healthcare Converage

Healthcare premiums and furloughed employees – What are owners doing in regards to continuing healthcare premiums for laid-off/furloughed employees was a popular question among owners who pay such for employees. For approximately 33% of participants, this question was not an issue since that coverage is not offered.

As you can see, at least as of May 8th, approximately 24% of employers continue to pay premiums for all employees. Unfortunately, approximately 11% of employers ceased (as of May 8 or before) paying healthcare premiums for inactive or furloughed employees.

Chart #7 – Handling Healthcare Premiums

Major Sales Declines Predicted

Our Covid-19 Take #2 survey offered up 5 distinct time frames (See graph #8-12 below) and asked participants to indicate the percentage that sales were either up or down. Suffice it to say, not a single participant indicated any UP or positive sales for the time periods reported or projected.

The graph below (Questions #8-#12) illustrates the tendency and belief at least among many survey participants that the “worst is behind us” in terms of impact on future sales. The further we go out in the future the lower the predicted cumulative negative impact on sales.

Nonetheless, printers are still predicting a 29% decline in sales for the 12 months ending Dec. 31, 2020. Note the devastating impact Covid-19 had on April sales, with printers predicting a decline of -49% on April 2020 sales compared to April 2019. The negative trend clearly carries over into the 2nd quarter of 2020 with a predicted decline of -45%.

Had we asked about predictions for 2021 we are convinced that we would continue to have seen negative numbers, but we will leave that for a future survey. For right now, suffice it to say we are indeed looking at a dismal picture in terms of both sales and profits for not only the rest of 2020 but into 2021.

Questions #8-12 – Sales Projections

Stimulus Checks & Other Loan Options

#14 – A Stimulus Check?

Our Covid-19 Take #2 survey asked five specific questions dealing with various stimulus legislation such as stimulus checks, PPP applications and EIDL/SBA Disaster Loans. Our first question was the simplest and yet the results were the most shocking.

Question #14 asked whether survey participants  had (Yes or No answer required) received their individual stimulus check or deposit of $1,200 per person (with qualifications and restriction). The question was flawed in a sense that the question assumed those that answered would be qualified to receive one.

Nonetheless, we believe that most printers and most participants would indeed be qualified to receive a stimulus check of some $$$ amount. With that said, 61% of respondents as of May 8, 2020 told us they had not received a check.

As a result, we were surprised when we began checking out the survey data. What was supposed to be the most transparent, the quickest and the simplest of the many federal bailout programs now appears to have run into some major delays if not roadblocks. When we asked folks if they had received (as of May 8th) their stimulus checks we were surprised to hear that 61% of our respondents told us “No.”

(SPECIAL NOTE: As noted previously, we realized this question and our comments that followed was flawed, in that not every owner/spouse would be qualified to receive a stimulus check. Our question should have been more specific, to allow for the fact that not everyone was qualified to receive such.)

PPL Funds and Applications –  The good news came when we asked about PPP funds. According to our survey data, almost 92% of the printing industry applied for PPP Funds, and even more surprising is that approximately 78% told us they had in fact received payments under the government’s Payroll Protection Plan. (See graph – Questions #15-17)

PPP Funds Forgiven? When asked about “forgiveness” of loans, participants told us they expected that 73.4% of the loan amount would be forgiven. The median was 95% of the loan amount.

#15-17 PPP Applications & Loans

EIDL – SBA Disaster Loans – Since this has turned out to be another popular Covid-19 era loan program, we thought we would ask participants if they have applied for a loan and whether or not they have actually received an advance and/or the full loan amount. Their answers appear below. Note that the cumulative total of the responses below (70.3%) represents to the total percent of survey participants who indicated they applied for an EIDL loan.

#18 EIDL Loan Disbursements

Cash Reserves – How Much & How Little – We asked participants to take into account steps and expenditures they have already taken, to tell us how many additional weeks or months did they feel they could survive under the current Covid-19 economy. (See Graph #19)

We must confide that the 33% of printers who told us they had enough cash reserves to last them at least six months was a refreshing bit of news considering all of the negative stats we had received. Even more encouraging was the fact that another 13% of respondents told us they could last at least one year.

Unfortunately, another 31% of printers told us they only have enough cash reserves to last them two months or less. Considering the fact that most owners predict that the negative business climate and the severe decline in demand will extend well into late summer (if not the Fall or Winter), it appears that a significant portion of the printing industry is in deep trouble.

#19 – Cash Reserves

Predicting modest recovery by Spring 2021?

Overall Business Confidence Level – Question #20 of our Covid-19 “Take #2” Survey posed the following question: “Taking into account everything that has transpired in the past three months, how would you rate your confidence level that your business will be somewhat back to ‘normal’ by April 2021.”

We provided a slider that moved through a scale from left to right. On the far left, we displayed a -100 and identified it as (Very Doubtful). In the middle we displayed a 0 and labeled it “about 50/50”. On the far right we displayed +100 and labeled it “Extremely Confident.”

The final score was +16! In hindsight, we should have simplified the scale and its interpretation. Nonetheless, we interpret the +16 to be a slightly (very slight) positive indication or feeling that their business will possible be approaching normal by Spring of 2021.

Controlling Labor Costs

Preferences for Controlling Labor CostsQuestion #21 was a complex question asking readers to provide a “weighted” answer to five possible steps that might be taken to reduce or control labor costs. We provided five options they could take, and then basically asked them to tell us how likely or unlikely they were to pursue each option. The options ranged between “We will not consider” to “Will like implement.”

As a result, we were able to produce the following graph. As you can tell, printers are very reluctant to institute a “Reduction in Pay.” At the other end of the spectrum, printers are far more likely to pursue a “Reduction in hours for individual employees” followed closely by a general “Reduction in hours across the board.”

#21 – Controlling Labor Costs

Handling Accounts Payable?

Dealing with Accounts Payable – Recognizing the critical importance of improving and maintaining cash flow, we asked participants what if any steps they have taken to delay or slow down payments to vendors.

One option that we initially had not even considered in our first draft but was added later was the option stating that the owner has not delayed or slowed payments to vendors at all. Surprisingly, as it turned out, this option dominated all of the other responses. Almost 60% of respondents told us they have not delayed or slowed payments to their vendors.

#22 Dealing With Accounts Payable

Prospects for the future of your business – We could have just as easily put this question at the beginning or the end, but we basically wanted printers to tell us how Covid-19 has impacted their business. As expected, approximately 70% told us Covid-19 is having a “significantly negative impact” on their business, while another 10.5% tell us it has been “catastrophic.” (Graph #23)

#23 – Prospects for the Future?

The Role of Politics

Support for Governors, Congress & the President – Since politics plays such a major role in everything these days, the last five questions of our survey attempted to gauge the support and ratings offered by participants for their governors, state legislatures, the U.S. Congress and President Trump. Participants were provided a scale ranging from 0 (Totally Opposed) to 50 (Neutral) to 100 (Fully Support). 

Accurate Reporting on this data was imperative and we thus calculated both average and median figures. Our take? Too close to call out any big “winners” or “losers” in this contest!

Questions #24-27

Red States vs. Blue States – As a foundation for question #23, we asked participants to define the political nature of their own state. Where they in “Red,” “Blue,” or “Purple” state. The answers appear below. Our “gut” expected the “Red” state percentage to be slightly higher than the 32% shown, but all of that will only really matter when November rolls around.

#28 – Red State vs. Blue State

Our Sincere Thanks – We want to sincerely thank those of you who took the time to participate in our most recent industry survey. Rest assured it will not be our last, but we will be honest with you that we need your continuing support, not only as a survey participant but also as a financial supporter.

We would also like to thank the following two individuals for their help and advice in creating this industry survey:  (1) John Henry, owner of Speedway Press, Oswego, NY and founding board member of NPOA, and (2) Armand Girard, owner of Curry Printing & Marketing, Auburn, ME and also a founding board member of NPOA.

You can support NPRC and its research efforts by participating in various surveys we conduct and/or purchasing studies when they published. Click here to visit our Bookstore. If you feel really generous, but have already purchased one or more of our studies, you can always make a small donation to NPRC via PayPal at membership@printingresearch.org.

Remember to drop us a line and give us your suggestions for future surveys, especially those dealing with the current and future impact of Covid-19! We love to hear from you.

John Stewart, Executive Director, NPRC

Copyright 2020, National Printing Research Council (NPRC), Melbourne, FL  www.printingresearch.org

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Visits: 633

Shocking – Printers Report April Sales Down 44%!

Early, preliminary results from NPRC’s newest survey, Covid-19 “Take #2,” are in and the results are nothing short of shocking!

Although approximately 81% of printers who responded told us they are back to “close to normal” in terms of actually being open for business, the financial picture is far more grim.

Below are just a few of the stats we’ve been able to gather so far. Please note that the percentages displayed are tentative and subject to change in the next few days.

The Check is in the Mail & other Stats…

  • According to survey respondents so far, approximately 29% of all employees in the printing industry are currently furloughed.
  • April 2020 sales compared to April 2019 sales are down a whopping -54%!
  • Second Qtr. 2020 sales compared to the same quarter in 2019 are down -44%.
  • Six month 2020 sales compared to 2019 sales are projected down -33%.
  • Digital color copy volume is reported to be down -48%.
  • 60% of all respondents (Survey launched May 6 at approx. 9:30 a.m.) report they have not yet received their $1,200 stimulus check.

Click here to participate in our survey:
https://www.surveymonkey.com/r/Y53VG27

We encourage all readers of this post to take our Covid-19 Survey. The deadline for participating is May 12th. All participants will receive a special link that will allow them to download a complete report of our survey.

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Brushing Up Your Pricing Practices

A Special Alert – that NPRC is reminding owners that operate printing, mailing and sign companies that they can download a copy of our 2017 Hourly Rates & Mark-Up Practices Report absolutely free.

This offer is simply our way of saying thanks to folks like yourself who have supported our industry research efforts during the past 25+ years.

Remember too, that we are also offering an 18% Discount on virtually all of our major reports and studies. With most businesses incurring major declines in monthly sales, what better time than now to brush up on pricing practices for digital printing, mailing services and signs and wide format products. Use the coupon NPRCVIP18 when placing an order in our bookstore. This coupon expires April 30th!

 

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