As the printing business becomes less about putting ink on paper and more about executing projects for multi-channel marketing campaigns, it becomes increasingly difficult to use a standard formula for print job pricing.
Pricing projects that include a mix of design, printing, finishing, logistics, and installation services can be challenging because so many variables are involved. But without a systematic approach, you could spend literally dozens of hours each month calculating and recalculating custom estimates for each job that comes through your shop.
Many print shop owners today develop their own pricing formulas that work for their specific mix of products, services, and target customers. Ordant estimating software can incorporate these proprietary pricing formulas so you dramatically reduce the amount of time spent creating custom estimates for complex projects. Plus, you can easily adjust these pricing formulas to keep up with ongoing changes in costs, your customer base, and your competition.
Here are a few tips that can help you ensure that your pricing formulas remain accurate.
Track changes in production costs. Every year brings a new wave of price hikes in the costs of inks and substrates. Other factors that can affect your profitability include rising costs for utilities, taxes, insurance, benefits, and other aspects of operating your facility and selling your products. Whatever pricing formula you develop, include enough markup so you don’t start losing money when some production, administrative, or facility costs rise throughout the year.
At the end of each quarter, review which costs have gone up and determine how they affect your margins. Before raising prices, look for ways to offset the effects of rising costs. Identify ways to increase productivity and reduce waste. Or consider finding new suppliers. You can also explore alternative methods of production that enable you to deliver printed products that meet the client’s expectations at a lower cost.
Reap the financial rewards of investing in more efficient equipment. In a webinar on Calculating Ownership Costs and ROI, Paul Reilly and Tom Williams of New Directions Partners, recommend keeping some savings from an investment in new equipment that reduces your overall production costs. Instead of immediately reducing prices to pass some savings to your customers, wait awhile. For one thing, you need time to recoup some expenses associated with installing the equipment and training your operators.
Eventually, your competitors will buy similar equipment and everyone will start to lower their prices. But until that happens, maximize the return on your investment by keeping some of the savings for your business.
Listen to customers, prospects, and former customers. Are your customers satisfied with the quality and service they are getting from your print shop? Have they noticed some of the extraordinary steps your employees have taken to deliver products by the given deadline? Are some customers fully committed to the value of printed collateral and visual communications? These types of customers are more likely to appreciate the value of maintaining a long-term relationship with your shop, even if it means paying a little more than they might pay elsewhere. When you do adjust your prices, remind them of some of the extra services you have provided and ask for ways you can continue to improve.
Likewise, when you lose a customer, try to find out why. You might assume that it was simply a matter of pricing, and they were offered a better deal elsewhere. But that might not be true. Maybe there was a problem with the quality and service they received.
You can use the customer relationship management tools in Ordant software to keep notes on each customer’s preferences, comments, and suggestions for improvement.
Pay attention to successful competitors. What advantages or innovations are they promoting to buyers of print services? Could you offer something similar (or better!) without raising your prices? You don’t necessarily want to follow the lead of shops that offer rock-bottom prices. Shops that offer prices that don’t cover the actual costs of production won’t be in business for long.
How We Can Help
At Ordant, we understand the pressure your shop faces to be strategic about pricing. You can’t afford to be locked into outdated pricing models that don’t reflect the realities of the printing industry today. To see how easy it can be to incorporate custom pricing formulas for projects that involve a mix of design, printing, fnishing, and installation services, schedule a demonstration of our popular estimating and order management software at www.ordant.com