Are Paper Allotments Becoming the Norm?

Shortly after the release of our FREE 8-page report on “Coping with Covid-19 & Supply Chain Issues,” we received an email from a printer who participated in our survey. He commented, “Wow, a lot has changed overnight for me.” 

This printer went on to explain, “I filled-out this report (survey) just prior to my paper merchant putting me on a 20% monthly allotment. While I filled-out the report and expressed I did not have any supply concerns, overnight I was told I am only allowed to order 20% of my monthly norm. Simply devastating,” he added.

In a follow-up email from this printer he told us, “I am a three-man shop in my rural area. I never made it big time, but I have beaten the odds of survival. We also do small signs and banners and such too. When the pandemic hit last year in June, we officially went to a quick print shop that did signs and banners to a sign shop that offered quick print needs. The sign end has saved us.”

“No, the supplier is not being selective,” he added. The allotment is based on your past purchase history. So the larger you are the more you can get. Plus since the allotment is currently monthly, whatever I do not order does not roll so my rep call actually  pull un-used allotment from another print shop if they do not use it and redirect towards me…. in the grand scheme of things and in the eyes of Midland Paper, I am still just a small three-man operation,” he added.

As an aside, this printer told us that his brother operates a much larger operation about 60 miles away. It operates with between 40-50 employees. His brother tells him that he is struggling as well, and can’t get any coated and has turned away a lot of work due to no paper.

Send us an email at [email protected] if you’re struggling with supply chain issues, especially paper, and tell us what, if anything you are doing about it.

Download FREE Digital Pricing Pages & Save 18%

Act now and save 18% 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: NPRCDIGITAL18. This special offer expires Oct. 30, 2020.

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 $184.50

 

You can download two sample pricing pages from this popular study by clicking here.

 

Mailing Study Aids Getting $15,000 Job!

NPRC just received the following unsolicited comment from a printer in North Palm Beach, FL… (P.S. You can still save 16% on this study) Check-out additional news about this study appearing below.)

“John: We do a number of mailings a month but very little EDDM. Yesterday, we were asked to price a big EDDM. Although, I could price the print price, figuring the mailing cost, aside from postage, as some what of a mystery. So, I turned to the survey and was able right away to get a good idea of what others were charging. Made my day. Considering this will be a $15,000 job-paying $147.00 for the survey was chump change.”

Big Thanks, Dennis Beck,
Minuteman Press
North Palm Beach, FL

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)

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