The Battle to Recover Sales & Profits

Published Oct. 15, 2020

Printers Continue to Face Covid-19 Challenges
As They Battle to Recover Sales & Profits
By John C. Stewart, Executive Director, NPRC

It’s been seven months since Covid-19 first began impacting our industry (as well as the entire U.S. economy) and NPRC has been surveying fellow printers ever since. Some businesses have closed their doors in the past few months, while others struggle to recover lost sales.

All in all, it has clearly been a rough seven months for the printing industry and our latest survey data indicates that while there may be light at the end of the tunnel the tunnel itself extends well into 2021 and possibly into 2022.

We launched our 4th Covid-19 survey on Oct. 6, 2020 and we implemented a strict Deadline of October 12th to allow us time to analyze and report our findings back to survey participants in a timely fashion. If you would like to view July 20-21st Covid-19 Report click here, or copy and paste the following: https://printingresearch.org/resilient-industry-despite-major-sales-declines/

We received 136 responses in our shortened survey time-frame. Below is a very brief profile of the firms that participated:

 

 

Average Median
2020 Projected Sales $1,290,601 $696,500
2020 Projected SPE    $134,149  $114,943
Staffing Jan. 1, 2020       9.27     5.0
Staffing Proj’d Jan 1, 2021       8.11     5.0

 

So Where Do We Stand?  As you can see from the following (Chart #1), the industry indeed suffered a dramatic decline in quarterly sales of almost 30% between the 1st and 2nd Quarters. And while the data shows signs of a modest recover since the end of the 2nd quarter, the recovery has been far from a “full recovery,” with projected 4th quarter average sales still down almost 15%!

Although we often rely on averages as opposed to medians, it is notable that the projected drop in median sales for the 4th quarter 2020 is down 29% – clearly an indication that the road to recovery for our industry is surely a long one.

#2 Employee Staffing Report – In order to help us with various SPE calculations, we asked survey participants to tell us how many total employees (excluding all working owners & partners) were employed at the beginning of each quarter in 2020, as well as what they projected for the 1st quarter in 2021. We used this data to calculate our SPEs for those respective periods.

Chart #3 below illustrates the results of our calculations for the various periods specified. Average reported SPE dropped almost 20% between the 1st quarter and year-end projections. The median decline was almost identical at 18%.

#3 Deployment of work force? We asked employers to tell us the current status of their workforce – who was working at their main plant versus who was still working at home. According to our data, approximately 92% of employees are now back at work, with the remaining 8% still working at home.

#4 Employee Staffing – Today vs. March 1, 2020 – Survey participants reported that their overall average staffing, as compared to March 1, 2020 was down -13.4%. The median decline was down -10%. It is clear from our data that employers, have not reacted as quickly to modifying their staffing as they have to declines in sales. The failure to react to same has resulted in lower SPEs than would otherwise be expected.

Questions #5 – #8 – June/July Sales 2020 vs. 2019 – We queried survey participants to compare their monthly sales for the months of June, July, August and September against their corresponding periods in 2019.

Not a single participating firm indicated they had increased their sales during the respective months. As you can see from the graph below, average and median sales declines of 20-25% were quite common among our survey participants.

Survey Questions #9 – #11 (2020 vs. 2019 Comparative Sales) asked participants to examine various sales periods and indicate how much their sales had increased/decreased for the respective reporting periods. Suffice it to say that while a handful of firms did report sales increases in the 2-6% range, most firms indicated significant declines in sales as indicated below.

Questions #12 – #14 – Covid-19 and Its Impact on Specific Sales – These questions addressed the impact that Covid-19 has had on three categories of sales during the past seven months (March – Sept 2020).

Based upon our data, it appears that digital and offset printing sales have both been heavily impacted by the Corona virus, with digital printing possibly being hit slightly more. Brokered printing has been slightly less impacted but declines of -18% are not easily dismissed.

Note that the questions covered cumulative declines over a 7-month period of time. Just as the sales declines have occurred over an extended period of time, so too will be any recovery. There is no reason or logic that we can see that would suggest that sales of digital, offset and even brokered sales will rebound anytime soon.

“There is no reason or logic that we can
see that would suggest that sales of digital,
offset and even brokered sales will
rebound anytime soon.”

We suspect, although we have no hard evidence to support this statement, that our industry may indeed have to wait until the 3rd or 4th quarter of 2021, if not beyond that time, before we begin to see even a hint that the economy returning to the pre-Covid economy that existed in January or February 2020.

15 – Sales of Covid-19 Related Sales – Some firms indicated early on that they were turning to selling and/or promoting various Covid-19 products (gloves, masks, sanitizers, dispensers, and signs) as a way to possibly make up for sales lost to Covid-19. We asked participants to estimate the volume of sales generated over the preceding 7-months.

As you can see from the graph below, approximately 28% of our respondents indicated they had sold between $5,000 and $25,000 Covid products. An additional 12% of respondents reported sales of $25,000 or greater.

At the other end of the spectrum, approximately 50% of all survey participants indicated they had sold less than $2,500 during that 7-month period.

#16 – Cash Reserves as of Oct. 2020? We asked participants to tell us the status of their current cash reserves. We specified that taking into account steps and expenditures they had taken through Sept. 2020, we asked them to tell us how many additional weeks or months they felt they could operate under the current Covid-19 economy.

The graph below presents a far more positive picture than previous graphs we have posted due to the fact that weaker firms have already dropped by the wayside. As a general observation, firms that continue to operate today, even at a reduced capacity and at lower sales levels, are by their very nature healthier companies.

At least 73% of our participating firms indicate they are well-positioned for 2021 and whatever transpires in regard to the continuing challenges of Covid-19.

#17 – Overall Confidence Level – Question #17 of our survey asked participants to tell us that in light of everything that has transpired during the previous 7 months, how would they rate their confidence that their business will be somewhat “back to normal or better” by July 2021.

The scale we used ranged as follows: -100 (very doubtful) to 0 in the center (chances are 50/50), to +100 (extremely confident).

The collective answer? The average score was 7.2, or just slightly above the “chances are 50-50” that things will be back to normal. The median score was 0. Certainly not optimistic, but most likely as realistic considering what the industry has already gone through in the past seven months.

#18 – Prospects for the Future – We gave participants six choices to describe the impact that Covid-19 has had on their business during the March-September 2020 time frame. Below are their answers:

#19 – Efforts to Recapture Customers – We asked owners to tell us what methods they were implementing and/or employing to recapture the attention of their existing customers as well as to attract new ones. Multiple answers were allowed. We suspect that had this question been asked pre-Covid-19, the percentage of owners indicating they were using “direct mail” would have been significantly lower.

#20 – Vendor/Supplier Costs – Participants were asked to tell us by what percent, if any, had their vendor/supplier costs increased or decreased. Owners told us that they had experienced a modest average increase in pricing of 3.9%, and a median price increase of 1.0%.

#21 – Impact on Selling Prices – The vast majority (98%) of owners indicated that neither increased or decreased their selling prices during this 7-month timeframe.

#22 – Support for the President – We posed the question: “Considering everything that has transpired since Jan. 1, 2020 in regards to the Covid-19 Pandemic, how would you rate your support of President Donald J. Trump and his administration?”

The scale we used ranged from “Totally Opposed” (0) to “Fully Support” (100). The results? The average score was 55.7. The median score was 75. The distribution of answers from 0 to 100 was startling in their extremes, with 23% of owners grading the President with a “0” and 33.7% awarding the President a “100.”

It was clear from our data that our survey revealed a case of extremes. Participants either “loved the President” or they “hate” him.

 

Please note that this report is Copyrighted and initial distribution has been limited to those firms who participated in any one or all of the three Covid-19 Surveys conducted by NPRC. This limited distribution is being done in recognition of and out of respect for the firms who took the time and effort to complete one or more of our surveys. However, in recognition that we serve the entire industry as well, we will publicly distribute this report within the next 15 days. For right now, however, we ask that you refrain from forwarding this report on to others. Thank you for your support. Send comments or questions to membership@printingresearch.org, 2110 Dairy Road, #102, Melbourne, FL 32904

 

1332

NPRC Shares July-Sept. Covid-19 Findings

Although the primary purpose of our recent “Survey of Surveys” was to determine where to concentrate our efforts in the next six months, we couldn’t help but ask a few questions regarding Covid-19 and its impact on the printing industry.

Based upon survey data we have gathered since early March 2020, it is clear that Covid-19 has had a major impact quarterly and annual sales for 2020 and into 2021. In contrast with what President Trump often says, the effects and impact of Covid-19 on the printing industry are not going to suddenly disappear.

“In contrast with what President Trump often says, the effects and impact of Covid-19 on the printing industry are not going to suddenly disappear.”

In fact, the data NPRC has collected so far strongly suggests many printers are forecasting significant declines in sales through 2021.

Projected sales for 2020 and 2021

Whether we are looking at raw $$$ or percentages, our survey participants, whether we are talking “averages” or “medians,” are forecasting troubled times at least for the next 18-24 months.

Significant Declines in Annual Sales

Relying upon financial data we have collected for more than 38 years, 2020 and possibly 2021 will be the first two years on record where sales (at least forecast sales) will actually be lower than the preceding year. Based upon our most recent data, printers are predicting their 2020 sales will be down -14.5% (Average) compared to 2019. Note the median data is only slightly better, reporting sales for year-end 2020 will be down -11.5%.

Significant declines in sales forecast for 2021

When it comes to key ratios in our industry, we will be the first to admit we have rarely if ever had to prepare and present charts and graphs dealing with “negative” numbers. Nonetheless, it is what is, with significant declines in sales projected through year-end 2021.

What about 2021 Sales? As you can see from the chart above, printers who responded to our most recent survey are predicting that year-end sales for 2021 will still be -6.4% below 2019 sales.

Typically we always calculate “averages” because we need that number to calculate “margin of error.” However, in many cases, this one being one of them, we feel the “median” is probably more reflective of what is happening in the industry. The median, unlike averages, is not distorted by large outliers. And while the latter are often valid, they can easily distort an otherwise realistic “average.”

As you can see from the chart above, many printers are predicting an even greater decline in annual sales for 2021 than they are forecasting for 2020. Part of the reason for this is that sales for January, February, and a portion of March 2020 were generally healthy and unaffected by Convid-19. Thus, it is not surprising to see that the negative median sales projection for 2021 is greater than the median for 2020, since the latter included 2.5 months (Jan-March) of relatively healthy sales.

Covid-19’s Impact on SPE

We continue to rely upon “Sales Per Employee” (SPE) calculations as a reliable method for tracking productivity in the industry. The data we’ve collected since early spring is extremely encouraging. It appears that printers, mailers and sign company owners are clearly reacting to the impact that Covid-19 has had by making significant adjustments in staffing.

Following what turned out to be major reductions in staffing earlier in the year, many employers appear more than willing to make some of those preliminary adjustments in staffing permanent. Employers appear willing to make “permanent” furloughed decisions made earlier in the year, even at the risk of losing some long-term employees. Many owners have reluctantly made significant adjustments in staffing and payroll, believing that is what it is going to take to survive the financial challenges brought about by the current pandemic.

Despite forecast for many problems ahead, sales per employee appears to be holding its own.

We are pleased to note that printers appear to have reacted quickly to Covid-19 and have made significant adjustments in staffing to maintain healthy SPE ratios.

Popularity of NPRC Surveys

Popularity of NPRC Studies

NPRC typically publishes 2-3 industry surveys a year. Companies that participate and complete a survey are automatically entitled to a FREE PDF of the final report. The graph below illustrates the relative participation levels in various surveys based upon our “Survey of Surveys.”

Participation levels in various surveys

This graph illustrates the relative degree of participation in various NPRC surveys.

Perceived Value of Studies – For planning purposes, we asked survey participants (125) to score a list of seven studies we have published in the past five years and rate the studies on a scale of 0-100 in terms of “Perceived Value.” The chart below illustrates the results.

Perceived value of various NPRC research studies.

We asked survey participants to rate or grade the overall perceived value of eight different studies we’ve published in the past five years.

Our Next Study – Based in large part on the feedback we received, NPRC has decided to launch a new industry 2020-21 Wage & Benefits Survey within the next two weeks. Not only does this study typically attract a healthy level of participation, it presents data that is critically important, especially in a time when employers are cutting costs, but also carefully monitoring labor costs.

“…end up receiving a “two week” notice from a long-term employee who you possibly failed to acknowledge or reward in a timely or adequate manner.”

It is one thing to discover that you might be paying an above average wage to a key yet “average” employee, but it is another thing entirely to end up receiving a “two week” notice from a long-term employee who you possibly failed to acknowledge or reward in a timely or adequate manner.

For additional information about NPRC and its various services and products, we invite you to visit our website at: www.printingresearch.org.

 

 

 

 

 

 

 

 

1854

Resilient Industry Despite Major Sales Declines

You can now download for free NPRC’s latest Covid-19 Report. Based upon a survey conducted in mid-July 2020 that attracted almost 200 printers, this report offers a detailed look at sales and productivity in the printing industry.

Although the industry has been forced to tighten its belt and make significant adjustment in daily operations, the report notes a “ray of optimism in terms of how printers continue to handle accounts payable. The new report also notes that 89% of survey participants indicate they are either “back to normal” or open under modified hours of operation. Only 11% of respondents indicated they remained “closed to the public.”

Download this special FREE report by clicking here or the artwork to the left. Please note that these NPRC surveys and reports are published and distributed free throughout the printing industry.

If you are interested in furthering and encouraging the type of research represented by surveys such as these, we encourage you to support our efforts by joining NPRC. With annual dues of only $240, your contribution will go a long way towards ensuring that top-notch research such as this continues in our industry.

Prospects that sales will return to “normal” by the end of 2020 are highly unlikely according to NPRC’s latest report.

Approximately 44% of industry report some degree of confidence that the economy with return to normal by July 2021, with the remainder being neutral or negative in their outlook.

 

 

199

NPRC Report Projects Sales Decline of 25%

Melbourne, FL, July 23-2020 – The National Printing Research Council (NPRC) has just published its latest report that explores the impact of Convid-19 on the printing industry. The report is based on a survey conducted between July 10-16, 2020. The 24-question survey attracted more than 190 participants.

Distribution of the initial 9-page report was and is being limited to participants only. Survey participants were provided confidential download instructions between July 22-23.

The complete report, however, will be made available to all printers, regardless of participation status, on Aug. 10, 2020. “We are slowly learning our lessons. Having now conducted three Covid-19 Surveys, we couldn’t help but notice a subtle decline in participation levels,” notes John Stewart, Executive Director of NPRC. “We believe many firms chose not to complete additional surveys because they assumed they would be able to read the results anyway,” adds Stewart.

“Free distribution of survey results will not longer be the case,” notes Stewart. “Henceforth, we will make it clear in our survey promotions that results of our surveys will only be provided to survey participants. Additional distribution to non-participants will be at our discretion.” adds Stewart.

Sharing of Some Results…

Based upon the results of our survey, it is easy to conclude on the one hand that the printing industry appears quite resilient. On the other hand, it is also quite clear that the vast majority of printers will be facing major challenges in the months and possibly years ahead. While it is no surprise that 2nd quarter sales would be down significantly, projections for the 3rd quarter of 2020 appear even worse, according to our data.

Looking forward to the 4th quarter, we find that printers are projecting a 26% decline in sales ($415,295 down to $307,025). Examining median figures we find that the projected drop in sales is even worse at almost 32%.

Dramatic Decline in SPE

With the dramatic decline in sales beginning in early March 2020, it is also no surprise that sales per employee (SPE) took an even greater dramatic hit due to the delayed reaction by most printers as to how they would handle payroll and staffing issues.

The chart below illustrates the dramatic decline in sales per employee as first calculated for Jan-Mar. 2020 and then for subsequent periods. Notice the dramatic 44% decline in average SPE between the 1st quarter and the 2nd quarter.

While the 1st quarter SPEs might be considered somewhat “optimistic” in terms of national averages reported in the past, the SPEs reported for the remaining three time-frames are signs of a troubled industry, especially if this trend continues into 2021.

Generally speaking, SPEs are indicative of relative degrees of productivity and there is little doubt that Covid-19 has directly and indirectly impacted productivity of the average printing firm. We suspect it will be at least 12-18 months before we see a return to healthier SPEs.

A special note as to our SPE calculations. The data below is most useful and informative when examined within its own context, as opposed to comparing to historical SPEs reported in other studies.  Nonetheless, the periodic changes are reliable in terms of the time frames noted.

Impact of Convid-19 on Your Business

Our survey asked printers to what degree has Covid-19 impacted their business during the January-June time-frame. As you can see from the graph below, approximately 78% of all participants said Covid-19 has had a significant if not catastrophic negative impact on their business. The results are certainly not surprising. Some printers will clearly learn to roll with the punches, but many others will keep absorbing them until they can’t take it anymore.

Clearly, learning to closely monitor, control and reduce total labor costs will continue to be the single greatest challenge facing printers in the next 6-12 months. Printers who fail to grasp the critical significance of payroll costs as a percent of sales and who fail to react quickly to these “red flags” may find themselves facing even greater changes in the 2nd half of this year than they faced in the first half.

Reacting quickly to sharp declines in sales with equivalent adjustments in labor costs is a skill that needs to be sharpened in this era of Covid-19.

Cash Reserves

Despite an abundance of discouraging “negative data” collected in our most recent survey, we were surprised and encouraged to find that almost 24% of our participants told us the they have enough cash reserves to last at least six months, while an additional 50% say the can last one year or more.

Confidence Level

One of our key survey questions posed the following: “Taking into account all that has transpired in the past four months (March – June), how would you rate your confidence level that your business will be somewhat ‘back to normal’ or better by July 2021?” The scale we used went from “-100” on the left, “0”0 at the center point to “100” on the right.

We intended and interpreted that firms selecting the center point were indicating a 50-50 confidence level that things would return to normal. Or, another interpretation might be that 28% of participants were sort of “neutral” in their predictions, selecting neither a positive or negative view of what might happen between now and July 2021.

Participation in Future Surveys?

As noted earlier, we intend to supply the entire 9-page Covid-19 #3 Summer report no later than August 10, 2020. We strongly encourage you to participate in future surveys. We are the only association serving the printing industry that brings you up-to-the-minute surveys and reports. We are proud of the caliber and quality of the reports we publish, whether they be various pricing reports, mailing and signs studies, or statistical studies reporting on the latest financial benchmarks in our industry.

We encourage you to visit our Blog (See tab at top of HOME page) or our Bookstore. When visiting the Bookstore, you can click on any of the dozen or more studies depicted to obtain additional information. In most cases, we offer a free preview of the Table of Contents for each study. Oftentimes, we also provide for free down loads of sample pages as well. Best yet, all of our studies are offered on a 100% money-back guaranteed basis.

Revision date: 7-23-20, 4:45 p.m.

437

NPRC Launches Newest Covid-19 Survey

NPRC continues to explore the impact that Covid-19 is having on the printing industry with the release of its latest survey – “Covid-19 & The Printing Industry – Summer 2020.”

The new survey by NPRC contains 24 questions and testing has indicated that the survey should take 15 minutes or less to complete. The deadline for submitting your survey is July 16. Take this latest survey and share with printers like yourself how you are dealing with the “good, bad and ugly” presented by Covid-19.

All survey participants will receive a complete report of our findings within one week following the close of the survey.

Click on this link to take our latest survey:
https://www.surveymonkey.com/r/QKFZNKC

390

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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California Mailer Praises Mailing Study

“The new NPRC Mailing Services Pricing Study is one of the best surveys to come out from NPRC in a long time,” says David Adams, owner of QPS Printing, Petaluma, CA.

“Although 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,” adds Adams.

Adams is one of many printers and mailers who have praised NPRC’s latest industry study, the 2020-2021 Mailing Services Pricing Study. This brand new, 100+ page study is packed with average and median prices for dozens and dozens of popular mailing products and services, including:

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

Click here to download the complete Table of Contents for this just-released study.

 

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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!

 

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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

153

“Pricing” – Where Does it Rank?

Earlier this week (April 8-10, 2019) we posted a graph and some summary comments regarding a survey conducted by RIT in 2003. We encouraged reader feedback and while we did receive two comments, we are looking for additonal feedback that we can post here.

Click artwork to download 2-p PDF

In the meantime, we have obtained permission from the original author to reprint the entire 2-page article. You need to read this article with an open-mind, rather than through some heavily tinted glasses that always seem to blame pricing for all your woes. Way too many printers often cite “pricing” as the primary cause for their lack of growth, poor profits, and the lack of customer loyalty, just to name a few.

If printers could only hear themselves talk sometimes. If they did they would realize that they use “pricing” as an excuse for their troubles. They blame printing brokers, low ball competitors down the street as well as the lack of loyalty from their own customers. If these printers did a little bit more probing, they would possibly discover that it really wasn’t pricing that caused their customers to leave, but things like consistent failure to meet deadlines, sometimes poor quality and less than friendly CSRs.

Anyway, enjoy the article and send us your feedback to: membership@printingresearch.org

Yes, we would love to do this survey all over again and see what has changed and what has remained the same, but getting our hands on a representative list of prospects to whom we could mail would represent a real challenge. Any ideas>

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