Chicken Scratchings

Posts Tagged ‘Unit Cost’

Your current printer may not tell you these things, but I will.

In my day job I am a printing broker. I on December 3, 2009 I marked off 20 years of self-employment. Beyond that I have nearly 20 more years of other experience in the printing business, some of it on press, but mostly in sales. I’ve been there, done that, so you can trust that I know what I’m talking about.

Printing is a very competitive business. To grow and stay viable printers must buy expensive equipment. It isn’t unusual to find a small company with a million dollar investment on the floor. New multi-color presses can easily run between one million to three million dollars. The only way to make this kind of investment payoff is by keeping the presses running. Having an idle press is like making a bonfire out of hundred dollar bills.That’s not something they want to do–would you?

What secrets do I know that you may not know?

1. You are the printer’s greatest asset. Without you the printer will have to close-up shop. Imagine being in their shoes, they are saddled with huge debts and the only way to pay back the banks is to keep their customers happy so they will continue bringing in work to keep those expensive presses running. They want you to be satisfied and will do almost anything to make sure they keep you. Try not to take too much advantage of this knowledge though. If you hold their feet to the fire too often, they won’t have a leg to stand on.
2. Every print shop is equipped differently. What difference does that make? Plenty. Printers buy equipment to meet the needs of their market. If your project is outside of their sweet spot it won’t be as efficient for them and cost you more. Suppose you’ve done a thousand jobs with them and everything was great, but your 1001 job is a little different, do you know when to change?
3. The printer’s employees have different levels of experience. I had this conversation with the owner of a successful printing company in my area, he said, “What would you rather have, a shop with the state-of-the-art equipment and people to run it that were less experienced, or equipment that was a little dated and operators that were the best in the industry?” He opted for the state-of-the-art equipment. It worked out well for him, but they had more rejections than a printer with more experienced personnel. Choose a printer based on your needs and expectations. If the price is good, but they make a lot of mistakes, is it worth it to you? Or, if there are few errors, but the cost is higher are you willing to pay the price? Don’t you think it is important that you know if the printer shares your same philosophy?
4. Much of the profit comes from buyouts. The printer’s markups on paper and other services like die-cutting, foil stamping and the like usually run around 40%. If you provide your own paper, or arrange for other services you can cut your printing bill substantially. WARNING–things happen on press that are not the printer’s fault. Just because a certain amount of paper is budgeted for the job doesn’t mean there won’t be a jam up, or other press problem that could eat your stock. If you provide paper and end up short on the order it will be your problem–not theirs.
5. Small substitutions can make a big difference in price. You don’t necessarily have to change printers or beat them up for a better price. Ask the printer if a small change in the size, or a different paper, or binding on another side would make a difference. You’d be surprised how much money you could save. That doesn’t mean that your printer was gouging you, they may not have focused on the alternatives until you asked. They may have assumed that your specifications were set in stone. Let them know where you are willing to make changes and you both benefit.
6. Quantity is the greatest factor in unit cost. With offset printing particularly, the longer you run the smaller the unit cost gets. That is because the printing estimate is created using two basic components, fixed costs and variable costs. Fixed costs include things like overhead, pre-press, and press set-up. They are the upfront expenses every printer must bear. Variable  costs are paper, ink, and press-time. Variable costs are determined by how much time or materials you use. Fixed costs are set, so the longer the press runs the fixed expenses are amortized. The total cost, however, goes up, but the unit cost goes down. Why does this matter? It matters because of point No.2, your current printer may not be as cost effective at larger quantities.

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