Pricing your printing services is a constant challenge. It’s never a set-and-forget activity because pricing is affected by variables such as changes in production costs, new sources of competition, and shifts in your customer base.
If your business isn’t meeting your profitability goals, take some time to consider these seven questions:
Are we charging too much?
If your shop routinely loses jobs to local competitors, you may be charging more than the buyers in your market are willing to pay. Find out how much your competitors charge for similar products and services and if they are offering any extra services that make them more attractive.
Are we charging too little?
Your prices may be too low if your shop is constantly busy with a high volume of work but you have very little profit to show for it. When your margins are too slim, you won’t be financially prepared to invest in technology updates or sudden changes in market conditions.
Have our production costs risen or dropped?
Have your suppliers raised prices for inks and materials? Have labor, utility, or maintenance costs increased or declined? Can you identify areas where costs can be trimmed without affecting sales, service, quality, or compliance with regulations?
Is it time for a different pricing strategy?
If your original pricing strategy was to penetrate the market by offering attractively low pricing, perhaps you can raise your prices now that you have established yourself as a leader in your market and built a broad base of customers. Or, perhaps you charged premium prices when you were the first print shop in town to adopt specialized new technology such as dye-sublimation printing or short-run package printing. If other companies in your area have adopted similar equipment, you may have to adjust your prices to stay competitive.
What can we do to increase the perceived value of our products?
Are there any new materials or finishing techniques that can be used to add a premium look and feel to certain types of products. Some customers are constantly seeking new ways to make their own companies stand out. So if you can find ways to help them, they may be willing to pay a bit more. Or, try bundling some low-cost items with your products to make it appear as if your customers are getting higher-value products for prices similar to those of your competitors.
What steps can we take to generate customer loyalty?
You can reduce customer acquisition costs by retaining more of your existing customers. Any steps you can take to help them grow their own businesses will pay off in longer-term loyalty. Also consider offering discounts to customers you bring you a steady flow of work. Setting up and hosting web-to-print sites for your customers can also keep customers from going elsewhere.
If we have to lower prices on some products to stay competitive, can we create a new line of higher margin products?
At trade shows you will find dozens of examples of innovative new types of products that you may be able to produce without much investment in additional equipment. Offering ancillary products such as superior design services, custom display fabrications, or multi-channel marketing support can also help you attract higher-margin business.
Why The Challenge Never Ends
In an ideal world, you could set your prices once and move onto other things. But that’s not realistic. Business is a never-ending chess game in which you must continually re-examine the repercussions of every move you and your competitors make. You also need to be alert to shifts in customer demands and potentially disruptive technology that can drive down prices.
If customers constantly question the prices listed on your estimates, take note of their objections or reasons for resistance. Sometimes, your customers might not fully understand how your products differ from lower-quality items offered at cheaper prices by your competitors. In other cases, the objections your customers raise might give you clues to the types of prices and pitches they are hearing from your competitors.
When you start losing more jobs or hearing the same types of objections from different customers, don’t hesitate to make some adjustments.
When you have installed an easy-to-use estimating and order management system such as Ordant software, adjusting your prices isn’t difficult. With Ordant’s built-in customer-relationship management and reporting tools, you can keep track which types of jobs most profitable and the types of questions and pricing issues you are hearing from customers.
When you and your staff waste less time on redundant, everyday tasks such as repeatedly entering job data or chasing proof approvals, you can spend more time on activities that can have a major impact on the long-term profitability and growth of your business. For a demonstration of our easy-to-use, easy-to-customize system, visit www.ordant.com