Turning an idea on its head

I was talking to an old printer friend the other day and asked him how he was doing.  I expected the usual cautious optimism (people say you have to be an optimist if you're still in the printing game at present) but instead he said "We're making money for the first time in years".

When I picked myself up off the floor I asked him what had changed.  "It's my new marketing guru", he said.  Apparently this new advisor had asked him what boxes a new client had to check in order to be accepted as a customer.  "Are you joking?" replied my friend "it's the other way round. There are so many printers for each job that the buyer can pick and choose".

"Well," said the advisor "why not stand that idea on its head?"  What he recommended was to see if the the customer had what it takes, by checking things like:

• Will you pay me up front?
• Will you accept my prices including a reasonable profit?
• Will you accept a reasonable time frame? 

I cautiously asked my friend whether his business had shrunk at all.  "No" he said. "The customers who were haggling away my profits, paying late, or defaulting now go to the big on-line boys, where they get what service they can.  But if a customer wants proper service, with the knowledge that we'll continue to be here to serve him next year, there's a price and it's worth his while paying it.  So that proper service is what we've been selling, and successfully too."

I've heard similar views expressed as an ideal by printers, but I think this was the first time I've seen the profitability increased in this way without compromising turnover. 

I take my hat off to him!

It's a funny old game, printing, isn't it?

In this job we get to talk to a lot of printers, and a question I always ask is “so how’s it going? Are you busy?” which I must say I have been asking with greater trepidation recently. The interesting thing is that some printers do seem to be extremely busy.

On the face of it that would appear to be encouraging, as it means that companies are trying to promote their way out of recession. On the other hand the recent BPIF Printing Outlook survey reports that almost half the printing industry has been forced to cut prices despite rising raw material costs. This is obviously unsustainable in even the short turn, so what is happening?

The obvious answer is that many printers are reverting to their discredited old motto ‘Turnover is king’, or as I once heard it put ‘If I work all the hours God sends I must be doing something right!’

Well, OK. If you’re working round the clock you may be making fuller use of your resources, and your rent and admin. costs etc. are spread over more jobs, which could, if you're careful, bring your print costs down by as much as 10%. The problem is we’re beginning to see reductions in price of far more than that, which in an already squeezed industry is not, on the face of it, healthy.

But there is a rather paradoxical light at the end of the tunnel, which is that people who reduce their costs that far are actually chasing turnover for immediate survival – they simply have to, in order to pay the wage bill at the end of the month. That £30,000 job they are doing for £23,000 can be factored for £18,000 which gets them neatly out of the mess - for this month. What about next month? I suspect that we are about to see a major shake-out of those printers who do not stick to their guns when pricing.

We live in interesting times!

Richard Fergusson

An Industry First

Well - its been a long time in the making, but I think we're about to score a Print MIS industry first.

We've now fixed November 28th as the official launch date, but pretty much everything is in place now for the first FREE fully featured Print MIS. This should finally mean that the estimated 50 percent or so of printers who don't currently have an MIS has no excuse to remain ignorant about whether they are covering their costs.

This industry is known for its suicidal undercutting. That normally gets even worse in a recession. Now maybe there's a way out. All it takes is for printers to work out the real cost of doing each job - including an allowance for indirect costs, and then to dig their heels in and refuse to budge lower than that figure. Sounds simple, but you'd never believe the reasons for not doing it!

"If we included all the costs we'd never get the job" (no comment)

"If we're working all round the clock we must be doing something right" (then where is your enormous expected profit?)

"It's a sprat to catch a mackerel" (but it's interesting to see that the customer who stitches you up for a small job will fillet you even more efficiently for the larger ones!)

"But we've already covered our costs this month" (so why give it all away?)

So thats it. If independent print companies are to survive, they have to keep an eye on their profits. There's really no excuse any more. Not when there's a free MIS available.

Richard